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ELEMENTS 



OF THE LAW OF 



Negotiable Contracts 



BY 

ELIAS FINLEY JOHNSON, B. S., LL. M., 

Author of Illustrated Cases on Bills and Notes; Editor of the Third 
Edition of Bliss on Code Pleading; Professor of Law in 
the Department of Law of the Uni- 
versity of Michigan. 



PUBLISHED BY 

GEORGE WAHR, 

ANN ABBOR, MICH., 

1898. 



I 

I 

I The Inland Press, 

j Ann Arbor, Mich. 



Copyright, 1898 
By George Wahr 



L 5498 

MAR 2 1932 



PREFACE. 



The cases here collected and annotated, have been selected by 
the undersigned, primarily for the use of students in his classes. 
To make a wise selection of cases from the large number that are 
to be found upon a particular subject is a most difficult task. The 
question, which is the most important case upon a given subject, 
is one upon which opinions will necessarily differ. It has been 
attempted here to select, as far as possible, the very earliest cases 
upon the particular subject, so that the student would thereby be 
able to get at the reason of the rule without reference to any statu- 
tory provisions. Attention is called to the latest cases, however, 
in the foot notes. 

Several years of experience as an instructor has taught the 
undersigned that the best method of impressing a principle upon 
the mind of the student is to show him a practical application of 
it. To remember abstract propositions, without knowing their 
application, is indeed difficult for the average student. But when 
the primary principle is once associated, in his mind, with par- 
ticular facts, illustrating its application, it is more easily retained 
and more rapidly applied to analogous cases. 

It is deemed advisable -that the student in the law should be 
required, during his course, to master, in connection with each 
general branch of the law, a few well-selected cases which are 
illustrative of the philosophy of that subject. To require each 
student to do this in the larger law schools has been found to be 
impracticable, owing to the lack of a sufficient number of copies 
of individual cases. The only solution of this difficulty seems to 
be to place in the hands of each student a volume containing the 
desired cases. In the table of cases will be found many leading 
cases printed in black type. E. F. J. 

University of Michigan, 

Department of Law, 
Ann Arbor, Oct. ist, 1898. 



TABLE OF CONTENTS. 



CHAPTER I. 

History, Nature and Purposes of Negotiable Contracts . . 21 

Section 1. Biography and Original of Bills and Notes. 21 

a. Negotiability, when first allowed 23 

b. Promissory notes, when first used. ... 24 

c. Lord Holt's objection to the negotia- 

bility of notes 25 

d. The Statute of Anne, its purpose 26 

Section 2. Nature and Purposes of Bills and N'otes .... 32 

a. Common law contracts and negotiable 

contracts distinguished 38 

b. They are representatives of money. . . 4m 

CHAPTER II. 

Bibliography of Negotiable Contracts 44 

Section 3. Text Books and Cases 44 

CHAPTER III. 

Enumeration and Definition of Negotiable Contracts 46 

Section 6. Negotiable Contracts Enumerated 46 

Section 7. Quasi-Negotiable Contracts Enumerated... 46 
Section 8. Bills of Exchange 46 

a. Defined 46 

b. Must be written 47n 

c. May be written in pen or pencil 47n 

d. Form required son 

e. Must not be under seal 50 

f. Kinds of 51 

g. Parties to, enumerated and defined. . . 5m 
Section 9. Promissory Notes 52 

a. Defined S2n 

b. Must be written 52n 

c. May be written in pen or pencil 52n 

d. Form required 52n 

e. Parties to, enumerated 53 



VI 



TABLE OF CONTENTS. 

Section 9. — Continued. 

f. Parties defined 53 

Section 10. Other Negotiable and Quasi-Negotiable 

Contracts 53 

CHAPTER IV. 

Section 11. Essentials Generally 54 

a. A bill must contain an order 54 

b. A note must contain a promise 54 

c. The order and the promise must be 

absolute and unconditional 54 

d. The order and the promise must be 

for the payment of money 54 

e. The order and the promise must be 

for the payment of a certain amount 

of money 54 

f. The order and the promise must be to 

pay at some time certain 54 

g. They must be in writing 54 

h. They must be signed 54 

i. The parties must be definite and cer- 
tain 54 

j. The contract must be delivered 54 

Section 12. A Bill of Exchange Must Contain an Order 

I by One Person to Another 54 

a. What will constitute an order 55 

Section 13. A Promissory Note Must Contain an Ex- 
press Promise to Pay 59 

a. What will constitute a promise 65 

— The English cases 65 

— The American cases 67 

— Equivalent expressions for "prom- 
ise" 69, 71 

b. Due bills 73 

c. Promise to give 73 

Section 14. The Promise and the Order Must be Abso- 
lute and Unconditional 74 

a. Payment must not depend upon a con- 
dition 79 

•b. The reason for the rule 79 

c. The bill or note will be good if the 

condition is sure to happen 79 

d. Bills and notes payable at the conven- 

ience of parties are sustained 80 



TABLE OF CONTENTS. vii 

Section 14. — Continued. 

e. Conditions may be imposed by an in- 

dorsement 81 

f. Inconsistent conditions will be disre- 

garded 81 

g. A condition which changes the time of 

payment does not destroy a bill or 

note 81 

h. Conditions to be binding must appear 

upon the contract 82 

Section 15. The Order and the Promise Must be for the 

Payment of Money only 83 

a. The general rule 84 

b. May be payable in merchandise if at 

the option of the payee 84 

— Statutory provisions 84 

c. The reason for the rule 85 

d. Money defined 85 

e. Equivalent words and phrases for 

money 86 

f. Contracts payable in bank bills or cur- 

rency 87 

g. An order to pay in "Bills of Ex- 

change" is not an order to pay in 
money 87 

h. The payment may be in the money of 

any country 87 

i. The money must not be payable out of 

a particular fund 88 

j. The amount may be charged to a par- 
ticular fund 88 

k. The payment must not be of money 

and an act 89 

Section 16. The Order and the Promise Must be for the 

Payment of a Certain Amount of 
Money 90 

a. Provision for the payment of attor- 

ney's fees 91 

— The rule ih different States 91 

b. Statutory provisions 92 

c. Payment of an amount certain with 

exchange 93 

d. The amount should be expressly 

stated 94 



Vlll TABLE OF CONTENTS. 

Section 16. — Continued. 

e. When is the amount certain 94 

— The general rule 94 

Section 17. The Order and the Promise Must be to Pay 

at Some Time Certain 95 

a. The exact time need not be stated. . . . 102 

b. Lost notes, when due 103 

c. Notes payable on demand, when due.. 103 

d. Payable in installments 103 

e. Days of grace 104 

— What instrument entitled to 104 

— Where grace is allowed, when must 

payment be demanded 104 

— Checks not entitled to 104 

— May be dispensed with 104 

f. Where a negotiable contract falls due 

on a holiday, when due 105 

— When grace is allowed 105 

— When grace is not allowed 105 

g. What days are holidays 105 

h. The rule where no time is stated 105 

i. Where interest is provided for 105 

j. Where contract is payable "on or be- 
fore" a day named 106 

k. Where time of payment depends upon 

an event sure to pass 106 

1. Time, computation of 107 

— The general rule 107 

— When measured from a day 107 

— When measured from an act 107 

— When runs for days 107 

— When runs for months 107 

Section 18. The Parties Must be Certain and Definite. . 109 

a. Parties, how designated 109 

1. To bills of exchange 109 

— Original 109 

— Subsequent 109 

2. To promissory notes no 

— Original 1 10 

— Subsequent no 

3. To checks no 

b. Certainty as to, how promoted 117 

c. Exceptions 117 

d. The general rules 118 



TABLE OF CONTENTS. IX 

Section 18. — Continued. 

f . Parties may be described 119 

h. Capacity of parties 121 

a. Generally 121 

b. Of infants 121 

1. For necessaires 121 

2. For torts 122 

3. As payees . . . ". 122 

4. As endorsers 122-123 

5. Ratification of 123 

6. Joint note of, and adult 124 

7. Joint note of, as partner 124 

c. Lunatics 124, 133 

1. The general rule 124 

2. Effect of lunacy upon these con- 
tracts 124 

d. Married women . . . . 124 

1. The general rule. .' 124 

2. The statutory rule 124, 126 

3. Liability of husband for ante-nup- 
tial contracts 125 

4. Exceptions to the general rule. . 125 

e. Partners 126 

1. The general rule 126 

2. The form of signature 127 

f. Corporations 127 

1. The general rule 127 

2. Mav not become accommodation 
parties 128 

3. Power to indorse 128 

4. The form of contract 129 

5. Authority of agents of 129 

g. Public corporations 129 

— Power to execute negotiable con- 
tracts 129 

h. Municipal corporations 130 

— Power to make negotiable con- 
tracts 130 

i. Executors and administrators 131 

1. Power to make nogatiable con- 
tracts 131 

2. Power to indorse negotiable con- 
tracts 131 

3. Liability of 131 



X TABLE OF CONTENTS. 

Section 18. — Continued. 

f. Agents 132 

1. Power to make negotiable con- 
tracts 132 

2. Authority of 132 

3. Joint agents 132 

4. Signature of 132 

k. Guardians 133 

— The general rule 133 

1. Drunkards 133 

Section 19. Negotiable Contracts Must be Delivered... 135 

a. The general rule 143 

b. The necessity for 143 

c. Delivery 150 

1. Defined 150 

2. Kinds of 150 

3. Sufficiency of 150 

4. Conditional 151 

5. When made 154 

6. May be compelled 152 

7. Presumption as to time of 152 

8. In escrow . . .' 152 

9. On Sunday 154 

a. The common law rule 154 

b. The statutory rule 154 

Section 20. Negotiable Contracts Must be Signed 155 

a. What constitutes a signature 160 

b. By whom may it be made 161 

c. The form of 161 

1. May be written 161 

2. May be printed 161 

d. By two or more parties 161 

— The nature of their liability 161 

e. By agent 162 

CHAPTER V. 

Non-essentials of Negotiable Contracts 163 

Section 21. Negotiable Contract Need Not be Dated. . . 163 

a. When delivered without sum or date, 

right of holder 164 

b. Effect of dating on Sunday 165 

c. Where placed 165 

d. Ante-dating 165 



TABLE OF CONTENTS. XI 

Section 21. — Continued. 

e. Post-dating 165 

f. Mistake as to the date 166 

Section 22. Negotiable Contract Need Not Contain a 

Statement of Consideration 167 

a. Consideration presumed 167 

b. The general rule 167 

c. The use of the phrase "value received" 168 

d. Effect of a failure of consideration. . . 16& 

e. What consideration is sufficient 169 

1. Love and affection not 169 

2. Money consideration 170 

3. Consideration other than money. . . 170 

4. Pre-existing debt as a consideration 172 
Section 23. Negotiable Contracts Need Not Stipulate a 

place of payment 173 

. a. Presumption of 173 

b. Place of payment may be in the alter- 
native 173 

Section 24. Negotiable Contracts Need Not Contain the 

Indicia of Negotiability 175 

CHAPTER VI. 

Acceptance 178 

Section 25. The Drawer of a Bill of Exchange is Not 

Liable Thereon Until He Has Ac- 
cepted the same 178 

a. Acceptance defined 180, 182 

b. The drawee mav become an indorser 181 

c. The form of an acceptance 182 

1. May be by parol 182 

2. May be in writing 182 

3. May be of a bill not yet drawn 182 

4. May be by telegram 183 

5. May be implied 183 

a. By a detention of the bill 183 

b. By a destruction of the bill 183 

6. A promise to accept may be an ac- 
ceptance 184 

7. The acceptance may be upon the bill 

or upon a separate piece of paper. . 184 

8. It need not be dated 184 

9. Need not be accepted when drawer 

. and drawee are the same party 184 



Xll 



TABLE OF CONTENTS. 



Section 25. — Continued. 

c. The form of an acceptance. 

10. By statute acceptance must be writ- 
ten 185 

d. The general method of acceptance. . . 185 

e. What bills must be presented for 185 

f. The liability of the drawer 185 

g. The varieties of acceptances 186 

1. Absolute 186 

2. Conditional 186 

3. Implied 186 

4. Local 187 

5. Partial 187 

6. Virtual 187 

h. Effect of a conditional acceptance. . . . 186 
i. When excused 187 

Section 26. An Acceptance Should Be Absolute and 

Identical With the Tenor of the 
Bill. A Partial, Conditional or 
Qualified Acceptance Will Render 
the Parties to Such an Aceptance 
1 Liable According to the Terms of 

Their Acceptance 188 

a. The payee or holder may refuse a par- 

tial or conditional acceptance 195 

b. Antecedent parties are discharged by 

a qualified or conditional accept- 
ance unless they give their consent 195 
Section 27. An Acceptance Must be by the Drawee. A 

Stranger Does Not Become an Ac- 
ceptor by the Acceptance of a Bill 
of Exchange 196 

a. If the name of the drawee is left blank 

the acceptance may be by a stran- 
ger 199 

b. Acceptance by a member of a firm 

binds the firm 199 

c. Joint drawees should all accept 199 

d. Acceptance may be by an agent 199 

Section 28. An Acceptance is Incomplete Until a Deliv- 
ery, Either Actual or Constructive, 
and May be Revoked 200 

a. The early rule 206 



TABLE OF CONTENTS. 



Xlll 



Section 28. — Continued. 

b. The acceptance is irrevocable after de- 
livery 206 

Section 29. An Acceptance May be Either by Parol or in 

Writing; Before or After the Bill is 
Drawn, and Before or After Ma- 
turity 207 

Section 30. A Bill of Exchange When Dishonored, May 

be Accepted for Honor or Supra 
Protest. An Acceptor Supra Pro- 
test is Not Liable Until the Bill 
Has Been Presented to the Original 
Drawee for Payment at Maturity 
and Again Protested 222 

a. The nature of the liability of an ac- 

ceptor for honor 224 

b. The contract of an acceptor for honor. 227 

c. For whom may an acceptance supra 

protest be made 227 

d. To whom is he liable 227 

Section 31. The Drawee, by Accepting a Bill, Thereby 

Admits the Genuineness of the 
Drawer's Signature and is There- 
after Estopped from Denying the 
Same 228 

a. The drawee must know the handwrit- 

ing of the drawer 231 

b. The drawee not presumed to know the 

handwriting in the body of the bill. 231 

c. The warranties or admissions 232 

Section 32. The Drawee, by Accepting a Bill, is not 

Thereby Estopped from Showing, 
Subsequently, That the Body of the 

Bill Has Been Altered 233 

Section 33. The Drawee, by Accepting a Bill, Thereby 

Admits or Warrants That the 
Payee Has Capacity to Indorse, but 
Does Not Admit His Indorsement . 240 



XIV 



TABLE OF CONTENTS. 



CHAPTER VII. 

Methods of Transferring Commercial Contracts 248 

Section 34. General Methods of Transfer 248 

Section 35. Assignment Defined 248 

Section 36. The Common Law Rule Abrogated 249 

Section 37. The Interest Received by an Assignee 249 

— Non-negotaible contracts trans- 
ferred by assignment 250 

Section 38. Assignment 251 

a. The action by whom 251 

b. The rule at common law 251 

c. The requirements in case of an assign- 

ment 251 

— Notice must be given 252 

Section 39. An Assignee Takes Subject to Equities 252 

Section 40. What is Meant by "Equities"Which May be 

Interposed Against an Assignee. . 253 
Section 41. What Equities May be Interposed 254 

CHAPTER VIII. 

Indorsement 255 

Section 42. An Indorsement Must be in Writing and 

Upon the Commercial Contract In- 
dorsed 255 

a. Indorsement defined 255 

b. The mode of indorsement 256 

c. To whom may they be indorsed 257 

d. The indorsement must be of the entire 

instrument 257 

e. When is an indorsement necessary. . . 257 

f. Effect of a transfer without an indorse- 

ment 258 

g. Indorsement explained by parol evi- 

dence, when 258 

h. Presumption as to the time of 260 

i. Presumption as to the place of 261 

Section 43. An Indorsement Can Only be Made by the 

Payee or Subsequent Holder. 
An Indorsement by a Stranger to 
the Bill or Note is Irregular or An- 
omalous 264 

a. Indorsement by joint payees 273 



TABLE OF CONTENTS. XV 

Section 43. — Continued. 

b. By whom may the indorsement be 

made 273 

c Irregular or anomalous indorsement 

defined 275 

Section 44. No Particular Form is Required for an In- 
dorsement. It is sufficient if it is 
Made, Either With an Intention to 
Transfer the Contract Upon Which 
it is Written or to Strengthen the 
Security and to Transfer the Con- 
tract 276 

a. Form of the indorsement 276 

b. An allonge defined 277 

Section 45. An Indorsement is not Complete until a De- 
livery of the Contract upon which 

it is Made 278 

Section 46. An Indorser Contracts to Pay the Bill or 

Note According to its Tenor, if 
Upon Presentment to and Demand 
Upon (and Protest when Neces- 
sary), the Parties Who Are Primar- 
ily Liable, Payment is Refused, He 
is Duly Notified of Such Refusal . . 282 

a. Interest payable annually, is when due 284 

b. The indorsees contract 286 

c. Presentment, demand and notice is 

necessary to charge an indorser 
with the payment of installments of 
principal and interest 287 

d. When do the statutes of limitations 

begin to run against annual interest 288 

e. The amount for which an indorser is 

liable 293 

1. They are liable for attorney's fees. . 293 

2. They are not liable to contribution. 293 

3. They are liable for the full amount 

due 294 

f. The consideration of indorsees con- 

tract 294 

Section 47. The Negotiability of a Commercial Contract 

Cannot Be Restrained, After an In- 
dorsement in Blank by the Payee, 
by an Indorsement in Full or Spe- 
cial 295 



XVi TABLE OF CONTENTS. 

Section 47. — Continued. 

a. Kinds of indorsements 295 

1. Blank indorsement, defined 295 

2. Indorsement in full or special, de- 
fined , 296 

3. Conditional indorsement, defined. . 297 

4. Restrictive indorsement, defined... 297 

a. To an agent 298 

b. To a trustee 298 

5. An absolute indorsement, defined. . 298 

6. Indorsement without recourse, de- 
fined 298 

a. Warranties of 299 

7. Accommodation indorsement, de- 

fined 299 

8. An irregular or anomalous iadorse- 
ment, defined 275 

b. General effect of an indorsement 301 

Section 48. A Special Indorser is Liable Only to Subse- 
quent Indorsees Who Make Their 
Title Through His Special In- 
dorsee. Subsequent Indorsee May 
Strike Out the Special Indorsement 
and Recover Against Prior Indors- 
ee 304 

a. An indorsement in blank mav be 

changed to a special indorsement . . 308 

CHAPTER IX. 

Warranties or Admissions of Indorsers 310 

Section 49. An Indorser Warrants or Admits that the 

Bill or Note is Just Such a Contract 
as it Purports to Be; That it is in 
Every Way a Valid, Subsisting, 

Genuine Contract 310 

a. Warranties or admissions of an in- 
dorser 310 

1. That the contract is in every way 
valid 310 

2. That the parties thereto are compe- 

tent 310 

3. That he has lawful title 310 

4. That he has a right to transfer it. . . 310 



TABLE OF CONTENTS. XV11 

Section 49. — Continued. 

a. Warranties or admissions of an in- 

dorser. 

5. That the contract is just what it pur- 

ports to be 310 

6. That the parties are able and will 
pay 310 

b. Effect of a forged indorsement 312 

c. Effect of an indorsement after maturity 312 

CHAPTER X. 

Warranties or Admissions of an Indorser "Without Re- 
course" 314 (322) 

Section 50. An Indorser "Without Recourse" Warrants 

or admits: 

a. That he is a lawful holder of the instru- 

ment 314 

b. That he has a just and lawful title to 

same 314 

c. That the contract is valid 314 

d. That he has a right to transfer it 314 

e. The contract of a transferrer. . . .316 (323) 

f. The warranties of a transferrer. .319 (323) 

g. An indorsement "without recourse" 

does not destroy the negotiability 

of the contract 322 

CHAPTER XI. 

Warranties or Admissions of a Transferrer of a Commercial 

Contract Without Indorsement. . . 

323(327) 

Section 51. The Transferrer, of a Commercial Contract, 

Payable to Bearer, Without In- 
dorsement, Impliedly Warrants or 
Admits: 

a. That he is a lawful holder of the con- 

tact 323 

b. That he has the title to the same 323 

c. That the contract is valid 323 

d. That he has a right to transfer it 323 

e. That it is just such a contract as it 

purports to be 323 

See also 327 



XV111 TABLE OF CONTENTS. 

Section 51. — Continued. 

f. Transfer by delivery simply 328 

g. Indorsement of a non-negotiable in- 

strument 329 

h. Indorsement, statute of limitations. . . 329 

L Indorsement after payment 330 

j. Payment before maturity 330 

k. Mistake in an indorsement 331 

1. Indorsees right to fill up a blank in- 
dorsement ' 331 

m. The holder's right to strike out an in- 
dorsement 331 

n. The indorsement must not be partial 332 

0. When may an indorsement be made. . 332 
p. The law of what place governs an in- 
dorsement 333 

CHAPTER XII. 

Protest 336 

Section 52. The "Certificate of Protest" Should Show: 

a. A copy of the instrument, or should 

set it out according to its legal ef- 
fect 337 

b. That presentment and demand were 

made 337 

c. The time and place of presentment and 

demand 337 

d. The parties by and to whom present- 

ment and demand were made 337 

e. The answer, if any, given to the de- 

mand; or that no answer was given; 
or that the party could not be 
found; or the facts which excuse 
presentment and demand 337 

f. That notice of dishonor had been 

given ; . . 337 

g. The signature and seal of the notary. . 337 

h. Why must presentment be made 350 

i. The law of what place governs the 

liability of the parties 356 

j. The purpose of protest 361 

k. Protest defined 366 

1. In what cases necessary 366 



TABLE OF CONTENTS. XIX 

Section 52. — Continued. 

m. When to be made 366 

n. Where made 367 

o. By whom made 367 

p. What the certificate must show 367 

1. A copy of the contract or a fair de- 
scription of it 367 

2. The fact of presentment for accept- 
ance or payment 367 

3. The time and place of presentment 

and demand 367 

4. The fact of dishonor with the reason 
therefor 367 

5. The fact of protest 367 

6. That notice of dishonor had been 
sent or given together with the time 

of such notice 367 

7. The signature of the notary 367 

8. The seal of the notary 367 

q. The form of the certificate of protest. . 368 

r. The form of notice of protest 369 

s. Protest when dispensed with 369 

t. Protest for better security 369 

CHAPTER XIII. 

Presentment and Demand 370 

Section 53. In an Action by an Indorsee Versus an In- 

dorser the Former Must Show Pre- 
sentment and Demand, or Due Dil- 
igence to Get the Money, at the 
Maturity, from the Person Who is 
Primarily Liable Upon the Con- 
tract 370 

a. The liability of drawer and indorser, 

compared 375 

b. Promissory notes and bills of ex- 

change, compared 377 

c. The duty of an indorsee 377 

d. Presentment for acceptance — when 

necessary 379 

1. Where the bill is payable after sight 
or where it is necessary to fix the 
maturity of the contract 379 



TABLE OF CONTENTS. 

Section 53. — Continued. 

d. Presentment for acceptance — when 

necessary. 
2. Where it is made necessary by the 

terms of the contract 379 

e. Presentment for acceptance — how 

made 379 

1. By or on behalf of the holder (for- 

eign bills by a notary) 379 

2. At the place named, if there be one, 

or at the place of business or resi- 
dence of the drawee 379 

3. Within a reasonable time after exe- 
cution and delivery and within 
business or reasonable hours 379 

4. To the drawee or some person au- 

thorized to act for him 379 

f. Presentment for acceptance excused, 

when 380 

1. When the drawee is dead 380 

2. When he has absconded 380 

■"* 3. When he is a fictitious person 380 

4. When he has no capacity to con- 
tract 380 

5. When the presentment is irregular, 

but acceptance is refused upon 
some other ground 380 

6. Where after reasonable diligence it 
cannot be made 380 

g. Presentment for acceptance may be 

delayed 380 

h. Rights of holder when acceptance is 

refused — may sue immediately. . . . 380 

i. Effect of acceptance 380 

j. Presentment for payment — when nec- 
essary 381 

1. Of drawers 381 

2. Of indorsers 381 

3. Of acceptors for honor 381 

k. Presentment of checks — necessity of.. ^81 

1. Presentment for payment — how made 381 

1. By or on behalf of the holder (if a 
foreign bill, by a notary) 381 



TABLE OF CONTENTS. XXI 

Section 53. — Continued. 

1. Presentment for payment — how made 

2. At the place named if there be one, or at 

the place of business or residence 
of the drawee or maker 381 

3. On the day the contract legally ma- 
tures 381 

4. At a reasonable hour of that day . . . 381 

5. To the person who is primarily lia- 

ble on the contract or to some one 
who is authorized to act for him . . 381 

6. By exhibiting the bill to the person 
from whom payment is demanded. 381 

a. Where there are several drawees 
not partners 382 

b. Where there are several drawees 
who are partners 382 

c. Where the drawee or maker is 
dead 382 

m. Presentment for payment — when ex- 
cused 382 

1. Where the latter has no right to 

expect or believe that the contract 
will be honored 382 

2. Where the contract was made for 

his accommodation 382 

3. Where after reasonable diligence it 
cannot be made 382 

4. Where the drawee or maker is a 
fictitious person 382 

5. Where it is expressly waived by the 
parties 382 

n. Presentment for payment — may be 

delayed when 383 

1. Where the holder is too ill to make 
the presentment himself or to ap- 
point some one to do it for him 383 

2. Where the contract is lost 383 

3. Where the mail miscarries 383 

4. Where, by reason of war or pesti- 
lence presentment cannot be made 
promptly 383 



XX11 TABLE OF CONTENTS. 

Section 53. — Continued. 

m. Presentment for payment — when 
excused. 

5. Where the death of the holder oc- 

curs before maturity and before the 
appointment of a personal repre- 
sentative 383 

6. Generally whenever the delay is 

caused by circumstances beyond 
the control of the holder and not 

imputable to his negligence 383 

o. Presentment for payment — effect 383 

CHAPTER XIV. 

Defenses to Commercial Contracts 384 

Section 54. A Material Alteration in the Terms of a Com- 
mercial Contract is a Real Defense 
and May Be Interposed Against 
Every Holder 384 

a. The general classes of defenses 398 

1. Real 398 

2. Personal 398 

b. A real defense, defined 398 

1. Incapacity of the parties such as in- 

fancy, coverature, insanity 398 

2. Illegality of the contract, as where it 
contravenes 398 

a. The statute 398 

b. The common law 398 

c. Public policy — such as usury, etc. 398 

3. Where by the acts of the parties the 

contract has either been cancelled, 

or altered in a material way 398 

4. Want of delivery 398 

c. A personal defense — defined 398 

d. Material alteration — defined 399 

e. Material alteration — effect of 400 

f. Material alteration by a stranger — ef- 

fect of 401 

g. Material alterations — illustrations of.. 401 

1. Changing a joint to a joint and sev- 

eral contract 401 

2. Changing the date or time of pay- 
ment 401 



TABLE OF CONTENTS. XXU1 

Section 54. — Continued. 

g. Material alterations — illustrations of. 

3. Changing the place of payment. . . . 401 

4. Changing the rate of interest 401 

5. Adding interest when it did not 
draw interest 401 

6. Substituting a new payee 401 

7. Adding a seal 402 

8. Adding a subscribing witness 402 

9. Adding or removing a signature. . . 402 

10. Adding words of negotiability when 

it was not negotiable 402 

11. Adding a special consideration after 
"value received" 402 

12. Adding a place of payment where 

none is named 402 

13. Changing a material memorandum . 402 

14. Changing the medium of payment. 402 
h. Immaterial alterations — illustrations.. 402 

1. Changing a bill payable to "A" or 

• bearer, to "A" or order or bearer. . 402 

2. Changing an indorsement in blank 
into a special indorsement 402 

3. Adding the legal rate of interest 

where the note reads "with interest ,, 
simply 402 

CHAPTER XV. 

Defenses, Alteration, Xegligence 403 

Section 55. Whenever the Makei of a Commercial Con- 
tract, by His Own Carelessness or 
Xegligence, Executes and Delivers 
it so that Material Alterations May 
be Made, in a Way Which Does 
Xot Excite the Suspicion of Care- 
ful and Prudent Business Men. He 
Will Be Held Liable Thereon to 
Any Bona Fide Holder. Negli- 
gence, However, is a Question of 

Fact 403 

a. Alterations — negligence of maker. . . . 407 



XXIV TABLE OF CONTENTS. 



CHAPTER XVI. 

Defenses, Fraud 408 

Section 56. Fraud May Be Either a Real or Personal 

Defense. It May Always Be Inter- 
posed Between Immediate Parties, 
and if it Caused the Parties to Enter 
Into the Contractual Relations 
Under a Misapprehension of the 
Real Nature of the Contract, with 
the Exercise of Due Diligence, then 
it is a Res 1 Defense and May Be In- 
terposed Against An> Holder 409 

a. Fraud — personal defense, generally... 416 

b. Fraud — "Bohemian Oats" notes 416 

c. Fraud — rights of bona fide holder. . . . 417 

d. Fraud — statutory provisions relating 

to 417 

e. Where the delivery of the contract is 

obtained through fraud 418 

f. Notes obtained in blank and wrong- 

fully filled up 419 

CHAPTER XVII. 

Defenses, Illegality 420 

Section 57. A Want or Failure of Consideration in a 

Commercial Contract is a Personal 
Defense and Avoids the Contract 
Only Pro Tanto. Illegality of Con- 
sideration is Usually a Real De- 
fense and Avoids the Contract in 
Toto. Where a Part of the Consid- 
eration is Legal and a Part is Il- 
legal, the Whole Contract is Void. 420 

a. Illegality — when it exists 427 

b. Illegality — burden of proof, when stat- 

ute does not make void 427 

c. Illegality — effect of payment 428 

d. Effect of illegality upon the contract, 

when once renewed 428 

e. What contracts are tainted with ille- 

gality 428 

1. Those made with alien enemies and 

in aid of rebellion 428 



TABLE OF CONTENTS. XXV 

Section 57. — Continued. 

e. What contracts are tainted with ille- 
gality. 

2. Bribery contracts 428 

3. Lobbying contracts 428 

4. Wagering contracts 428 

5. Compounding of crimes 429 

6. Contracts in restraint of trade 429 

7. Contracts for the procurement of 
marriage and divorce 429 

8. Contracts in restraint of marriage. . 429 

9. Contracts in relation to offenses 

against morality and religion 429 

10. Usury 429 

f. Illegality — usury 429 

CHAPTER XVIII. 

Defenses, Infancy 430 

Section 58. Minors May Always Plead Infancy in Bar of 

Actions Upon Their Commercial 
» Contracts Unless the Same Were 
Executed and Delivered for: 

a. Necessaries 430 

b. In satisfaction of a tort 430 

c. Incapacity — infants' — liability for nec- 

essaries and torts 430 

d. Incapacity — coverature 430 

e. Incapacity of bankrupts 431 

f. Incapacity of persons under guradian- 

ship 431 

g. Incapacity of persons who execute 

commercial contracts while intoxi- 
cated 431 

CHAPTER XIX. 

Bona Fide Holder — Who Is? 434 

Section 59. A Holder of Negotiable Paper, Who Takes 

it Before Maturity, for a Valuable 
Consideration, in the Usual Course 
of Trade, and Without Knowledge 
of Facts Which Impeach Its Va- 
lidity Between Antecedent Parties, 
Holds it by a Good Title, and May 
Maintain an Action Upon the Same 434 



XXVI TABLE OF CONTENTS. 

Section 59. — Continued. 

a. Purchaser for value without notice de- 

fined 441 

1. Before maturity 441 

2. For a valuable consideration 441 

3. In the due course of business 441 

4. Without notice of its dishonor or of 

facts which impeach its validity. . . 441 

b. Purchaser before maturity 441 

1. Exception 442 

c. Bill or note payable on demand or at 

sight — when overdue 442 

d. Bill or note payable in installments, 

either of principle or interest — 
when over due 443 

e. Bill or note, not matured until expira- 

tion of the day when it is legally 
due 443 

f. Purchaser for a valuable consideration 444 

g. Valuable consideration defined 444 

1. The surrendering of negotiable se- 

curities 444 

2. Giving one's signature to a negotia- 

ble paper 444 

3. Releasing an existing debt (upon 
this question there is much con- 
flict of authority) 444 

4. An agreement to forbear 444 

5. Holding as collateral security 444 

h. Purchaser in the due course of busi- 
ness defined 444 

i. Purchaser "without notice" — kinds of 
notice — actual and constructive — 
defined 445 

j. Notice to agent — effect of 446 

k. Notice of equities — when the rule does 

not apply 446 

1. Transfer of bill or note, payable "To 

order 1 ' without indorsement 446 



TABLE OF CONTENTS. XXVII 

CHAPTER XX. 

Checks and Bills of Exchange Distinguished 448 

Section 60. A Check is a Written Order or Request, 

Addressed to a Bank or to Persons 
Carrying on the Business of Bank- 
ing* by a Party Having Money in 
Their Hands, Requesting Them to 
Pay on Presentment to Another 
Person, or to Bearer, or Order, a 
Certain Sum of Money Specified in 
the Instrument 448 

a. Bills of exchange and checks distin- 

guished 449 

b. Check — defined 450 

c. Check — form of 450 

d. Check — presentment and demand. . . . 450 

e. Effect of a delay in presentment 450 

f. Memorandum checks — defined 451 

g. Checks — certification of — effect upon 

drawer's liability 452 

h. Check — payment upon unauthorized 

indorsement 453 

i. Check — liability of banker for failure 

to honor 453 

j. Coupon bonds — defined 453 

k. Coupon — defined 454 

CHAPTER XXI. 

Quasi-Negotiable Contracts 456 

Section 61. Quasi-Xegotiable Contracts Enumerated 

and Defined 456 

a. United States Treasury notes — defined 457 

b. Bank notes — defined 457 

c. Gold and silver certificates 459 

d. Bills of lading — defined 459 

e. Warehouse receipt — defined 460 

f. Receiver's certificate— defined 461 

g. Certificates of stock — defined 461 

h. Due bill — defined 462^ 



XX Vlll TABLE OP CONTENTS. 



CHAPTER XXII. 

Conflict of Laws 463 

Section 62. Where a Negotiable Contract is Executed 

and Delivered at One Place to be 
Performed at Another and the Rate 
of Interest is Different at the Two 
Places, the Parties May Stipulate 
with Reference to the Laws of 
Which Place Shall Govern 463 

CHAPTER XXIII. 

Sureties or the Contract of Suretyship 471 

Section 63. The Contract of Suretyship or of Surety Cor- 
responds in Many Respects with 
that of Guaranty, but Many Im- 
portant Differences Exist, Which 
Should Be Carefully Noted 471 

a. Surety defined 471 

b. Form of the contract 471 

c. Consideration of 471 

d. Negotiability of 472 

e. Grace 472 

f. Presentment, demand, notice of dis- 

honor — necessity for 472 

g. Liability of sureties: 

1. He is liable for the amount of the 
contract 472 

2. He is liable with the principal and at 

the same time 472 

3. He is liable alone and independently 

of the principal 472 

4. He may be sued before the principal 472 

5. He is liable without presentment 
and demand, unless those steps are 
required by the terms of the con- 
tract 472 

h. Surety's liability — how discharged... 472 

i. Rights of surety 474 

1. He may commence proceedings in 
chancery to compel creditors to sue 
the principal obligor 474 



TABLE OF CONTENTS. XXIX 

Section 63. — Continued. 

i. Rights of surity. 

2. He may go into chancery and com- 

pel the. creditor to sue by indem- 
nifying him 474 

3. He may pay the debt himself and 

bring an action against the princi- 
pal obligee 474 

4. If there are co-sureties after he has 
paid the debt he may sue them for 
contribution 474 

5. If he compromises with the creditor, 

he may recover that amount only of 
the debtor 474 

6. If he pays the debt in a depreciated 
currency, he m^y recover its actual 
value only 474 

CHAPTER XXIV. 

Guarantor, or Contract of Guaranty 475 

Section 64. The Contract of Guaranty Differs in Some 

Important Respects from the Con- 
tract of Surety, and it is not easy 
to Define it in Any Brief and Com- 
prehensive Formula 475 

a. The contract of guaranty 475 

b. Form required 475 

c. Consideration for 475 

d. Negotiability of 476 

e. Grace 476 

f . Kinds of guarantees 476 

g. Presentment, demand, notice of dis- 

honr — necessity for 476 

h. Liability of a guarantor 477 

i. Liability of guarantor — how dis- 
charged 477 

j. Rights of guarantor 477 

CHAPTER XXV. 

General Provisions 481 

Section 65. Short Title 481 

Section 66. Definition ?nc] Meaning of Terms 481 

Section 67. Person Prim?rily Liable on Instrument. . . . 482 



XXX TABLE OF CONTENTS. 

Section 68. Reasonable Time, What Constitutes 482 

Section 69. Time, How Computed: When Last Day 

Falls on a Holiday 482 

Section 70. Application of .Chapter 482 

Section 71. Law Merchant; When Governs 483 

CHAPTER XXVI. 

Form and Interpretation 484 

Section 72. Form of Negotiable Instrument 484 

1. It must be in writing and signed by 

the maker or drawer 484 

2. Must contain an unconditional prom- 

ise or order to pay a sum certain 

in money 484 

3. Must be payable on demand, or at a 

fixed or determinable future time. 484 

4. Must be payable to order or to bearer 484 

5. Where the instrument is addressed to 

a drawee, he must be named or 
otherwise indicated therein with 

reasonable certainty 484 

Section 73. Certainty as to Sum ; What Constitutes . . . 484 

Section 74. When Promise is Unconditional 485 

Section 75. Determinable Future Time; What Consti- 
tutes 485 

Section 76. Additional Provisions Not Affecting Nego- 
tiability 486 

Section TJ t Omissions, Seal, Particular Money 486 

Section 78. When Payable on Demand 487 

Section 79. When Payable to Order 487 

Section 80. When Payable to Bearer 487 

Section 81. Terms, When Sufficient 488 

Section 82. Date, Presumption as to 488 

Section 83. Ante-Dated and Post-Dated 488 

Section 84. When Date May be Inserted 489 

Section 85. Blanks, When May be Filled 489 

Section 86. Incomplete instrument Not Delivered 490 

Section 87. Delivery; When Effected; When Presumed 490 
Section 88. Construction Where Instrument is Ambig- 
uous 490 

Section 89. Liability of Persons Signing in Trade or 

Assumed Name 491 

Section 90. Signature by Agent; Authority How Shown 491 



TABLE OF CONTENTS. XXxi 

Sefction 91. Liability of Person Signing as Agent, etc.. . 492 

Section 92. Signature by Procuration ; Effect of 

Section 93. Effect of Indorsement by Infant or Corpora- 
tion 492 

Section 94. Forged Signatures; Effect of 493 

CHAPTER XXVII. 

Section 95. Prespmption of Consideration 494 

Section 96. Consideration, What Constitutes 494 

Section 97. What Constitutes Holder for Value 494 

Section 98. When Lien on Instruments Constitutes 

Holder for Value 495 

Section 99. Effect of Want of Consideration 495 

Section 100. Liability of Accommodation Indorser. . . . 495 

CHAPTER XXVIII. 

Negotiation 496 

Section 101. What Constitutes Negotiation 496 

Section 102. Indorsement ; How Made 496 

Section 103. Indorsement Must be of Entire Instrument 496 

Section 104. Kinds of Indorsement 497 

Section 105. Special Indorsement; Indorsement in 

Blank 497 

Section 106. Blank Indorsement ; How Changed to Spe- 
cial Indorsement 497 

Section 107. When Indorsement Restrictive 497 

Section 108. Effect of Restrictive Indorsement; Rights 

of Indorsee 498 

Section 109. Qualified Indorsement 498 

Section no. Conditional Indorsement 498 

Section in. Indorsement of Instrument Payable to 

Bearer 499 

Section 112. Indorsement Where Payable to Two or 

More Persons 499 

Section 113. Effect of Instrument Drawn or Indorsed 

to a Person as Cashier 499 

Section 114. Indorsement Where Name is Misspelled, 

et cetera 499 

Section 115. Indorsement in Representative Capacity.. 500 

Section 116. Time of Indorsement; Presumption 500 

Section 117. Place of Indorsement; Presumption 500 

Section 118. Continuation of Negotiable Character.... 500 
Section 119. Striking Out Indorsement 500 



XXXii TABLE OF CONTENTS. 

Section 120. Transfer Without Indorsement; Effect of. . 501 
Section 121. When Prior Party May Negotiate Instru- 
ment 501 

CHAPTER XXIX. 

Rights of Holders 502 

Section 122. Right of Holder to Sue ; Payihent 502 

Section 123. What Constitutes a Holder in Due Course. 502 
Section 124. When Person Not Deemed Holder in Due 

Course 502 

Section 125. Notice Before Full Amount Paid 503 

Section 126. When Title Defective 503 

Section 127. What Constitutes Notice of Defect 503 

Section 128. Rights of Holder in Due Course 503 

Section 129. When Subject to Original Defenses 504 

Section 130. Who Deemed Holder in Due Course 504 

CHAPTER XXX. 

Liabilities of Parties . ; 505 

Section 131. Liability of Maker 505 

Section 132. Liability of Drawer 505 

Section 133. Liability of Acceptor 505 

Section 134. When Person Deemed Indorser 506 

Section 135. Liability of Irregular Indorser 506 

Section 136. Warranty Where Negotiation by Delivery, 

et cetera 506 

Section 137. Liability of General Indorser 507 

Section 138. Liability of Indorser Where Paper Nego- 
tiable by Delivery .. . 507 

Section 139. Order in Which Indorsers Are Liable.... 507 

Section 140. Liability of Agent or Broker 50S 

CHAPTER XXXI. 

Presentment for Payment 509 

Section 141. Effect of Want of Demand on Principal 

Debtor 509 

Section 142. Presentment Where Instrument is Not 

Payable on Demand 509 

Section 143. What Constitutes a Sufficient Presentment 509 

Section 144. Place of Presentment 510 

Section 145. Instrument Must be Exhibited 510 

Section 146. Presentment Where Instrument Payable 

at Bank 510 



Section 147. 

Section 148. 
Section 149. 
Section 150. 

Section 151. 

Section 152. 

Section 153. 

Section 154. 

Section 155. 

Section 156. 

Section 157. 

Section 158. 

Section 159. 



TABLE OF CONTENTS. XXXlii 

Presentment Where Principal Debtor is 

Dead 511 

Presentment to Persons Liable as Partners 511 

Presentment to Joint Debtors 511 

When Presentment Not Required to 

Charge Drawer 511 

Where Presentment Not Required to 

Charge Indorser 512 

Where Delay in Making Presentment is 

Excused 512 

When Presentment May Be Dispensed 

With 512 

When Instrument Dishonored by Non-pay- 
ment 512 

Liability of Person Secondarily Liable, 

When Instrument Dishonored ... 513 

Time of Maturity , 513 

Time ; How Computed 513 

Rule Where Instrument Payable at Bank. . 513 

What Constitutes Payment in Due Course. 514 



Notice of 
Section 

Section 
Section 
Section 
Section 

Section 
Section 
Section 
Section 
Section 
Section 
Section 
Section 
Section 
Section 
Section 
Section 



CHAPTER XXXII. 

Dishonor 515 

160. To Whom Notice of Dishonor Must be 

Given 515 

161. By Whom Given 515 

162. Notice Given by Agent 515 

163. Effect of Notice Given on Behalf of Holder 515 

164. Effect Where Notice is Given by Party En- 

titled Thereto 516 

165. When Agent May Give Notice 516 

i£6. When Notice Sufficient 516 

167. Form of Notice 516 

168. To Whom Notice May be Given 517 

169. Notice Where Party is Dead 517 

170. Notice to Partners 517 

171. Notice to Persons Jointly Liable 517 

172. Notice to Bankrupt 518 

173. Time Within Which Notice Must be Given 518 

174. Where Parties Reside in Same Place 518 

175. Where Parties Reside in Different Places. 518 

176. When Sender Deemed to Have Given Due 

Notice 5 X 9 



XXXIV TABLE OF CONTENTS. 

Section 177. Deposit in Postoffice; What Constitutes. . . 519 

Section 178. Notice to Subsequent Party; Time of 519 

Section 179. Where Notice Must be Sent 519 

Section 180. Waiver of Notice 520 

Section 181. Whom Affected by Waiver 520 

Section 182. Waiver of Protest 520 

Section 183. When Notice is Dispensed With 521 

Section 184. Delay in Giving Notice ; How Excused 521 

Section 185. When Notice Need Not be Given to 

Drawer 521 

Section 186. When Notice Need Not be Given to In- 

dorser 521 

Section 187. Notice of Non-payment Where Acceptance 

Refused 522 

Section 188. Effect of Omission to Give Notice of Non- 
acceptance 522 

Section 189. When Protest Need Not be Made; When 

Must be Made 5 22 

CHAPTER XXXIII. 

Discharge of Negotiable Instruments 523 

Section 190. Instrument ; How Discharged 523 

Section 191. When Persons Secondarily Liable on, Dis- 
charged 523 

Section 192. Right of Party Who Discharges Instru- 
ment 524 

Section 193. Renunciation by Holder 524 

Section 194. Cancellation ; Unintentional ; Burden of 

Proof 524 

Section 195. Alteration of Instrument ; Effect of 525 

Section 196. What Constitutes a Material Alteration.. 525 

CHAPTER XXXIV. 

Bills of Exchange ; Form and Interpretation 526 

Section 197. Bills of Exchange Defined 526 

Section 198. Bill Not an Assignment of Funds in Hands 

of Drawee 526 

Section 199. Bill Addressed to More Than One Drawee 526 
Section 200. Inland and Foreign Bills of Exchange. . . . 526 
Section 201. When Bill May be Treated as Promissory 

Note 527 

Section 202. Drawee in Case of Need 527 



TABLE OF CONTENTS. 



XXXV 



Acceptance of 
Section 203. 
Section 204. 

Section 205. 
Section 206. 

Section 207. 
Section 208. 

Section 209. 
Section 210. 
Section 211. 
Section 212. 
Section 213; 



Presentment of 
Section 214. 

Section 215. 



Section 
Section 
Section 
Section 
Section 
Section 
Section 



216. 
217. 
218. 
219. 
220. 
221. 
222. 



CHAPTER XXXV. 

Bills of Exchange 528 

Acceptance; How Made, et cetera 528 

Holder Entitled to Acceptance on Face of 

Bill 528 

Acceptance by Separate Instrument 528 

Promise to Accept, When Equivalent to 

Acceptance 528 

Time Allowed Drawee to Accept 529 

Liability of Drawee Retaining or Destroy- 
ing Bill ^ . . 529 

Acceptance of Incomplete Bill 529 

Kinds of Acceptances 530 

What Constitutes a General Acceptance. . 530 

Qualified Acceptance 530 

Rights of Parties as to Qualified Accept- 
ance 530 

CHAPTER XXXVI. 

Bills of Exchange for Acceptance 532 

When Presentment for Acceptance Must 

be Made 532 

When Failure to Present Releases Drawer 

and Indorser 532 

Presentment ; How Made 532 

On What Days Presentment May be Made 533 
Presentment Where Time is Insufficient.. 533 

Where Presentment is Excused 533 

When Dishonored by Non- Acceptance. . . 534 
Duty of Holder Where Bill Not Accepted. 534 
Rights of Holder Where Bill Not Accepted 534 



CHAPTER XXXVII. 

Protest of Bills of Exchange 535 

Section 223. In What Cases Protest Necessary 535 

Section 224. Protest; How Made 535 

Section 225. Protest ; by Whom Made 535 

Section 226. Protest ; When to be Made 536 

Section 227. Protest ; Where Made 536 

Section 228. Protest Both for Non- Acceptance and Non- 
payment 536 



xxxvi 



Section 229. 

Section 230. 
Section 231. 



Acceptance of 
Section 232. 
Section 233. 
Section 234. 

Section 235. 
Section 236. 
Section 237. 

Section 238. 

Section 239. 

Section 240. 

Section 241. 



TABLE OF CONTENTS. 

Protest Before Maturity Where Acceptor 

Insolvent 536 

When Protest Dispensed With 537 

Protest Where Bill is Lost, etc 537 

CHAPTER XXXVIII. 

Bills of Exchange for Honor 538 

When Bills May Be Accepted for Honor. . 538 

Acceptance for Honor ; How Made 538 

When Deemed to Be an Acceptance for 

Honor of the Drawer 538 

Liability of Acceptor for Honor 539 

Agreement of Acceptor for Honor 539 

Maturity of Bill Payable After Sight; Ac- 
cepted for Honor 539 

Protest of Bill Accepted for Honor, et 

cetera 539 

Presentment for Payment to Acceptor for 

I Honor; How Made 540 

When Delay in Making Presentment is Ex- 
cused 54° 

Dishonor of Bill by Acceptor for Honor. . . 540 



CHAPTER XXXIX. 

Payment of Bills of Exchange for Honor 541 

Section 242. Who May Make Payment for Honor 541 

Section 243. Payment for Honor; How Made 541 

Section 244. Declaration Before Payment for Honor. . . 541 
Section 245. Preference of Parties Offering to Pay for 

Honor 541 

Section 246. Effect on Subsequent Parties Where Bill Is 

Paid for Honor 542 

Section 247. Where Holder Refuses to Receive Payment 

Supra Protest 542 

Section 248. Rights of Payer for Honor 542 

CHAPTER XL. 

Bills in a Set ' 543 

Section 249. Bills in Sets Constitute One Bill 543 

Section 250. Rights of Holders Where Different Parts 

Are Negotiated 543 



txfctfc or cofcTENta. Kxxvii 

Section 251. Liability of Holder Who Indorses Two or 

More Parts of a Set to Different 

Persons 543 

Section 252. Acceptance of Bills Drawn in Sets 544 

Section 253. Payment by Acceptor of Bills Drawn in 

I Sets 544 

Section 254. Effect of Discharging One of a Set 544 

CHAPTER XLI. 

Promissory Notes and Checks 545 

Section 255. Promissory Notes Defined 545 

Section 256. Check Defined 545 

Section 257. Within What Time a Check Must Be Pre- 

> sented 545 

Section 258. Certification of Check ; Effect of 546 

Section 259. Effect Where the Holder of Check Procures 

1 it to be Certified 546 

Section 260. When Check Operates as an Assignment. . 546 

CHAPTER XLIL 

Notes Given for Patent Rights and for a Speculative Consid- 

i eration 547 

Section 261. Negotiable Instrument Given for Patent 

Rights 547 

Section 262. Negotiable Instrument for a Speculative 

Consideration 547 

Section 263. How Negotiable Bonds Are Made Non- 
Negotiable 548 

CHAPTER XLIII. 

Laws Repealed ; When to Take Effect 549 

Section 264. Law Repealed 549 

Section 265. When to Take Effect 549 

CHAPTER XLIV. 

Preliminary 550 

Section 266. Short Title 550 

Section 267. Interpretation of Terms 550 



kxxviii 



TABLE OF CONTENTS, 



CHAPTER XLV. 

Bills of Exchange — Form and Interpretation 552 

Section 268. Bill of Exchange Defined 552 

Section 269. Inland and Foreign Bills 552 

Section 270. Effect Where Different Parties to Bill are 

the Same Person 553 

Section 271. Address to Drawee 553 

Section 272. Certainty Required as to Payee 553 

Section 273. What Bills are Negotiable 554 

Section 274. Sums Payable 554 

Section 275. Bill Payable on Demand 555 

Section 276. Bill Payable at a Future Time 555 

Section 277. Omission of Date in Bill Payable After 

Date 556 

Section 278. Ante-Dating and Post-Dating 556 

Section 279. Computation of Time of Payment 556 

Section 280. Case of Need 557 

Section 281. Optional Stipulations by Drawer or In- 

dorser 558 

Section 282. Definition and Requisites of Acceptance.. 558 

Section 283. Time for Acceptance 558 

Section 284. General and Qualified Acceptances 559 

Section 285. Inchoate Instruments 559 

Section 286. Delivery 560 

CHAPTER XLVI. 

Capacity and Authority of Parties 561 

Section 287. Capacity of Parties 561 

Section 288. Signature Essential to Liability 561 

Section 289. Forged or Unauthorized Signature 561 

Section 290. Procuration Signatures 562 

Section 291. Persons Signing as Agent or in Represen- 
tative Capacity 562 

CHAPTER XLVIL 

The Consideration for a Bill 563 

Section 292. Value and Holder for Value 563 

Section 293. Accommodation Bill or Party 563 

Section 294. Holder in Due Course 564 

Section 295. Presumption of Value and Good Faith. . . . 564 



TABLE OF CONTENTS. 



XXXIX 



CHAPTER XLVIII. 

Negotiation of Bills 565 

Section 296. Negotiation of Bill 565 

Section 297. Requisites of a Valid Indorsement 565 

Section 298. Conditional Indorsement 566 

Section 299. Indorsement in Blank and Special Indorse- 
ment 566 

Section 300. Restrictive Indorsement 567 

Section 301. Negotiation of Overdue or Dishonored 

Bill 567 

Section 302. Negotiation, of Bill to Party Already Lia- 
ble Thereon 568 

Section 303. Rights of the Holder 568 

CHAPTER XLIX. 

General Duties of the Holder 569 

Section 304. When Presentment for Acceptance is Nec- 
essary 569 

Section 305. Time for Presenting Bill Payable After 

Sight 569 

Section 306. Rules as to Presentment for Acceptance 

and Excuses for Non-Presentment 570 

Section 307. Non-Acceptance 571 

Section 308. Dishonor by Non-Acceptance and Its Con- 
sequences 571 

Section 309. Duties as to Qualified Acceptances 571 

Section 310. Rules as to Presentment for Payment. . . . 572 
Section 311. Excuses for Delay or Non-Presentment for 

Payment 573 

Section 312. Dishonor by Non-Payment 574 

Section 313. Notice of Dishonor and Effect of Non- 
Notice 574 

Section 314. Rules as to Notice of Dishonor 575 

Section 315. Excuses for Non-Notice and Delay 597 

Section 316. Noting or Protest of Bill 578 

Section 317. Duties of Holder as Regards Drawee or 

Acceptor 579 

CHAPTER L. 

Liabilities of Parties 581 

Section 318. Funds in hands of Drawee 381 

Section 319. Liability of Acceptor 581 

Section 320. Liability of Drawer or Indorser 582 



XL TABLE OF CONTENTS. 

Section 321. Stranger Signing Bill Liable as Indorser. . 582 
Section 322. Measure of Damages Against Parties to 

Dishonored Bill 583 

Section 323. Transferrer by Delivery and Transferree. . 583 

CHAPTER LI. 

Discharge of Bill 585 

Section 324. Payment in Due Course 585 

Section 325. Banker Paying Demand Draft Whereon 

Indorsement is Forged 585 

Section 326. Acceptor the Holder at Maturity 586 

Section 327. Express Waiver 586 

Section 328. Cancellation 586 

Section 329. Alteration of Bill 587 

CHAPTER LII. 

Acceptance and Payment for Honor 588 

Section 330. Acceptance for Honor Supra Protest 588 

Section 330. Liability of Acceptor for Honor 588 

Section 332. Presentment to Acceptor for Honor 589 

Section 333. Payment for Honor Supra Protest 589 

CHAPTER LIII. 

Lost Instruments 591 

Section 334. Holder's Right to Duplicate of Lost Bill . . . 591 

Section 335. Action on Lost Bill 591 

CHAPTER LIV. 

Bill in a Set 592 

Section 336. Rules as to Sets.' 592 

CHAPTER LV. 

Conflict of Laws 593 

Section 337. Rules Where Laws Conflict 593 

CHAPTER LVI. 

Cheques on a Banker 595 

Section 338. Cheque Defined 595 

Section 339. Presentment of Cheque for Payment 595 

Section 340. Revocation of Banker's Authority 596 



TABLE OF CONTENTS. 



XL1 



CHAPTER LVII. 

Crossed Cheques 597 

Section 341. General and Special Crossings Defined. . . . 597 

Crossing by Drawer or After Issue 597 

Crossing a Material Part of Cheque 598 

Duties of Banker as to Crossed Cheques. . 598 
Protection to Banker Where Cheque is 

Crossed 599 

Effect of Crossing on Holder 599 

Protection to Collecting Banker 599 



Section 342. 
Section 343. 
Section 344. 
Section 345. 

Section 346. 
Section 347. 



CHAPTER LVIII. 
Promissory Notes - 600 



Section 348 
Section 349 
Section 350 
Section 351 
Section 352 
Section 353 
Section 354 



Promissory Note Defined 600 

Delivery Necessary 600 

Joint and Several Notes 600 

Note Payable on Demand 601 

Presentment of Note for Payment 601 

Liability of Maker 602 

Application of Part II. to Notes 602 



Supplementary 
Section 355 
Section 356 
Section 357 
Section 358 
Section 359 
Section 360 
Section 361 
Section 362 
Section 363 
Section 364 
Section 365 



CHAPTER LIX. 



603 

Good Faith 603 

Signature . .* 603 

Computation of Time 603 

When Noting Equivalent to Protest 604 

Protest When Notary Not Accessible .... 604 

Dividend Warrants May be Crossed 604 

Repeal 605 

Savings 605 

Saving of Summary Diligence in Scotland . 606 

Construction With Other Acts, Etc 606 

Parol Evidence in Judicial Proceedings in 

Scotland 606 



ELEMENTS 

OF 

NEGOTIABLE CONTRACTS 



CHAPTER I. 
History, Nature and Purposes of Negotiable Contracts. 



SECTION 1. 
BIOGRAPHY AND ORIGINAL OF BILLS AND NOTES. 

GOODWIN v. ROBARTS. 1 
In the Exchequer Chamber, July 7, 1875. 

[Reported in Law Reports 10 Court of Ex. 76, Jan. 28, 1875; 
also Law Reports 10 Court of Ex. Chamber, jj?, July 7, 1875, 
also in the House of Lords 1 App. Cas. 476, May 12, ij, 18, ip; 
June J, 1876.'] 

Cockburn, Chief Justice, said: "Bills of exchange are 
known to be of comparative modern origin, having been first 
brought into use, so far as it is at present known, by the Flor- 
entines in the twelfth, and by the Venetians about the thirteenth 
century'. The use of them gradually found its way into 

'This case is cited in Wood's Byles on Bills and Notes, 133, 
173, 182, 272; Benjamin's Chalmers, Bills, Notes, and Checks, 14, 
66, 67, 122; Ames on Bills and Notes, 783; Tiedeman on Com- 
mercial Paper, 473; Norton on Bills and Notes, 2, 14, 16; John- 
son's Cases on Bills and Notes, 3. 

1 Chancellor Kent, in his learned commentaries, in speaking of 
the history of bills of exchange says: "In 1394, the City of Bar- 
celona, by ordinance, regulated the acceptance of bills of exchange; 
and the use of them is said to have been introduced into Western 
Europe by the Lombard merchants, in the thirteenth century. Bills 
of exchange are mentioned in a passage of the Jurist Baldus of the 



2 2 GOODWIN V. ROBARTS. [CHAP. I, 

France, and, still later, and but slowly, into England. We 
find it stated in a law tract by Mr. Macleod, entitled • Specimen 
of a Digest of the Law of Bills of Exchange,' printed, we be- 
lieve, as a report to the government, but which, from its 
research and ability, deserves to be produced in a form calcu- 
lated to insure a wider circulation, that Richard Malynes, a 
London merchant, who published a work called the • * Les 
Mercatoria," in 1622, and who gives a full account of these 
bills as used by the merchants of Amsterdam, Hamburg, and 
other places, expressly states that such bills were not used in 
England. There is reason to think, however, that this is a 
mistake. Mr. Macleod shows that promissory aotes, payable 
to bearer, or to a man and his assigns, were known in the time 
of Edward IV. Indeed, as early as the statute of 3 Rich. II., 

date of 1328. (Hallam's introduction to the Literature of Europe, 
Vol. 1, p. 68.) M. Boucher received from M. Legon Deflaix, a 
native of India, a memoir, showing that bills of exchange were 
known in India from the most high antiquity. But the ordinance 
of Barcelona is, perhaps, the earliest authentic document in the 
middle ages, of the establishment and general currency of bills of 
exchange. (Consul tat de la Mer, par Boucher, torn, i, pp. 614, 
620.) The first bank of exchange and deposit in Europe was 
established at Barcelona in 1401, and it was made to accommodate 
foreigners as well as citizens. I. Prescott's Ferdinand and Isabella, 
Int. p. 112, M. Merlin says, that the edict of Louis XI. of 1462, 
is the earliest French edict on the subject; and he attributes the 
invention of bills of exchange to the Jews, when they retired from 
France to Lombardy. The Italians, and merchants of Amsterdam, 
first established the use of them in France. ( Repertoire de juris- 
prudence, tit. Lettre et billet de Change, sec. 2.) In England, 
reference was made, in the statute of 5 Rich. II., ch. 2, to the 
drawing of foreign bills. This was in the year 1381." (See Hal- 
lam's Middle Ages, Vol. 4, Pt. 2, ch. 9* p. 255, and note, Am. 
edit, 1821. See also Cobbet on Pawns, pp. 3, 12.) See also 
Hallam, Introduct. to Literature of Europe, Vol. 1, ch. 1, § 55, 
note (a), p. 40 of Paris edition, where he states on the authority 
of Beekman, that the earliest recorded bills of exchange are in a 
passage of the Jurist Baldus, and bear the date of 1328. Baldus 
(as cited in a Dissertation of Mr. Bergson, in the Revue Etrangere 
et Franc, by Foelix, 1843, pp. 203, 204, 206,) gives the forms of 
bills of exchange drawn in A. D. 1381 and 1385. (Baldus, Consil. 
edit. Brixcensis, Pars. 1, Consil. 53; Id. Pars. 3, Consil. 298. 
See also the forms in Scaccia de Camblo, § 1, Quest. 5, pp. 110 to 
127; Id., pp. 508 to 514; post, § 26, n. 3.) 



SEC. I.] GOODWIN V. ROBARTS. 23 

ch. 3, bills of exchange are referred to as a means of convey- 
ing money out of the realm, though not as a process in use. 
among English merchants. But the fact that a London mer- 
chant, writing expressly on the law merchant, was unaware of 
the use of the bills of exchange in this country, shows that 
that use at the time he wrote must have been limited. Accord- 
ing to Professor Story, who herein is, no doubt, perfectly right, 
' * the introduction and use of bills of exchange, " as indeed it 
was everywhere else, *' seems to have been founded on the 
mere practice of merchants, and gradually to have acquired 
the force of a custom." With the development of English 
commerce the use of these most convenient instruments of 
commercial traffic would, of course, increase; yet, according 
to Mr. Chitty, the earliest case on the subject to be found in 
the English books is that of Martin v. Boure, (I603) 1 in the 
first James I. Up to this time the practice of making these 
bills negotiable by indorsement had been unknown, and the 
earlier bills are found to be made payable to a man and his as- 
signs, though in some instances to bearer. 

Negotiability — When First Allowed But about this 

period — that is to say, at the close of the sixteenth or the com- 
mencement of the seventeenth century — the practice of 
making bills payable to order, and transferring them by indorse- 
ment, took its rise. Hartmann, in a very learned work on bills 
of exchange, recently published in Germany, states that the 
first known mention of the indorsement of these instruments 
occurs in the Neapolitan Pragmatica of 1607. Slavery, cited 
by Mons. Nouguier, in his work, "De Lettres des Change," 
had assigned to it a later date, namely, 1620. From its 
obvious convenience this practice speedily came into general 
use, and, as part of the general custom of merchants, received 
the sanction of our courts. At first the use of bills of exchange 
seemed to have been confined to foreign bills between English 
and foreign merchants. It was afterwards extended to domes- 
tic bills between traders, and finally to bills of all persons, 
whether traders or not. 8 



! Cro. Jac, 6 (1603). 

2 Chitty Bills (8th ed.) 13. 



24 GOODWIN V. ROBARTS. [CHAP. I, 

Promissory Notes — When First Used. — In the mean- 
time, promissory notes had also come into use, differing herein 
from bills of exchange: That they were not drawn upon a third 
party, but contained a simple promise to pay by the maker, 
resting, therefore upon the security of the maker alone. They 
were at first made payable to bearer, but when the practice of 
making bills of exchange payable to order, and making them 
transferable by indorsement, had once become established, the 
practice of making promissory notes payable to order, and of 
transferring them by indorsement, as had been done with bills 
of exchange, speedily prevailed. And for some time the courts 
of law acted upon the usage with reference to promissory 
notes, as well as with reference to bills of exchange. 

In 1680, in the case of Shelderi v. Hentley, 1 an action 
was brought on a note under seal by which the defendant 
promised to pay to bearer ;£ioo, and it was objected that the 
note was void because not payable to a specific person. But 
it was said by the court: "Traditio facit chartam loqui, and 
by the delivery he (the maker) expounds the person before 
meant; as when a merchant promises to pay to the bearer of 
the note, any one that brings the note shall be paid." Jones, 
J., said that 44 it was the custom of merchants that made that 
good." 

In Bromwich v. Loyd,* the plaintiff declared upon the 
custom of merchants in London on a note for money payable 
on demand, and recovered; and Treby, C. J., said that 
bills of exchange were originally between foreigners and mer- 
chants trading with the English. Afterwards ', when such 
bills came to be more frequent, then they were allowed between 
merchants trading in England, and afterwards between any 
traders whatsoever, and now between any persons, whether 
trading or not; and therefore the plaintiff need not allege 
any custom, for now those bills were of that general use that 
upon an indebitatus assumpsit they may be given in evidence 
upon the trial " To which Powell, J., added: 4< On indebita- 
tus assumpsit for money received to the use of the plaintiff 

1 2 Show., 160. 

2 2 Lutw., 1582. 



SEC. I.] GOODWIN V. ROBARTS. 25 

the bill may be left to the jury to determine whether it was 
given for value received." In Williams v. Williams, 1 where 
the plaintiff brought his action as indorsee against the payee 
and indorser of a promissory note, declaring on the custom of 
merchants, it was objected on error that, the note having been 
made in London, the custom, if any, should have been laid 
as the custom of London. It was answered * • that this cus- 
tom of merchants was part of the common law, and the court 
would take notice of it ex-officio; and therefore it was need- 
less to set forth the custom specially in the declaration, but it 
was sufficient to say that such a person * secundum usum et 
consuetudinem mercatorum,' drew the bill." And the plaintiff 
had judgment. 

Holt's Objection to the Negotiability of Promissory 
Notes. — Thus far the practice of merchants, traders and oth- 
ers of treating promissory notes, whether payable to bearer or 
order, on the same footing as bills of exchange, had received 
the sanction of the courts, but, Holt having become chief jus- 
tice, a somewhat unseemly conflict arose between him and the 
merchants as to the negotiability of promissory notes, whether 
payable to order or to bearer; the chief justice taking what must 
now be admitted to have been a narrow-minded view of the 
matter, setting his face strongly against the negotiability of 
these instruments, 5 contrary, as we are told by authority, to 
the opinion of Westminster Hall, and in a series of suc- 
cessive cases persisting in holding them not negotiable by in- 
dorsement or delivery. 

1 Carth., 269. 

a Lord Holt, C. J., refused to allow the privilege of negotia- 
bility to promissory notes. He said in the case of Buller v. Crips 
(6 Mod. Rep, 29), " I remember when actions upon inland bills of 
exchange did first begin; and they were laid a particular custom 
between London and Bristol and it was an action against the 
acceptor. The defendant's counsel would put them to prove the 
custom, at which Hale, C. J., who tried it, laughed and said ' they 
had a hopeful case of it' And in my Lord North's time it was said 
that the custom in that case was part of the common law of Eng- 
land, and these actions since became frequent, as the trade of the 
nation did increase, and all the difference between foreign bills 
and inland bills is that foreign hills must be protested before a notary 



26 GOODWIN V. ROBARTS. [CHAP. 1, 

The Statute of 3 and 4 Anne, c. g — Its Purpose. — 
The inconvenience to trade arising therefrom led to the pass- 
ing of the statute of 3 and 4 Anne, c. 9, 1 whereby promis- 
sory notes were made capable of being assigned by indorsement, 
or made payable to bearer, and such assignment was thus ren- 
dered valid beyond dispute or difficulty. It is obvious from 
the preamble of the statute, which merely recites that 4 *it had 



public before the drawer can be charged, but inland bills need 
not be protested. " Lord Holt said of promissory notes that they 
were a * ' new sort of specialty \ unknown to the common law and in- 
vented in Lombard street." He continued, " to allow such contract 
to carry any lien with it were to turn a piece of paper, which is, in 
law, but evidence of a parole contract, into a specialty." 5 Mod. 
Rep. l 3) l Salk. 24; 2 Salk. 442; Buller v. Crips, 6 Mod. 
Rep. 30. 

x Its most important provisions were as follows: "Whereas, it 
.hath been held that notes in writing, signed by the party who makes 
the same, whereby such party promises to pay unto any other per- 
son, or his order, any sum therein mentioned, are not assignable 
or indorsable over, within the custom of merchants, to any other 
person; and that the 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 shall be assigned, indorsed, 
or made payable, could not, within the said custom of merchants, 
maintain any action upon such note against the person who first 
drew and signed the same: Therefore, to the extent to encourage 
trade and commerce, which will be much advanced if such notes 
shall have the same effect as inland bills of exchange, and shall be 
negotiated in like manner, be it enacted, that all notes in writing 
whereby any person shall promise to pay to any other person, his 
order, or unto bearer, any sum of money mentioned in the note 
shall be taken and construed to be payable to any such person to 
whom the same shall be payable; and also every such note shall be 
assignable or indorsable over in the same manner as inland bills of 
exchange are according to the custom of merchants; and that the 
person to whom such sum of money is payable may maintain an 
action for the same as he might do upon an inland bill of exchange 
made, or drawn, according to the custom of merchants; and that 
any person to whom such note is indorsed, or assigned, or the 
money therein mentioned ordered to be paid by indorsement there- 
on, may maintain his action for such sum of money either against 
the person who signed the note, or against any of the persons that 
indorsed the same, in like manner as in cases of inland bills of ex- 
change. " • 



SEC. I.] GOODWIN V. ROBRATS. 2^ 

been held that such notes were not within the custom of mer- 
chants, " that these decisions were not acceptable to the pro- 
fession or the country. Nor can there be much doubt that by 
the usage prevalent amongst merchants these notes had been 
treated as securities negotiable by the customary method of 
4 assignment, as much as bills of exchange, properly so-called. 
The statute of Anne may, indeed, practically speaking, be 
looked upon as a declaratory statute, confirming the decisions 
prior to the time of Lord Holt. 

We now arrive at an epoch when a new form of security 
for money, namely, goldsmiths' or bankers' notes, came into 
general use. Holding them to be part of the currency of the 
country as cash, Lord Mansfield and the court of king's bench 
had no difficulty in holding in Miller v. Race* that the prop- 
erty in such a note passes, like that in cash, by delivery, and 
that a party taking it bona fide, and for value, is consequently 
entitled to hold it against a former owner from whom it has 
been stolen. 

In like manner it was held, in Collins v. Martin* that 
where bills indorsed in blank had been deposited with a 
banker, to be received when due. and the latter had pledged 
them with another banker as security for a loan, the owner 
could not bring trover to recover them from the holder. Both 
these decisions, of course, proceeded on the ground that the 
property in the bank note payable to bearer passed by deliv- 
ery, that in the bill of exchange by indorsement in blank, pro- 
vided the acquisition had been made bona fide. 

A similar question arose in Wookey v. Pole* in respect of 
an exchequer bill, notoriously a security of modern growth. 
These securities being made in favor of blank or order, con- 
tained this clause, "if the blank is not filled up, the bill will 
be paid to bearer." Such an exchequer bill having been placed, 
without the blank being filled up, in the hands of the plaintiff's 
agent, had been deposited by him with the defendants, on a 
bona fide advance of money. It was held by three judges of 

*i Burrows, 452 (1758). 
a i Bos. & P., 648 (1797). 
'Barn. & Aid., 1 (1818). 



28 GOODWIN V. ROBARTS. [CHAP. I, 

the queen's bench — (Bayley, J., dissentiente) — that an exche- 
quer bill was a negotiable security, and judgment was there- 
fore given for the defendants. The judgment of Holroyd, J., 
goes fully into the subject, pointing out the distinction between 
money and instruments which are the representatives of 
money and other forms of property. ' * The courts, " he says, 
have considered these instruments either promises or orders 
for the payment of money, or instruments entitling the holder 
to a sum of money, as being appendages to money, and fol- 
lowing the nature of their principal." After referring to the 
authorities, he proceeds: "These authorities show that not 
only money itself may pass, and the right to it may arise, by 
currency alone, but, further, that these mercantile instruments, 
which entitle the bearer of them to money, may also pass, and 
the right to them may arise, in like manner, by currency or 
delivery. These decisions proceed upon the nature of the 
property (*". e. , money) to which such instruments gives the 
right, and which is in itself current, and the effect of the in- 
struments, which either give to their holders, merely as such, 
a right to receive the money, or specify them as the persons 
entitled to receive it. 

. Checks — History of. — Another very remarkable instance 
of the efficacy of usage is to be found in much more recent 
times. It is notorious that, with the exception of the Bank of 
England, the system of banking has recently undergone an 
entire change. Instead of the banker issuing his own notes 
in return for the money of the customer deposited with him, 
he gives credit in account to the depositor, and leaves it to the 
latter to draw upon him, to bearer or order, by what is now 
called a " check." Upon this state of things the general 
course of dealing between bankers and their customers has 
attached incidents previously unknown, and these, by the de- 
cisions of the courts, have become fixed law. Thus, while an 
ordinary drawee, although in possession of funds of the drawer, 
is not bound to accept, unless by his own agreement or con- 
sent, the banker, if he has funds, is bound to pay on presen- 
tation of a check on demand. Even admission of funds is 
not sufficient to bind an ordinary drawee, while it is sufficient 
with a banker; and the money deposited with a banker is not 



SEC. I.] GOODWINS. ROBARTS. 29 

only money lent, but the banker is bound to repay it when 
called for by the draft of the customer. See Pott v. Clegg} 
Besides this, a custom has grown up among bankers them- 
selves of marking checks as good for the purposes of clearance 
by which they become bound to one another. Though not 
immediately to the present purpose, bills of lading may also be 
referred to as an instance of how general mercantile usage may 
give effect to a writing which without it would not have had 
that effect at common law. // is from mercantile usage, as 
proved in evidence, and ratified by judicial decision in the 
great case of Lickbarrow v. Mason 1 , that the efficacy of bills 
of lading to pass the property in goods is derived. 

It thus appears that all these instruments, which are said 
to have derived their negotiability from the law merchant, had 
their origin, and that at no very remote period, in mercantile 
usage, 8 and were adopted into the law by our courts as being 

1 16 Mees. & W., 321. 

2 2 Term. R., 63. 

8 It is true that the law merchant is sometimes spoken of as a 
fixed body of law, forming part of the common law, and, as it 
were, coeval with it. But as a matter of legal history, this view is 
.altogether incorrect. The law merchant thus spoken of with ref- 
erence to bills of exchange and other negotiable securities, though 
forming part of the general body of the lex mercatoria, is of com- 
paratively recent origin. It is neither more nor less than the 
usages of merchants and traders in the different departments of 
trade, ratified by the decisions of courts of law, which, upon such 
usages being proved before them, have adopted them as settled 
law, with a view to the interests of trade and the public conve- 
nience, the court proceeding herein on the well-known principle 
of law that, with reference to "transactions in the different depart- 
ments of trade, courts of law, in giving effects to the contracts and 
dealings of the parties, will assume that the latter have dealt with 
one another on the footing of any custom or usage prevailing gen- 
erally in the particular department. By this process, what before 
was usage only, unsanctioned by legal decision, has become en- 
grafted upon, or incorporated into, the common law, and may thus 
be said to form part of it. " When a general usage has been judic- 
ially ascertained and established," says Lord Campbell, in Brandao 
v. Barnett, 12 Clark & F., at p. 805, "it becomes a part of the 
law merchant, which courts of justice are bound to know and 
j-ecognize." 

The true origin and history of bills of exchange and negoti- 



30 GOODWIN V. ROBARTS. [CHAP. I, 

in conformity with the usages of trade; of which, if it were 

able instruments like the origin and history of all our law, based 
upon custom, is enveloped in no small degree of obscurity. The 
exchange of commodity for commodity or what is known as barter 
and trade must have existed among all nations from the earliest 
dawn of the formation of men into communities from their \ery 
necessities. During these early days there could be no exchange 
of goods or trade in commodities except where two persons should 
meet, each having a certain product which was desired by the other. 
There was no necessity for purchases, made for the purpose of sup- 
plying the future demand. And it was not until the merchants 
conceived the idea of having a medium of exchange, some product 
having an intrinsic value, and of great durability, that we had 
properly what is known as a sale of commodities as distinguished 
from barter and trade. 

It is asserted that commercial contracts were known to anti- 
quity and practiced by the Romans. Chancellor Kent seems to 
think that they were also known among the Greeks, and cites a 
passage found in one of the pleadings of Isocrates, showing that 
bills of exchange were sometimes resorted to at Athens as a safe 
expedient to shift funds from one country to another. 

In an interesting forensic argument which Isocrates puts into 
the mouth of a son of Sopaeus, the Governor of Province of Pon- 
tus, in that suit against Passion, an Athenian banker, for the gross- 
est breach of trust, it is said that the son, wishing to receive a large 
sum of money from his father, applied to Stratocles, who was about 
to sail from Athens to Pontus, to leave his money and take a draft 
upon his father for the amount. This, said the orator, was deemed 
a great advantage, to the young man, for it saved him the risk of 
remittances from Pontus, over a sea covered with Lacedaemonian 
pirates; it is added that Stratocles was so cautious as to take secur- 
ity from Passion, for the money advanced upon the bills, and to 
whom he might have recourse if the Governor of Pontus should 
not honor the draft, and the young Pontian should fail. 

After full investigation, we have great reason to doubt whether 
the use of bills of exchange or promissory notes for the purposes 
to which they are now applied was known to antiquity. The near- 
est approach seems to be a custom which prevailed at Rome, where 
one paid money to another, to be paid by the other at another 
place. This contract is frequently referred to in the pandeets, but 
it may be doubted whether these contracts were those of our 
modern bills of exchange. They were simply contracts or man- 
dates for the exchange of money in different places. 

Certainly the peculiar distinguishing quality of our modern 
bills of exchange, their negotiable character, does not appear to 
have been known to the ancients or to have found its way into the 
general transactions of their commercial intercourse. This at 



SEC. I.] GOODWIN V. ROBARTS. 3 1 

needed, a further confirmation might be found in the fact that 



least is the opinion of many of the modern authors who have dis- 
cussed these features of these contracts.* Pothier, a French au- 
thor, says: "There is not a single vestige of our contracts to be 
found in the Roman law." Mr. Bell, an early writer upon this 
subject, says: "That as a branch of practical jurisprudence, or as 
a circulating medium in trade, bills of exchange were unknown to 
the Romans." 

Sir William Blackstone in remarking upon the subject of bills 
of exchange, says that, "This method is said to have been 
brought into general use by the Jews and Lombards, when banished 
for their usury and other vices, in order the more easily to draw 
their effects out of France and England into those countries in 
which they had chosen to reside. But the invention of it was a 
little earlier, for the Jews were banished out of Guinne in 1287, and 
out of England in 1290; and in 1236 the use of paper credit was 
introduced into the Mugul Empire in China." 2 Black. Com. 467. 

" Other nations," says Mr. Chitty, " had attributed the inven- 
tion of these commercial contracts to the Florentines. When being 
driven out of their country, by the faction of the Gebelings, they 
established themselves at Lyons and other towns in order to with- 
draw their effects secretly and to escape the confiscation of them 
by their enemies." Mr. Chitty further says, "That it seems 
extremely doubtful at what period, or by whom bills of exchange 
were first invented." 

Each of these various accounts of the origin and history of 
bills of exchange has been supported by some and rejected by 
other authors as wholly unsatisfactory and uncertain. 

Certain it is, that bills of exchange were used in many of the 
commercial states bordering on the Mediterranean as early as the 
14th century, although it is probable that the forms thereof were 
different, and had not then settled down into one model or uniform 
instrument, like that in use in our days. But while similar instru- 
ments to our bills of exchange were in quite common use in the 
14th century, they were used much earlier. Weber in his work on 
the history of these customs, published in 18 10, states positively 
that such instruments were in use at Venice in 1171; and a law of 
Venice in 1272 clearly recognizes these documents. While we find 
a statute of Marseilles, that once great commercial metropolis of 
the Mediterranean, dated 1253, which presents evident traces of 
them, and a transaction of this description is attested by a docu- 
ment of 1256. There has been found several copies of these 
documents, dated early in the 15th century, which correspond in 
form almost exactly with the forms in common use to-day. One is 
still extant, dated April 28th, 1405, drawn by a merchant in Bruges 
upon a mercantile company in Barcelona. 

The introduction and the use of bills of exchange in England 



32 MILLER V. RACE. [CHAP. I, 

according to the old form of declaring on bills of exchange, 
the declaration always was founded on the customs of mer- 
chants. 



SECTION 2. 

NATURE AND PURPOSES OF BILLS AND NOTES. 

MILLER v RACE. 1 

In the King's Bench, January 31, 1758. 

[Reported by /. Burrows, 452.] 

Form of Action. — It was an action of trover against the 
•defendant, upon a bank- note, for the payment of twenty-one 
pounds ten shillings to one William Finney or bearer on demand. 

The cause came on to be tried before Lord Mansfield, at 

seems to have been founded upon a mere practice of merchants 
and gradually to have acquired the force, at first of a custom, and 
subsequently of a binding code of rules or laws. Mr. Chitty says, 
" That the earliest case on the subject to be found in the English 
Teports is that of Martin v. Boure (Cro. Jac. 6)." 

We have good authority for saying that these instruments were 
in use in England as early as 1307; for in that year King Edward 
I. ordered certain money collected there for the Pope, not to be 
sent to him in coin but by way of exchange. 

But whatever may be said about the time of the origin of bills 
of exchange, it is certainly true that their origin may be assigned 
to the general necessities and customs of the widely extended busi- 
ness intercourse of the commercial nations which inhabited the 
shores of the Mediterranean at a very early period in history. In 
France there is an ordinance of Louis XL as early as 1462 which 
permits all persons to give out and remit their money by bills of 
•exchange in the business of merchants in whatever country it may 
be, except England. It has been said that the law of bills and 
notes or of commercial contracts has mainly grown up since Lord 
Mansfield came upon the bench; and we owe more to his labor on 
this subject than to any other one judicial mind, although vast and 
valuable productions have been made on the subject by numerous 
learned justices who have succeeded him. 

1 This case is cited in Chitty on Bills, 196, 216, 241, 258, 260, 
523; Story on Bills of Exchange, 62, 188, 207, 416; Tiedeman on 
Commercial Paper. 1, 289, 464; Wood's Byles on Bills and Notes, 
50, 84, 577; Daniel on Nogotiable Instruments, 771, 1503, 1672, 
1687; Randolph on Commercial Paper, 9, 481, 543; Ames on Bills 
and Notes, 400; Norton on Bills and Notes, 111, 199. 



SEC. 2.] MILLER V. RACE. 3$ 

the sitting in Trinity term last at Guildhall, London, and upon 
the trial, it appeared that William Finney, being possessed of 
this bank-note on the nth of December, 1756, sent it by the 
general post, under cover, directed to one Bernard Odenharty, 
at Chipping Norton, in Oxfordshire; that on the same night, 
the mail was robbed and the bank-note in question (among 
other notes) taken and carried away by the robber; that this 
bank-note on the 12th of the same December, came into the 
hands and possession of the plaintiff, for a full and valuable 
consideration, and in the usual course and way of his business, 
and without any notice or knowledge of this bank-note being 
taken out of the mail. 

It was admitted and agreed, that in the common and 
known course of trade, bank-notes are paid by and received 
of the holder or possessor of them, as cash; and that in the 
usual way of negotiating bank-notes, they pass from one per- 
son to another as cash, by delivery only, [when payable to- 
bearer] and without any further inquiry or evidence of title, 
than what arises from the possession. It appeared that Mr. 
Finney, having notice of this robbery, on the 1 3th of Decem- 
ber, applied to the Bank of England 4 4 to stop the payment of 
this note," which was ordered accordingly, upon Mr. Finney's 
entering into proper security "to indemnify the bank." 

Some little time after this, the plaintiff applied to the 
bank for the payment of this note; and for that purpose de- 
livered the note to the defendant, who is a clerk in the bank, 
but he refused either to pay the note or to re-deliver it to the 
plaintiff. Upon which this action was brought. 

The jury found a verdict for the plaintiff, and the sum of 
twenty-one pounds ten shillings damages, subject, neverthe- 
less, to the opinion of this court upon this question: ki Whether 
under the circumstances of the case \ the plaintiff had a suffi- 
cient property in this bank-note to entitle him to recover in 
the present action ?" 

Argument of Counsel for Defendant. — Sir Richard 
Lloyd, for the defendant. 

The present action is brought not for the money due upon 
the note, but for the note itself, the paper, the evidence of the 
debt. So that the right ta the money is not the present ques- 



34 MILLER V. RACE. [CHAP. I, 

tion, the note is only an evidence of the moneys being due to 
him as bearer. 

The note must either come to the plaintiff by assignment, 
or must be considered as if the bank gave a fresh, separate, 
and distinct note to each bearer. Now, the plaintiff can have 
no right by the assignment of a robber. And the bank can- 
not be considered as giving a new note to each bearer; though 
each bearer may be considered as having obtained from the 
bank a new promise. 

I do not say whether the bank can or cannot stop pay- 
ment; that is another question. But the note is only an 
instrument of recovery. 

Now this note, or these goods (as I may call it), was the 
property of Mr. Finney, who paid in the money; he is the real 
owner. It is like a medal which might entitle a man to the 
payment of money, or to any other advantage. And it is by 
Mr. Finney's authority and request, that Mr. Race de- 
tained it. 

It may be objected, " that this note is to be considered as 
cash in the usual course of trade." But still, the course of 
trade is not at all affected by the present question, about the 
right of the note. A different species of action must be 
brought for the note, from what must be brought against the 
bank for the money. And this man has elected to bring trover 
for the note itself, as owner of the note; and not to bring his 
action against the bank for the money. In which action of 
trover, property cannot be proved in the plaintiff, for a special 
proprietor can have no right against the true owner. 

The cases that may affect the present, are Anonymous, 1 
coram Holt, C. J. at nisi prius at Guildhall. There Ld. C. 
J. Holt held, • ' That the right owner of a bank-note, who lost 
it, might have trover against a stranger who found it; but not 
against the person to whom the finder transferred it for a 
valuable consideration, by reason of the course of trade, which 
creates a property in the assignee or bearer," 2 in which case 



1 1 Salk., 126. 

9 1 Ld. Raym., 738, s. c, in which case the note was paid 
away in the course of trade; but this remains in the man's hands, 



SEC. 2.] MILLER V. RACE. 35 

the note was paid away in the course of trade; but this remains 
in the man's hands, and is not come into the course of trade. 
Ford v. Hopkins, 1 per Holt, C. J., at nisi prius at Guildhall. 
44 If bank-notes, exchequer-notes, or million lottery tickets, 
or the like, are stolen or lost, the owner has such an interest 
or property in them, as to bring an action, into whatsoever 
hands they are come, money or cash is not to be distinguished; 
but these notes or bills are distinguishable, and cannot be 
reckoned as cash; and they have distinct marks and numbers 
on them." Therefore the true owner may seize these notes 
wherever he finds them, if not passed away in the course of 
trade. 

H. In Middlesex, coram Pratt, C. J. , Armory v. Dela- 
mirie a — A chimney-sweeper's boy found a jewel. It was ruled 
' • that the finder has such a property as will enable him to 
keep it against all but the rightful owner, and consequently 
may maintain trover. 

This note is just like any other piece of property, until 
passed away in the course of trade. And here the defendant 
acted as agent to the true owner. 

Argument of Counsel for Plaintiff. — Mr. Williams 
contra for the plaintiff. 

The holder of the bank note \ upon a valuable consider- 
ation, (and without notice of existing defenses and before ma- 
turity) has a right to it, even against the true owner. 

1 . The circulation of these notes vests a property in the 
holder, who comes to the possession of them, upon a valuable 
consideration (and without notice of defenses). 

2. This is of vast consequence to trade and commerce, 
and they would be greatly incommoded if it were otherwise. 

3. This falls within the reason of the sale in market- 
overt, and ought to be determined upon the same principle. 

and is not come in the course of trade. In this case the transferee 
went to the bank and got a new bill in his own name. However, 
the case turned upon his having the note for a valuable consider- 
ation. 

I H. 12 W., 1 Salk, 283, 284 

I I Strange 505 (8 Geo. I.) 



36 MILLER V. RACE. [CHAP. l r 

First. He put several cases where the usage, course, 
and convenience of trade made the law, and sometimes even 
against an act of parliament. 1 

Secondly. This paper credit has been always, and with 
great reason, favored and encouraged. 2 

The usage of these notes is, 4 ' that they pass by delivery 
only (when payable to bearer); and are considered as current 
cash; and the possession always carries with it the property." 

A particular mischief is rather to be permitted than a gen- 
eral inconvenience incurred. And Mr. Finney who was rob- 
bed of this note, was guilty of some laches in not preventing it. 

Upon Sir Richard Lloyd's argument, a holder of a note 
might suffer the loss of it, for want of title against a true 
owner; even if there was a chasm in the transfer of it through 

one only out of 500 hands. 

Thirdly. This is to be considered upon the same footing 
as a sale in market-overt. 

4 "A sale in market-overt binds those that had right."' 
But it is objected by Sir Richard, " that there is a substantial 
difference between a right to the note, and a right to the 
money. " But I say the right to the money will attach to it a 
right to the paper. Our right is not by assignment, but by 
law, by the usage and custom of trade. I do not contend 
that the robber, or even the finder of a note, has a right to 
the note; but after circulation, the holder upon a valuable 
consideration has a right. 

We have a property in this note; and have recovered the 
value against the with-holder of it. It is not material what 
action we could have brought against the bank. 

Then he answered Sir Richard Lloyd's Cases, and agreed 
that the true owner might pursue his property, where it came 
into the hands of another, without a valuable consideration, or 

1 Stanley v. Ayles, per Hale, C. J. at Guildhall. 3 Keb. 444 \ 
2 Strange 1000. Lumley v. Palmer, 1 Salk. 23, where a parol- 
acceptance of a bill of exchange was holden sufficient against the 
acceptor. 

2 Feny v. Fowler, et al. , 2 Strange 946. 
8 1 Salk. 126 is in point. 

4 2 Inst. 713. 



SEC. 2.] MILLER V. RACE. 37 

not in the course of trade: which is all that Ld. C. J. Holt 
said in I Salk. 284. 

As in 1 Strange 505, he agreed that the finder has the 
property against all but the rightful owner, not against him. 

Replication of Counsel for Defendant. — Sir Richard 
Lloyd in reply: 

I agree that the holder of the note has a special property; 
but it does not follow that he can maintain trover for it 
against the true owner. 

This is not only without, but against the consent of the 
owner. 

Supposing this note to be a sort of mercantile cash; yet 
it has an ear-mark by which it may be distinguished; therefore 
trover will lie for it. And so is the case of Ford v. Hopkins. l 

And you may recover a thing stolen from a merchant, as 
well as a thing stolen from another man. And this note is a 
mere piece of paper; it may be as well stopped, as any other 
sort of mercantile cash (as, for instance, a policy which has 
been stolen). And this has not been passed away in trade but 
remains in the hands of the true owner. And therefore, it 
does not signify in what manner they are passed away, when 
they are passed away; for this was not passed away. Here, 
the true owner, or his servant (which is the same thing), de- 
tains it. And, surely robbery does not divest the property. 

This is not like goods sold in market-overt; nor does it 
pass in the way of a market-overt; nor is it within the reason 
of a market-overt. Suppose it was a watch stolen; the owner 
may seize it (though he finds it in a market-overt), before it is 
sold there. But there is no market-overt for bank-notes. 

I deny the holder's (merely as holder) having a right to 
the note, against the true owner; and 1 deny that the posses- 
sion gives a right to the note. 

Upon this argument on Friday last, Ld. Mansfield said, 
that Sir Richard Lloyd had argued it so ingeniously, that 
(though he had no doubt about the matter), it might be pro- 
per to look into the cases he had sited in order to give a pro- 
per answer to them, and therefore the court deferred giving 

I I Salk., 283. 

2 



38 MILLER V. RACE. [CHAP. I, 

their opinion to this day. But at the same time Ld. Mans- 
field said he would not wish to have it understood in the city 
that the court had any doubts about the point. 

Decision of Court. — Lord Mansfield now delivered the 
resolution of the Court. 

After stating the case at large, he declared, that at the 
trial he had no sort of doubt, but that this action was well 
brought, and would lie against the defendant in the present 
case; upon the general course of business, and from the con- 
sequences to trade and commerce, which would be much in- 
commoded by a contrary determination. 

Negotiable Contracts — Common Law Contracts — 
Goods — Distinguished. — It has been very ingeniously argued 
by Sir Richard Lloyd for the defendant. But the whole fal- 
lacy of the argument turns upon comparing bank-notes to 
what they do not resemble, and what they ought not to be 
compared to; viz., to goods, or to securities, or documents for 
debts. 

Now, they are not goods, not securities, nor documents 
for debts, nor are so esteemed, but are treated as money, as 
cash, in the ordinary course and transaction of business, by 
the general consent of mankind; which gives them the credit 
and currency of money, to all intents and purposes. They 
are as much money as guineas themselves are; or any other 
current coin, that is used in common payments as money or 
cash. 

They pass by a will, which bequeaths all the testator's 
money or cash, and are never considered as securities for 
money but as money itself. Upon Ld. Ailesbury's "will, 900 
pounds in bank-notes was considered as cash. On payment 
of them, whenever a receipt is required, the receipts are al- 
ways given as for money, not as for securities or notes. 

So, on bankruptcies, they cannot be followed as identical 
and distinguishable from money; but are always considered as 
money or cash. 

Tis pity that reporters sometimes catch at quaint ex- 
pressions that may happen to be dropped at the bar or bench; 

"Papham, et al., v. Bathurst, et al., Ambl. 68, Nov., 1748. 



SEC. 2.] MILLER V. RACE. 39 

and mistake their meaning. It has been quaintly said, ( ( that 
the reason why money cannot be followed is because it has no 
ear-marks;" but this is not true. The true reason is, upon 
account of the currency of it. It cannot be recovered after it 
has passed in currency. So in case of money stolen, the true 
owner cannot recover it, after it has been paid away fairly 
and honestly upon a valuable and bona fide consideration ; but 
before money has passed into currency, an action may be 
brought for the money itself. There was a case in I G, i, at 
the sittings, Thomas v. Whip, before Ld. Mansfield, which 
was an action upon assumpsit, by an administrator against the 
defendant, for money had and received to his use. The de- 
fendant was nurse to the intestate during his sickness; and 
being alone, conveyed away the money. And Ld. Mansfield 
held that the action lay. Now this must be esteemed a find- 
ing at least. 

Apply this to the case of a bank-note. An action may 
lie against the finder, it is true (and it is not at all denied); 
but not after it had been paid away in currency. And this 
point has been determined even in the infancy of bank-notes. 
And Ld. C. J. Holt there says, that it is " by reason of the 
course of trade, which creates a property in the (assignee or) 
bearer." (And "the bearer" is a more proper expression 
than assignee. ) 

Here an inn-keeper took it, bona fide, in his business 
from a person who made* the appearance of a gentleman. 
Here is no pretense or suspicion of collusion with the robber; 
for this matter was strictly inquired and examined into at the 
trial; and is so stated in the case, " that he took it for full and 
valuable consideration, in the usual course of business." In- 
deed, if there had been any collusion, or any circumstances of 
unfair dealing the case had been much otherwise. If it had 
been a note for 1,000 pounds it might have been suspicious; 
but it was a small note for twenty-one pounds ten shillings 
only, and money given in exchange for it. 

Another case cited was a loose note 8 ruled by Ld. C. J. 

1 1 Salk.j 126. 10 Williams, 3. 
1 1 Ld. Raym., 738. 



40 MILLER V. RACE. [CHAP. I, 

Holt at Guildhall, in 1698; which proves nothing for the de- 
fendant's side of the question, but it is exactly agreeable to 
what is laid down by my Ld. C. J. Holt in the case I have 
just mentioned. The action did not lie against the assignee 
(indorsee) of the bank-note; because he had it for valuable 
consideration. 

In that case he had it from the person who found it, but 
the action did not lie against him, because he took it in the 
course of currency; and therefore, it could not be followed in 
his hands. It never shall be followed into the hands of a per- 
son who bona fide took it in the course of currency, and in the 
way of his business. 

The case of Ford v. Hopkins was also cited, which was 
in Hil. 12 W. 3, coram Holt C. J. at nisi prius, at Guildhall 
and was an action of trover for million lottery tickets. But 
this must be a very incorrect report of that case; it is impos- 
sible that it can be a true representation of what Ld. C. J. 
Holt said. It represents him as speaking of bank-notes, ex- 
chequer-notes and million lottery tickets as like to each other. 
Now, no two things can be more unlike each other than a lot- 
tery ticket and a bank-note. Lottery tickets are identical and 
specific; specific actions lie for them. They may prove ex- 
tremely unequal in value; one may be a prize; another a blank. 
Land is not more specific than lottery tickets are. It is there 
said, * • that the delivery of the plaintiff's tickets to the defend- 
ant, as that case was, was no change of property." And most 
clearly it was no change of property. So far the case is right. 
But it is here urged as a proof •• that the true owner may fol- 
low a stolen bank-note into what hands soever it shall come." 

Now the whole of that case turns upon the throwing in 
bank-notes as being like to lottery tickets. 

But Ld. C. J. Holt could never say "that an action 
would lie against the person who, for a valuable considera- 
tion, had received a bank-note which had been stolen or lost 
and bona fide paid to him;" even though the action was 
brought by the true owner, because he had determined other- 
wise, but two years before, and because bank-notes are not 
like lottery tickets, but money. 

The person who took down this case, certainly misunder- 



SEC. 2.] MILLER V. RACE. 41 

stood Ld. C. J. Holt, or mistook his reasons. For this rea- 
soning would prove (if it were true, as the reporter represents 
it), that if a man paid to a goldsmith 500 pounds in bank- 
notes, the goldsmith could never pay them away. 

A bank-note is constantly and universally, both at home 
and abroad, treated as money, as cash; and paid and received 
as cash, and it is necessary, for the purposes of commerce, 
that their currency should be established and secured. 

There was a case in the Court of Chancery (Walmefly v. 
Child, nth December, 1749) on some of Mr. Child's notes, 
payable to the person to whom they were given, or bearer. 
The notes had been lost or destroyed many years. Mr. Child 
was ready to pay them to the widow and administratrix of the 
person to whom they were made payable upon her giving 
bond, with two responsible sureties (as is the custom in such 
cases), to indemnify him against the bearer, if the notes 
should be found and ever demanded. The administratrix 
brought a bill, which was dismissed, because she either could 
not, or would not, give the security required. No dispute 
ought to be made with the bearer of a cash-note, in regard to 

Fuller, Chief Justice of the Supreme Court of the United 
States, in the case of Friedlander et al. v. Texas and Pacific R. R. 
Co. (130 U. S., 416), said that " Bills of exchange and promissory 
notes are representatives of money, circulating in the commercial 
world as such, and it is essential to enable them to perform their 
peculiar function that he who purchases them should not be bound 
to look beyond the instrument, that his right to enforce them 
should not be defeated by anything short of bad faith on his part." 
It is certainly true that these commercial papers — bills of exchange, 
promissory notes, checks, etc. — do in a large measure answer the 
purpose of money in the business world. The character of nego- 
tiability which has been given them has enabled them to take the 
place of the actual use of money, and their use as representatives 
of money, has made them indispensable in the transactions of the 
daily business of to-day. 

' ' Bills of exchange were probably the first instruments for the 
payment of money that were accorded the negotiable quality, though 
promissory notes, being simpler in form, were doubtless used as 
evidences of debt before bills of exchange came in vogue amongst 
merchants. Certainly these two securities were recognized as 
negotiable instruments before any other paper representatives of 
money or property passed currently from hand to hand in like 
manner as money; and from them, as fruitful parents, have sprung 



42 MILLER V. RACE. [CHAP. I, 

commerce, and for the sake of the credit of these notes; 
though it may be both reasonable and customary to stay the 
payment till inquiry can be made, whether the bearer of the 
note came by it fairly or not. 

Lord Mansfield declared that the court were all of the 



all the varieties of negotiabilities now known." Dan. on Neg. Inst. 
Sec. 2. 

The existence of these commercial contracts were caused by 
the necessities of commerce and trade between different nations. 
So long as all trade was a mere exchange of commodities, neither 
money nor a representative of money was necessary. It was not 
long, however, before the necessities of commerce demanded some- 
thing of real value — of money — for the conveniences of trade. 
Instead of a simple exchange of one commodity for another it be- 
came customary to exchange commodities for something having a 
representative value which was called money. At first the precious 
metals were used in bulk as the bases for the measurements of the 
value of products; later the value of a certain quantity of these 
metals was fixed by a stamp of the sovereign. This for a long 
time answered the purposes of commerce. But in the course of 
time — in the gradual development and extension of commerce be- 
tween different nations — it was found that the transfer of these 
precious metals, became not only burdensome and expensive, but 
there was great danger of losing the same, by robbery and other- 
wise, in their transfer from one country to another, by the rude 
methods of transporting them in vogue. The great necessity for 
something which represented money and which could be thus trans- 
ferred with less expense and less hazard, was felt and supplied by 
the ingenious merchants of that day in the form of the various 
commercial contracts which in one form or another have been 
adopted and improved from time to time by the commercial 
world. 

It is highly necessary for the purposes and conveniences of 
commerce that the negotiability of commercial contracts should be 
established and protected. 

Mr. Joseph Chitty in speaking of the general utility of bills 
of exchange said, "A bill of exchange is a security originally in- 
vented amongst merchants in different countries and kingdoms, for 
the more easy and safe remittance of money, or rather for the pur- 
pose of avoiding the necessity of transmitting money itself, from 
the one to the other, and has since been extended to commercial 
transactions within the same kingdom." Chitty on Bills, 4. 

In the origin of bills of exchange, their principal utility was 
the safe transfer of property from one place to another; but since 
the great increase of commerce, they have become the evidence of 
valuable property, and in a great measure equivalent to specie, en- 



SEC. 2.] MILLER V. RACE. 43 

same opinion for the plaintiff; and that Mr. Just. Wilmot 
concurred. 

Rule. — That the postea be delivered to the plaintiff. 

iarging the capital stock of wealth in circulation, and thereby facili- 
tating and increasing the trade and commerce of the country. 
Gibson v. Minet, i Hen. Bla., 618. 

Sir William Blackstone in speaking of the purposes of these 
instruments puts the following instance: "If A, live in Jamaica, 
and owe B., who lives in England, iooo^, now if C. be going 
from England to Jamaica, he may advance B. this iooo^, and 
take a bill of exchange, drawn by B. in England upon A. in 
Jamaica, and receive it when he comes thither: Thus B. receives 
his debt at any distance of place by transferring it to C, who car- 
ries over his money in paper credit, without the risk of robbery 
or loss." 2 Bla. Co mm., 466, 467. 



CHAPTER II. 
Bibliography of Negotiable Contracts. 



SECTION 3. 
TEXT BOOKS AND CASES. 

The subject of negotiable contracts has been discussed by 
many text writers. Among them may be mentioned the fol- 
lowing: — 

Ames on Bills and Notes; 

Bay ley on Bills; 

Bateman on Commercial Paper (i860); 

Beauves, Lex. Merc. — Bills of Exchange (1720); 

Benjamin's Chalmers on Bills, Notes and Checks; 

Bigelow on Bills and Notes; 

Bigelow's Cases on Bills and Notes; 

Bryant and Stratton s Commercial Paper; 

Byles on Bills and Notes; 

Chalmers on Bills, Notes and Checks; 

Chitty on Bills of Exchange; 

Cunningham on Bills of Exchange; 

Daniel on Negotiable Instruments (2 vol.); 

Edwards on Bills and Promissory Notes (1857); 

Hartman on Bills of Exchange; 

Hough's Article in Vol. 2, American and English Ency- 
clopedia of Law; 

Huffcut's Negotiable Instruments (1898); 

Hulteau on Bills; 

Johnson on Bills and Notes (1898); 

Johnson's Cases on Bills and Notes; 

Kyd on Bills; 

Malynes Lex. Mercatoria (1622); 

Marius on Bills and Notes (1670); 

Norton on Bills and Notes; 

Paige's Cases on Commercial Paper; 



SEC. 5.] BIBLIOGRAPHY. 45 

Parsons on Bills and Notes (1870); 

Pomeroy's Smith's Mercantile Law; 

Pothier de Exchange; 

Randolph on Commercial Paper (3 vol.); 

Scrutten's Elements of Mercantile Law (1891); 

Sharswood's Bayley on Bills; 

Smith's Mercantile Law; 

Story on Promissory Notes; 

Story on Bills of Exchange (1843); 

Tiedeman on Commercial Paper; 

Wood's Byles on Bills and Notes. 



SECTION 4. 

Among the books which are most useful to the practi- 
tioner, engaged in the active practice of the law may be men- 
tioned Daniel on Negotiable Instruments in 2 vols. (4th ed.) 
(1891); Randolph on Commercial Paper in 3 vols. (1st ed. ) 
(1888); Tiedeman on Commercial Paper (1st ed.) (1889); 
Ames on Bills and Notes in 2 vols. (1881) (discussion of 
leading cases). These authors have each discussed the funda- 
mental principles of the law of commercial contracts and 
have cited numerous illustrations, thereby rendering their texts 
valuable to the practitioner. 



SECTION 5. 

Among the texts which are valuable for class room pur- 
poses may be mentioned Chalmers (Benjamin's ed.); Byles 
on Bills and Notes (Wood's 8th ed. ) ; Norton on Bills and 
Notes (2nd ed.); Bigelow on Bills and Notes (ist ed.); and 
Ames on Bills and Notes; Tiedeman on Commercial Paper 
and Huffcut on Negotiable Instruments (1898). 



CHAPTER III. 
Enumeration and Definition of Negotiable Contracts. 



SECTION 6. 

NEGOTIABLE CONTRACTS— ENUMERATED. 

The following instruments have been generally held to be 
negotiable: Bills of exchange, Promissory Notes, Checks, 
Certificates of Deposit, Bank Bills, Bank-notes, United 
States Treasury Notes, Exchequer Bills, Government Bonds, 
Receipts for Bonds to be issued, Bonds of Private Corpora- 
tions, Coupon Bonds, Coupons, Gold Certificates, and Silver 
Certificates. 



SECTION 7. 

QUASI-NEGOTIABLE CONTRACTS— ENUMERATED. 

The following contracts may be considered Quasi-nego- 
tiable contracts: Bills of Lading, Warehouse Receipts, Due 
Bills, Letters of Credit, Bank Pass Books, and Receiver's 
Certificates. 



SECTION 8. 

BILL OF EXCHANGE— DEFINED 1 

By an Act of Parliament in 1882, known, as the 4 'English 
Bills of Exchange Act," a bill of exchange was defined to be 
"An unconditional order in writing, addressed by one person 

*Many definitions have been given for bills of exchange. Black- 
stone defined a bill of exchange to be "An open letter of request 
from one man to another, designating him to pay a sum named 
therein to a third person on his account." 2 Com., 466. 

Chitty says "It is defined to be an open letter of request from, 
and order by one person on another to pay a sum of money therein 
mentioned to a third person on his account." Chitty on Bills, 1. 

Parsons on Bills says, "A written order for the payment of 
money." 1 Parsons on Bills and Notes, 52. 

Judge Byies defines a bill to be "An unconditional written 



SEC. 8.] ENUMERATION AND DEFINITION. 47 

to another, signed by the person giving it, requiring the per- 
son to whom it is addressed to pay on demand or at a fixed or 
determinable future time a sum certain in money to or to the 
order of a specified person, or to bearer. " 

A bill of exchange is an unconditional written* order by one 

•order from A to B directing B to pay C a sum certain of money 
named therein.*' Byles on Bills and Notes, i. 

Judge Kent defines a bill to be "A written order or request by 
■one person to another for the payment of money at a specified 
time absolutely and at all events." 3 Kent Com., 74. 

*Must be Written. — Chitty says, "A bill of exchange 
being an open letter of request by one person to another to pay 
money, it follows that it must be in writing.'* Chitty on Bills, 126. 

Story on bills of exchange says, "It must be in writing and 
should be signed by the drawer, or by some person duly author- 
ized in his name and on his behalf.** Story on Bills, 33. 

Concerning this requisite of a bill of exchange, there cer- 
tainly can be no controversy; an unwritten note would be a 
•contradiction in terms. This requisite applies to all negotiable 
instruments. A verbal or oral promise, however valid and bind- 
ing in law, can never be considered a negotiable contract. This 
proposition is obvious upon the slightest consideration. 

May be Written in Pencil or Ink. — In the case of 
•Geary v. Physic, 5 B. & C, 234 (11 E. C. L., 442), (1826), 
the plaintiff brought an action of assumpsit as endorsee against 
the defendant as maker of a promissory note for the sum of 
thirty pounds payable two months after, to the order of one 
Folder, and indorsed by him, (Folder), to one Kemo, who subse- 
quently endorsed the note to the plaintiff. At the trial before 
Abbott C. J., at the London sittings, after Hilary term, 1825, it 
appeared that the indorsement by Kemp, to the plaintiff was in 
pencil, and it was thereupon objected that the plaintiff could not 
recover; an indorsement in pencil not being such an indorsement 
as the law and custom of merchants recognizes to be sufficient to 
pass the interest in a bill of exchange, and promissory notes being 
by the statute 3 and 4 Ann, c. 9 s. 1, assignable or indorsable in 
the same manner as unpaid bills of exchange are according to the 
•custom of merchants. The Ld. Chief Justice thought it sufficient, 
and directed the jury to find a verdict for the plaintiff, reserving 
liberty to the defendant's counsel to move to enter a non-suit, if 
the court should be of opinion that the indorsement of the prom- 
issory note in pencil, was not a good and valid indorsement. F. 
Pollock, in last Easter term, obtained a rule nisi to enter a non- 
•suit. He contended, first y that a writing in pencil, was not a 
writing recognized at common law; and he cited Co. Litt., 229 a, 
-where Ld. Coke, speaking of a deed, said, " Here it is to be 



48 ENUMERATION AND DEFINITION. [CHAP. 3, 

person upon another to pay to some third person or his order 

understood, that it ought to be in parchment or in paper. For if 
a writing be made upon a piece of wood, or upon a piece of linen, 
or on the bark of a tree, or on a stone, or the like, etc., and the 
same be sealed or delivered, yet is it no deed, for a deed must be 
written either in parchment or paper, as before is said; for the 
writing upon these is least subject to alteration or corruption." 
For the same reasons a writing ought to be made with materials 
least subject to alteration or corruption. Now, writing made with 
a pencil is easily altered or obliterated, and therefore, for the rea- 
sons given by Ld. Coke, where the law requires a contract to be in 
writing, it ought to be made with materials the least subject to 
alteration. Secondly, he contended, that it was not a writing 
according to the custom and usage of merchants. In point of 
practice bills of exchange were generally written in ink and it lay 
upon the plaintiff in this case to show by evidence that this was a 
writing according to the custom of merchants. 

Thesiger now showed cause. First. The passage cited from Co. 
Litt.,229, a., regards only the materials upon which, not with which, 
a deed must be written; and even assuming that a deed written in 
pencil might not be good, it does not, therefore, follow that a bill 
of exchange so written may not be so. Deeds are more solemn 
instruments, are intended permanently to go along with the inher- 
itance, but bills of exchange are made to continue in force for a 
very short period. Letters and words traced on paper by a pencil, 
constitute a writing in the ordinary acceptation of that term. In 
Jeffry v. Walton, i Stark, 267, a memorandum entered in pencil upon 
a card was received as evidence of an agreement; and in Rymes 
v. Clarkson, 1 Phil., 22. Sir John Nicholl was of opinion that a 
will written by a testator with a pencil would be valid, provided 
that the court could be satisfied that he intended so to execute his 
will. In Green v. Skipworth, 1 Phil., 53, a disposition made by a 
testator in pencil was carried into effect, and in Dickenson v. 
Dikenson, 2 Phil., 173, alterations in pencil in a regularly executed 
will were admitted to probate. Sir John Nicholl said, "There 
was no doubt that in point of law they must be considered as 
equally valid as if made in ink, provided the deceased intended 
them to take effect." Now, there can be no question as to the in- 
tention here. For here Kemp, not only wrote his name on the 
note in pencil, but he passed it from his hand to another, thereby 
clearly showing that he intended to transfer the property in the 
note. The authorities, therefore, show that this indorsement in 
pencil is an indorsement in writing within the legal meaning of 
that term. 

Secondly. It is an indorsement in writing within the legal 
meaning of that term. It is an indorsement in writing within the 
usage and custom of merchants. That usage requires that the in- 
dorsement should be in writing; it refers to the act to be done, and 



SEC. 8.] ENUMERATION AND DEFINITION. 49 

or bearer, a certain sum of money therein named. These 

not to the particular mode or the materials with which it is to be 
done. The argument addressed to the court on the part of the de- 
fendant goes to confound the usage with the practice. If the usage 
requires not only that the indorsement should be in writing, but 
that it should be written in a particular mode, it will be a matter 
of inquiry whether the color of the ink, or the species of paper 
on which the bill is written, be such as is required by the custom. 

F. Pollock, contra. The passage from Co. Litt. was cited to 
show that where the law required a contract to be in writing, it 
required that it should be written on materials which were the least 
subject to alteration; and from thence it was inferred that the law, 
for the same reason, would require that it should be written with 
materials having the same quality, general convenience certainly 
requiring that negotiable instruments should be written with mate- 
rials more durable than pencil. It lay upon the plaintiff to show 
that such a writing was a writing within the custom of mer- 
chants, and that he has not done. Suppose the indorsement upon 
the paper had been scratched with a pen, or with the inverted end 
of a pencil, would that have been a writing according to the cus- 
tom of merchants ? 

Abbott, C. J. There is no authority for saying that where the 
law requires a contract to be in writing, that writing must be in ink. 
The passage cited from Ld. Coke, shows that a deed must be writ- 
ten on paper or parchment, but it does not show that it must be 
written in ink. That being so, I am of opinion that an indorsement 
on a bill of exchange may be by a writing in pencil. There is not any 
danger that our decision will induce individuals to adopt such a 
mode of writing in preference to that in general use. The imper- 
fection of this mode of writing, its being so subject to obliteration, 
and the impossibility of proving it when it is obliterated, will pre- 
vent it being generally adopted. There being no authority to show 
that a contract which the law requires to be in writing should be 
written in any particular mode, or with any specific material, and 
the law of merchants requiring only that an indorsement of bills 
of exchange should be in writing, without specifying the manner 
with which the writing is to be made, I am of opinion that the in- 
dorsement in this case was a sufficient indorsement in writing within 
the meaning of the law of merchants, and that the property in the 
bill passed by it to the plaintiff. 

Bailey, J. 7" think that a writing in pencil is a writing within 
the meaning of that term at common law and that it is a writing 
within the custom of merchants. I cannot see any reason why, 
when the law requires a contract to be in writing, that contract 
shall be void if it be written in pencil. If the character of the 
handwriting were thereby wholly destroyed, so as to be incapable 
of proof, there might be something in the objection; but it is not 
thereby destroyed, for, when the writing is in pencil, proof of the 



50 ENUMERATION AND DEFINITION. [CHAP. $ r 

instruments have been defined in some jurisdictions by statute. 

character of the handwriting may still be given. I think, therefore, 
that this is a valid writing at common law, and also that it is an 
indorsement according to the usage and custom of merchants; for 
that usage only requires that the indorsement should be in writing, 
and not that the writing should be made with any specific material. 

Holroyd, J., concurred. 

Rule. — Discharged. 

A note in pencil is valid while it is legible. Neither will it 
amount to a material alteration of a negotiable contract to trace the 
writing in pencil with ink. Reed v. Roark, 14 Tex., 329 (1855); 
Chitty on Bills, 126, 127, 184, n. 

Form Required. — Judge Bailey in the case of Green v. 
Davies said "That no particular form of words is necessary to 
constitute a negotiable contract." 4 B. & C, 235. (10 E. C. 

L-,557-) 

The following have been held sufficient as to form: 
£1000.00. Ann Arbor, Mich., May 8, 1898. 

Six months after date of this first of exchange (second and 
third unpaid) pay to the order of E. F. one thousand dollars, 
value received. 

Charles E. Hiscock. 
To Rothschild Bros., 

London, Eng. 
$ 1 000. 00. Ann Arbor, Mich., May 8, 1898. 

Ten days after sight, pay to Mr. A., or order, one thousand 
dollars, value received. 

Charles E. Hiscock. 
To Mr. John Wanamaker, 

Philadelphia, Pa. 

Must Not be Under Seal. — The definition of a negoti- 
able contract is that it is "an open letter," for the payment 
of money. By the phrase "open letter" is meant that it must 
not be under seal. "If a seal be affixed to a paper, in the 
ordinary form of a note, its character as such is destroyed; 
and this rule applies to corporations as well as individuals." 
Daniel on Negotiable Instruments, § 32; Rawson v. Davison, 
49 Mich., 607; Clark v. Farmer's Manuf. Co., 15 Wend., 256; 
Weeks v. Esler, 143 N. Y., 374; Brown v. Jordhal, 32 Minn., 
135; Osborn v. Kistler, 35 Ohio St., 99; Osborne v. Hubbard, 20 
Oregon, 318; Muse v. Dantzler, 85 Ala., 359; Mason v. Frick, 105 
Pa. St., 162. 

In Anderson v. Bullock, 4 Munf., 442, the following was held 
to be a promissory note, and the scroll annexed as a seal to be 
mere surplusage: 
£2,361.81. Richmond, October 10, 1801. 

"On or before the first day of February next, we bind our- 
selves, our heirs, executors, or administrators, to pay Thomas and 



SEC. 8.] ENUMERATION AND DEFINITION. 51 

For a collection of the various definitions of promissory notes, 

Amos Ladd, or order, two thousand, three hundred and sixty-one 
dollars and eighty-one cents. 

"Austin & Anderson, (L. S.)" 

14 Cent., L. J., 317; Story on Bills, § 62; Helper v. Alden, 
3 Minn., 332; Tiedeman on Commercial Paper, § 32. 

In many jurisdictions the quality of negotiability has been 
conferred upon sealed commercial instruments. (See statutes of 
your state). This has been done in the following states: Ohio, 
Massachusetts, Colorado, Dakota, Florida, Georgia, Illinois, Kan- 
sas, Tennessee, Nebraska, and North Carolina. 

Kinds of Bills. — Bills of exchange are either foreign or 
inland. They are said to be foreign when they are drawn in 
one country and made payable in another. If a bill is drawn 
in one of the states of the Union and is payable in another 
it is a foreign bill. The states of the Union are in this respect 
foreign to each other. An inland bill of exchange is one which 
is both drawn and made payable in the same country. A 
bill is not necessarily foreign because the parties to it reside 
in different countries. Neither is it an inland bill because 
the parties to it reside in the same state or country, for, if 
the bill actually be drawn in one state by parties of the state 
and made payable to parties within the state, but payable in 
another state or county, it is a foreign bill. There is no necessary 
difference in the form between inland and foreign bills; but there 
are certain rules controlling foreign bills which do not apply to 
inland bills. For instance, a foreign bill must be protested while 
inland bills need not be. Ld. Holt in the case of Boroughs v. 
Perkins (Holt's Rep., 121, Trinity term, 2 Ann.), said: "In inland 
as well as foreign bills of exchange, the person to whom it is paya- 
ble must give convenient notice of non-payment to the drawer; 
for if by his delay, the drawer receives prejudice, the plaintiff shall 
not recover. A protest on a foreign bill was part of its constitu- 
tion; and on inland bills, a protest is necessary by this statute, but 
was not at common law. Yet the statute doth not take away the 
plaintiff's action for want of a protest, nor does it make it a bar 
thereto; but this statute seems to take place only in case there be 
no protest to deprive the plaintiff of damages or interest, and to 
give the drawer a remedy against him for damages, if a protest be 
not made." 

Foreign bills are usually drawn in sets or copies, usually three 
and sometimes more; and these sets or copies are called in law a 
" set of exchange" and constitutes but one bill. 

Parties to Bills of Exchange — Enumerated and Defined. 
— The parties to a bill of exchange are denominated as the drawer, 
the drawee, payee, acceptor, holders, indorsees, and transferees. 
The person who makes or draws the bill is the drawer; the person 
upon whom it is drawn and who is expected to accept and pay the 



52 enumerXtion and definition. [chap. 3, 

bills of exchange and other negotiable contracts the student 
is referred to Randolph on Commercial Paper. 



SECTION 9. 
PROMISSORY NOTES DEFINED. 1 

A promissory note is an unconditional written promise by 
one person to pay to another or to his order, or bearer, a cer- 
tain sum of money therein named. 

A promissory note is defined by the English bills of ex- 
change Act Sec. 83 to be "An unconditional promise in 

same is the drawee; the person in whose favor it is drawn is the 
payee. Subsequent parties may be denominated as holders, 
indorsers, indorsees, or transferees, according to the nature of the 
transaction, and their particular liability will be discussed under 
the head of Transfer by Indorsement. When the drawee accepts 
the bill he is called the acceptor. 

1 Other Definitions. — Blackstone defines a promissory note 
to be "A plain and direct engagement in writing to pay a sum 
specified at a time therein limited, to a person therein named, or 
sometimes to his order or often to the bearer at large." 2 Com., 
467. 

Judge Kent adopts Bailey's definition, which is, "A written 
promise by one person to another for the payment of money abso- 
lutely, at a specified time, and at all events." 3 Kent. Com., 74. 

Judge Byles says, that a promissory note is, "An absolute 
promise in writing, signed but not sealed, to pay a certain specified 
sum at a time therein limited or on demand or at sight, to a person 
therein named or designated, or to his order, or to the bearer. " 
Byles on Bills and Notes, 5. 

Judge Story said. " It is a written engagement by one person 
to pay another person therein named absolutely and uncondition- 
ally a certain sum of money at a time specified therein." Story 
on Bills and Notes, § 1. 

In California, the statute defines a promissory note to be, 
" An instrument negotiable in form whereby the signer promises to 
pay a specified sum of money." Cal. Civ. Code, § 3244. 

Must be in Writing. — A promissory note like a bill of 
exchange cannot exist in parol. It must be reduced to writing; 
but must not be under seal unless permitted by. a statutory pro- 
vision in the particular jurisdiction. It way be written upon 
parchment or paper and with pen or pencil. See cases cited in the 
note to § 8 upon this question. 

Form Required. — No particular phraseology or form is 
required for promissory notes, so long as they contain all the 



SEC. IO.] ENUMERATION AND DEFINITION. 53 

writing made by one person to another, signed by the maker, 
engaging to pay, on demand, or at a fixed or determinable 
future time, a sum certain in money, to, or to the order of, a 
specified person, or to bearer." 



SECTION 10. 

OTHER NEGOTIABLE AND QUASI-NEGOTIABLE CONTRACTS. 

The negotiable as well as the quasi-negotiable contracts 
enumerated in Sections 1 and 2 of this chapter, and not de- 
fined in this chapter, will be defined and discussed in chapters 
devoted to those particular subjects. 



essential elements of a negotiable contract. They may be written 
or printed. The following have been held to be sufficient in form : 
$500.00. Ann Arbor, Mich., May 8, 1898. 

One year after date I promise to pay to E. F. or order, five 
hundred dollars at the Ann Arbor Savings Bank of Ann Arbor, for 
value received, with interest. 

Charles E. Hiscock. 
$500. 00. Ann Arbor, Mich., May 6, 1898. 

On demand, we promise to pay to the order of E. F., five 
hundred dollars, value received, with interest after maturity. 

Charles E. Hiscock, 
John R. Miner. 
$100.00. Ann Arbor, Mich., May 8, 1898. 

Thirty days after date we, or either of us, promise to pay the 
bearer one hundred dollars. 

Charles E. Hiscock, 
John R. Miner. 

The first of these examples is known as a several note; the 
secend as a joint note, and the third as a joint and several note. 

Parties to a Promissory Note — Enumerated and De- 
fined. — The parties to a promissory note are designated as maker, 
payee, indorsee, holders, indorsers, transferers and transferees. The 
first two parties might be called original parties and the others subse- 
quent parties. The one who gives the note and who is primarily 
liable thereon is called the maker. The person to whom the note 
is to be paid in the first instance is called the payee. Whether a 
party is an indorser, indorsee, transferer, or transferee, depends 
altogether upon the nature of his contract, which relations will be 
discussed under the head of ' ' Transfer by Indorsement. " 



CHAPTER IV. 
Essentials of Negotiable Contracts. 



SECTION 11. 
ESSENTIALS— GENERALLY. 

i . A bill of exchange must contain an order. 

2. A promissory note must contain a promise. 

3. The order and the promise must be absolute and 
unconditional. 

4. The order and the promise must be for the payment 
of money. 

5. The order and the promise must be for the payment 
of a certain sum of money. 

6. The order and the promise must be to pay at some 
time certain. 

7. They must be in writing. 

8. They must be signed by the parties giving them. 

9. The parties must be definite and certain. 
10. The contract must be delivered. 



SECTION 12. 

A BILL OF EXCHANGE MUST CONTAIN AN ORDER BY ONE 

PERSON TO ANOTHER. 

RUFF v WEBB.* 

In the King's Bench; Easter Term, 34 George III., May 24, 1794. 

[Reported in 1 Espinasse 127; star p. I2Q.~\ 

Form of Action. — Assumpsit for work and labor, with 
the common counts. Plea of the general issue. 



*This case is cited in Daniel on Neg. Inst, 35; Tiedeman on 
Com. Paper, 23; Benjamin's Chalmers, Bills, Notes and Checks 
10, 56; Norton on B. &. N., 29; Randolph on Commercial 
Paper, 105; Story on Bills of Ex., 33; Chitty on Bills, 118, 
128, 129, 130, 154; Wood's Byles on B. & N., 31, 147. 



SEC. 12.] RUFF V. WEBB. 55 

The action was brought to recover the amount of wages 
due by the defendant to the plaintiff. 

The plaintiff had been servant to the defendant, and on 
his discharging him from his service, had given him a draft 
for the amount of his wages on an unstamped slip of paper, 
in the following words: 

1 * Mr. Nelson will much oblige Mr. Webb, by paying J. 
Ruff, or order, twenty guineas on his account. " 

This draft the plaintiff had taken, but it did not appear 

What Will Constitute an Order. — Every bill of exchange 
must contain an imperative order or a direction to pay; but this 
order may be expressed in polite, civil language. Any form of 
words implying a right on the part of the drawer of the bill to 
demand payment will be sufficient. No particular word or words 
are essential to constitute the order or direction; the word or 
words used, however, must be in the nature of a demand or a right, 
and not the mere asking of a favor. The following expressions 
have been held to be a sufficient order or direction: "Please pay, 
John Jones"; "Please let the bearer have £50.00; I will arrange 
it with you this forenoon. " 

In the case of Rex v. Ellor, 1 Leech 323, the following instru- 
ment: 

"Messrs Songer, — Please send 10 pounds by the bearer, as I 
am so ill I cannot wait upon you. Elizabeth Wery." 

was held not to contain an order. The court said, "This appears 
to be a mere letter, rather requesting the loan of money than 
ordering the payment of it. The terms of it do not import any- 
thing compulsory on the part of the drawee to pay it; and, in the 
case of Mary Mitchell, it was determined, by nine judges against 
one, that the order was not within the meaning of the act; because 
the direction of it was not positive, and the terms of it did not 
import that the party giving it had a right to the goods ordered." 

In Russell v. Powell, 14 M. & W., 418, the following instru- 
ment: 
"To the Executors of T. H., deceased: 

We do hereby authorize and require you to pay to Mr. George 
Powell, or his order, the sum of 250 pounds, being the amount 
directed by the order of the 29th of July last, to be paid to our 
order. We are, Gentlemen, 

Your very obedient servants, 

John Mynn." 
was held not to contain an order to pay but a mere warrrant for 
the payment of money. A similar ruling is found in the cases of 
Hamilton v. Spottiswoode, 4 Exch., 200; Willoughby's Case 1 
Leech, 95. 

In the case of Hoyt v. Lynch, 2 Sandf., 328, the following 



56 RUFF V. WEBB. [CHAP. 4, 

that he had ever demanded payment of it from Mr. Nelson, 
to whom it was addressed. 

It was given in evidence on the part of the defendant, 
that he lived in the country, and kept cash with Mr. Nelson 
in London, and that he paid all his bills in that manner, by 
drafts on Nelson; that the plaintiff knew that circumstance 
and took the draft without any objection; and that if he had 
applied to Nelson, it would have been paid. This evidence 
was relied on as a discharge, and bar to the action. 

statement attached to an ordinary statement of account was held 
to be a good bill of exchange: 

" Willi amsburgh, Dec. 16, 1847. 

"Mr. J. Lynch, — Please pay the above bill — being the amount 
for tinning your house on South Sixth Street — and charge the same 
to our account; and much oblige, 

Yours, 

Smith & Woglom." 

In the case of Wheatley v. Strobe, 12 Cal., 92, upon the fol- 
lowing instrument: 

"Sac City, July 18, 1857. 

"Mr. Strobe: Please pay the bearer of these lines two hun- 
dred and thirty-six dollars, and charge the same to my account. 

E. D. Wheatley." 
Justice Field, now of the Supreme Court of the U. S., said: "No 
further particulars than these are essential to constitute a bill of 
exchange. The insertion of the word "please" does not alter the 
character of the instrument. This is the usual term of civility and 
does not necessarily imply that a favor is asked. " 

In Woolley v. Sergeant, 8 N. J. L., 323, the following instru- 
ment: "Mr. David Sergeant, please to credit John Woolley, or 
bearer, thirty dollars, and I will pay you by the tenth day of April 
next, and you will oblige your friend, 

John Miller " 
was held not to be a good bill of exchange. Ford J. said: "The 
instrument is neither a bill of exchange nor a promissory note, for 
it does not require payment; but only the giving of credit on a book 
account. " 

In Spurgin v. McPheeters, 42 Ind., 527, the following instru- 
ment was held to possess all the characteristics of a bill of exchange: 
"Mr. B.— 

Sir, Please pay to A. or order the sum of one hundred and 
nineteen dollars on said bill of i^-in. lumber, and oblige the 
firm of C. & Co. 

B." 

In the case of Little v. Slackford, 1 Mood. & Malk., 171, Ld. 
Tenderton held the following not to be a bill of exchange: 



SEC. 12.] RUFF V. WEBB. 57 

Argument of Counsel for Plaintiff. — Shepherd for the 
plaintiff contended, that the only mode by which this could 
operate as a bar to the action, was by taking the draft 
in question as a bill of exchange; in which case, under 
Stat. 3 and 4 Ann. c. 9, 7, it is declared that if any person 



"Mr. Little: — Please to let the bearer have seven pounds 
and place it to my account, and you will oblige, 

Your humble servant, 

J. Slackford." 

An instrument in writing by which A. directs B. to pay C. or 
bearer $400, and take up A.'s note of that amount, is not a bill of 
exchange. Cook v. Satterlee, 6 Cow., 108. Chitty on Bills, 159. 

Language of civility merely ought not to be permitted to 
change the nature and character of these instruments; but the lan- 
guage used must necessarily import the asking of a favor coupled 
with the right to demand a compliance therewith. To illustrate 
the words of civility, "Please to pay" in an order by a man on his 
banker, who had money of the drawer in his hands, can certainly 
be construed to be an order to pay absolutely. Whatever lan- 
guage used, in order to be a good order to pay money, it must 
amount to an absolute, unconditional order to pay. If the pay- 
ment is made to depend upon any contingency whatever, the 
instrument will not be a negotiable contract. The following are 
not good bills of exchange: "Please pay when you collect, etc." 
" Pay when a certain ship arrives, etc "; "Pay when a railroad is 
constructed to a certain point"; "Pay on the return of this note "; 
"Pay out of the rents and profits received from my farm"; "Pay 
out of the growing crops ". 

See following cases: Coolidge v. Ruggles, 15 Mass., 387; 
Palmer v. Pratt, 2 Bing., 185; Blackman v. Lehman, 63 Ala., 547; 
Morice v. Lee, & Mod. Rep., 363; Mason v. Metcalf, 8 Baxt., 440; 
Roberts v. Peake, 1 Burr., 323; Powell v. Grey, 6 Grey, 340; 
Gillilan v. Myers, 31 111., 525; Crawford v. Cully, Wright (Ohio), 
453; Kinney v. Lee, 10 Texas, 155; Averett v. Booker, 15 Gratt 
(Va.), 163; DeForest v. Frary, 6 Cow., 151. 

The general rule is that the payment must be ordered, but 
under certain circumstances a request may amount to an order. 
Morris v. Lea, Ld. Raym., 1397; Brown v. Harraden, 4 T. R.. 149; 
Ruff v. Webb, supra. But the order or request to pay must be a 
matter of right and not of favor. Little v. Slackford, 1 Mood. & 
Malk., 171. The word " Pay" is not absolutely indispensable, for 
the word " Deliver" will be sufficient. Morris v. Lea, supra. 

No stereotyped form of words is necessary to constitute a note 
or bill; and, if it be doubtful for which of the two a particular in- 
strument was intended, it may be treated as either. Block v. Bell, 
1 M. & Rob., 149; Edis v. Bury, 6 B. & C, 433. 



58 RUFF V. WEBB. [CHAP. 4, 

shall accept a bill of exchange, in satisfaction of a debt, 
the same shall be deemed a full and sufficient discharge, 
if the person so accepting such bill for his debt shall not 
take his due course by endeavoring to get the same ac- 
cepted and paid, and making his protest for non-acceptance 

But a note must in legal effect, contain a promise; and a bill, 
an order for the payment of money. The simple acknowledgement 
of a debt, such as, "I. O. U." is not a promissory note; nor does 
an entreaty addressed to a drawee to pay a certain sum amount to 
a bill of exchange. This rule is now changed by statute in some 
of the states. 

The theory is, in the case of a bill, that the drawer has funds 
deposited with the drawee which he may demand as a matter of 
right and not as favor. Hence, if it appears from the tenor of the 
instrument that the drawer has no right to order the money paid, 
it is no bill of exchange. Norton on Bills and Notes, 29. 

But mere language of courtesy will not deprive the instrument 
of its commercial character. Judge story says: " The language is 
not to be too closely scanned; nor is it, because it has politeness 
now generally introduced into commercial contracts and transac- 
tions, to be presumed to ask a favor, and not demand a right. The 
true rule would seem therefore, to be, to hold the mere drawing of 
a bill to be the demand of a right and not the asking of a favor, in 
all cases, where the language is susceptible of two interpretations; 
and to deem it favor only, when the language used repeals, in an 
unequivocal manner, the notion, that it is claimed as a right." 
Story on Bills, 45. 

In Bissenthall v. Williams, 1 Duval, 329, a Kentucky court held 
the following instrument to be sufficient to constitute a bill of ex- 
change: " Please let the bearer have $50.00; I will arrange it with 
you this afternoon," and signed, " Yours, most obedient." 

At the trial the plaintiff in the case insisted that the instrument 
was not a bill of exchange, but a covenant, and was barred only 
by the lapse of fifteen years. As a basis for his contention, he re- 
lied upon the concluding words: "I will arrange it with you this 
afternoon," as well as upon the general tone of courtesy and sup- 
plication which pervaded the instrument. He further contended 
that an intention to make the instrument a bill would have been 
manifested by employing some usual phrase to that effect, such as, 
"And place to my account." But the court overruled the conten- 
tion and sustained the instrument as a bill on the principle stated 
by Bouvier that: "It is usual, when the drawer of a bill is debtor 
to the drawee, to insert in the bill these words: 'and put it to my 
account '; but where the drawee is debtor to the drawer, then he 
inserts these words: 'and put it to your account '; but it is alto- 
gether unnecessary to insert any of these words." 



SEC. 13.] CURRIER V, LOCKWOOD. 59 

or non-payment; but he contended, that in point of substance 
it was not a bill of exchange, but a mere request to pay 
money, not accepted by Nelson, or such as could put the 
plaintiff into any better situation with respect to his demand. 
But if it was taken as a bill of exchange, then it could not be 
given as evidence at all, as it was not stamped. 

Argument of Counsel for Defendant. — It was answered 
by the defendant's counsel, that the plaintiffs having ac- 
cepted the draft as payment, was a waiver of every objection 
to it, and that he was therefore bound by it, and could not 
recur to the demand for wages. 

Decision of Court. — Lord Kenyon said he was of opinion 
that the paper offered in evidence was a bill of exchange; 
that it was an order by one person to another to pay money 
to the plaintiff or his order, which was in point of form a bill 
of exchange; that as such it could not be given in evidence, 
without being legally stamped; and as the only mode in which 
it could operate as a discharge of the plaintiff's demand was, 
as stated by the plaintiff's counsel, that the plaintiff in point 
of law was therefore entitled to recover. 



SECTION 13. 

A PROMISSORY NOTE MUST CONTAIN AN EXPRESS 

PROMISE TO PAY. 

CURRIER v. LOCKWOOD. 1 

In the Suprkme Court, Connecticut, October, 1873. 

[Reported in 40 Connecticut, 349^ 

Form of Action. — An action in assumpsit upon a writ- 
ten instrument described as a note, with the common counts; 
brought originally before a justice of the peace and appealed 
to the Court of Common Pleas of Fairfield county, and tried 
in that court, upon the general issue, closed to the court, 

x This case is cited in Wood's Byles on B. & N., 45; Daniel 
on Negotiable Instruments, 36, 39, 899; Randolph on Commercial 
Paper, 106; Norton on Bills and Notes, 32, 34; Bigelow on B. & 
N., 11; Benjamin's Chalmers* Bills, Notes and Checks, 278; Ames 
on Bills and Notes, 21; Tiedeman on Commercial Paper, 23. 



<>0 CURRIER V. LOCKWOOD. [CHAP. 4, 

with notice that the action was barred by the statute of limi- 
tations. The suit was brought June i, 1872. 

The Facts. — In the special counts the plaintiff averred 
"that the defendant, in and by a certain writing or note, 
under his hand by him well executed, dated the 2 2d day of 
January, 1863, promised the plaintiffs to pay to them for value 
received, the sum of seventeen dollars and fourteen cents, as 
by the said writing or note ready in court to be shown 
appears. " 

Upon the trial the plaintiffs offered in court the following 
writing: 

"$17.14. Bridgeport, Jan. 22d, 1863. 

4 * Due Currier & Barker seventeen dollars and fourteen 
cents, value received. Frederick Lockwood." 

At the time the note was given the plaintiffs were part- 
ners under the name of Currier & Barker. 

To this evidence the defendant objected, upon the ground 
that there was a fatal variance between the evidence offered 
and the special count in the declaration, and the court ex- 
cluded the same as evidence to prove the special count, but 
admitted it to prove an indebtedness under the common 
counts. 

It was proved that sometime within three years before 
the bringing of the suit, Barker, one of the plaintiffs, met the 
defendant in the street, and reminded him of the note, and 
that the defendant said, " I will give you a ton of coal for it," 
and no reply being made, passed along on his way. 

It was further proved that, about the time the suit was 
brought, the defendant came into Barker's store and said to 
him, * * Have you that note ?" or ' * Where is that note ?" and 
' * I wish to settle it, " or words to that effect, and that Barker 
told him that the note was in Mr. Steven's hands and he 
could settle with him, and that the defendant replied, " The 
note is outlawed and good for nothing, and you can go ahead 
if you want to." 

It was further proved that the note was given for cloth- 
ing purchased of the plaintiffs by the defendant, which had 
not been paid for. 



SEC. 13.] CURRIER V. LOCKWOOD. 6l 

Claim of Plaintiffs in Court Below. — The plaintiffs 
claimed, first, as a matter of law, that the writing was a 
promissory note, not negotiable under the statute, and was 
not barred until seventeen years from its date; also, second, 
that the facts proved an acknowledgment of the debt, and a 
new promise, which took it out of the statute of limitations. 

Claim of Defendant in Court Below. — The defendant 
claimed adversely to each of these claims. 

Holding of the Court Below. — The court ruled adversely 
to the claims of the plaintiffs, and held that the debt was bar- 
red by the statute of limitations, and rendered judgment for 
the defendant to recover his costs. 

Claim of Plaintiffs in Supreme Court. — The plaintiffs 
moved for a new trial, 

Thompson in support of the motion, contended. 

First. . That there is no variance. The writing imports 
a • ' promise to pay " and it is set forth according to its legal 
effect. 1 The acknowledgment of indebtedness implies a prom- 
ise to pay, and constitutes it a promissory note.* If the instru- 
ment is a ' ' note not negotiable, " it is not barred by the stat- 
ute of limitations, such notes running seventeen years. 

Secondly. But if within the statutes which limits it to 
six years, yet it is taken out of the statutes by the acknowl- 
edgments of the debt made by the defendant within six years 
of the bringing of the suit. He admitted that it was justly 
due when he said, 4 * I will give you a ton of coal for it. " He 
afterwards went to settle it, asked for the note, and not until 
directed to settle with the agent did he say that it was out- 
lawed, and even in declaring it to be outlawed he does not say 
that he shall refuse to pay it on that account.* 

1 Smith v. Allen, 5 Day (Conn.), 337, where the note read as 
follows: "Due A. B. one hundred dollars, on demand. 99 ) Edwards 
on Bills, 131; 1 Am. Lead. Cas. (5th ed.), 383. 

* Cummingsv. Freeman, 2 Humph., 143; Marrigan v. Page, 
id., 247; Fleming v. Burge, 6 Ala., 373; Brenzer v. Wightman, 7 
Watts & Serg., 264; Brewer v. Brewer, 6 Ga., 588; Lowe v. Mur- 
phy, 9 id., 341; Johnson v. Johnson, Minor (Ala.), 263; Harrow 
v. Dugan, 6 Dana., 341; Kilgore v. Bulkley, 14 Conn., 383. 

8 Lord v. Harvey, 3 Conn., 372; DeForest v. Hunt, 8 id., 184; 
Austin v. B os t wick, 9 id., 501; Lee v. Wyse, 35 id., 384. 



62 CURRIER V. LOCKWOOD. [CHAP. 4, 

Claim of Defendant in Supreme Court. — Lock wood, 
contra for defendent said: 

First. "A note must contain a legal promise for the 
certain payment of a certain sum. 1 An acknowledgment of a 
debt is not a promissory note. 2 The note must contain and 
must express the promise of the debtor to pay the money."* 

Secondly. "The statute of limitations applies. Our 
courts have never adopted the expedient which has prevailed 
to some exextent in other states, of taking cases out of the 
statute upon some doubtful or equivocal acknowledgment, but 
have always held that the party must have intended to relin- 
guish its protection, or that its provisions must be applied. 4 
An admission that the note was unpaid, accompanied by the 
claim that it was "outlawed," is not sufficient to remove the 
bar of the statute. 6 An offer to pay a certain sum in satis- 
faction of a larger one, will not remove the bar of the statute, 
even as it regards the sum actually offered, unless the offer is 
accepted when made." 6 

Decision of the Court. — The first question in this case 
is whether the writing sued upon is a promissory note within 
the meaning of those words in the statute of limitations. 
The statute is as follows: "No action shall be brought on any 
bond or writing obligatory, contract under seal, or promissory 
note not negotiable, but within seventeen years next after an 
action shall accrue." The instrument sued upon is as follows: 

1 1 Parsons on Notes and Bills, 23, 24; Story on Prom. Notes, 
§14; Bouvier's Law Diet., Due Bill, Promissory Note, and 
I. O. U. 

2 1 Parsons on Notes and Bills, 25; Byles on Bills, 11, 28; 
Smith v. Allen, 5 Day, 340; Beeching v. Westbrook, 8 Mees. & 
Wels., 412; Melanotte v. Teasdale, 13 id., 216; Bowles v. Lam- 
bert, 54 111., 237. 

* 1 Parsons on Notes and Bills, 25. 

4 Hart's Appeal from Probate, 32 Conn., 539. 

6 Sanfordv. Clark, 29 Conn., 460. 

•Bell v. Morrison, 1 Peters, 531; Smith v. Eastman, 3 Cush., 
355; Mumford v. Freeman, 8 Met., 432; Brush v. Barnard, S 
Johns, 407; McLellan v. Albee, 5 Shepley, 184; 1 Smith Lead. 
Cas. (H. & W. Notes), part 2d, p. 876. 



SEC. 13.] CURRIER Z>. LOCKWOOD. 63 

"$17.14. "Bridgeport, Jan. 22d, 1863. 

"Due Currier & Barker seventeen dollars and fourteen 
cents, value received. Frederick Lockwood. 

Promissory notes not negotiable are by the statute 
above recited put upon the footing of specialties in regard to 
the period of limitation, and for most other purposes such 
notes have been regarded as specialties in Connecticut* The 
instrument however to which this distinction has been attached 
is the simple express promise to pay money in the stereotyped 
form familiar to all. The writing given in evidence in this 
case is a due bill and nothing more. Such acknowledgments 
of debts are common and pass under the name of due bills. 
They are informal memoranda, sometimes here as in England 
in the form of "I. O. U." They are not the promissory 
notes which are classed with specialties in the statute of lim- 
itations. The law implies indeed a promise to pay from such 
acknowledgments, but the promise is simply implied and not 
expressed. It is well said by Smith, J., in Smith v. Allen, 1 
' ' Where a writing contains nothing more than a bare acknowl- 
edgment of a debt % it does not in a legal construction import 
an express promise to pay ; but where a writing imports not 
only the acknowledgment of a debt but an agreement to pay 
it, this amounts to an express contract." 

In that case the words " on demand" were held to import 
and to be an express promise to pay. That case adopts the 
correct principle, namely, that to constitute a promissory note 
there must be an express as contra-distinguished from an 
implied promise. The words "on demand" are here wanting. 
The words "value received" which are in the writing signed 
by the defendant, cannot be regarded as equivalent to the 
words "on demand." The case of Smith v. Allen went to 
the extreme limit in holding the writing then given to be a 
promisory note, and we do not feel at liberty to go further in 
that direction than the court then went. 

The writing then not being a promissory note, the plain- 
tiffs action is barred by the six years clause of the statute, 
unless revived by a new promise to pay. 

! 5 Day (Conn), 337. 



64 CURRIER V. LOCKWOOD. [CHAP. 4, 

The offer of the defendant to give a ton of coal for the 
note was not accepted. It was a mere offer of compromise, 
and clearly no acknowledgment to take the case out of the 
statute. 

The conversation between the parties, recited in the 
motion, taken together as one transaction, was held by the 
Court of Common Pleas not to be sufficient evidence of a new 
promise. The result of the interview was a refusal to pay. 
The opening of the conversation on the part of the defendant 
would seem to admit the justice of the plaintiff's demand. 
The expression of a wish "to settle the note" would seem to 
imply that it was justly due; but the word "settle" is some- 
what equivocal, and taking the whole interview together, we 
think the Court of Common Pleas made no mistake in law in 
deciding as it did. 

A new trial is not advised. 

In this opinion Park and Carpenter, Js., concurred. 

Foster, J. That the paper before us is more correctly 
described as a due bill, than as a promissory note, is unques- 
tionable. That it would be regarded among business men, in 
the daily transactions of life, as conferring the same rights, 
and imposing the same liabilities, as a promissory note, seems 
to me equally unquestionable. It was so regarded by the 
parties to it; it was so treated and so spoken of whenever it 
was alluded to. This is manifest from the record; "The 
defendant came into the store of said Barker (one of the 
plaintiffs), and said to him: ' Have you that note ?' or 'Where 
is that note ? ' and that he ' wished to settle it. ' Barker told 
him ' the note was in Mr. Steven's hands, etc. ' " Any writing 
importing a debt, and an obligation to pay it, especially if it 
contains the words "for value received" is, in the popular 
judgment, a note. This instrument is clearly of that char- 
acter. It was clearly the intent of the parties so to make it, 
and it is evident that they supposed they had so made it. To 
hold otherwise would seem to be contrary to the understand- 
ing and intent of the parties. 

But it is claimed that this instrument is not, in law, a 
promissory note, and that the legislature, in passing the stat- 
utes of limitation, could never have intended to put such 
contracts on a footing with specialties. 



SEC. 13.] CURRIER V. LOCKWOOD. 65 

Now if we examine the various works on bills of exchange 
and promissory notes, we do not find that the learned authors 
of those treatises agree upon any exact and precise definition 
of a promissory note. Chitty, Bayley, Byles, Story, and 
Parsons, however, all agree that no particular words are 
necessary to make a bill or note. "It is sufficient if a note 
amount to an absolute promise to pay money." 1 Chancellor 
Kent, following substantially Mr. Justice Bayley, says, "A 
note is a written promise, by one person to another, for the 
payment of money, at a specified time, and at all events." 2 
Judge Parsons says, "A promissory note is, in its simplest 
form, only a written promise."' 

These definitions imply that a note must contain an express 
promise to pay. And Mr. Justice Story says: "But it seems 
that, to constitute a good promissory note, there must be an 
express promise upon the face of the instrument to pay the 
money; for a mere promise implied by law, founded upon an 
acknowledged indebtment, will not be sufficient."* Courts of 
the highest authority, however, both in England and in this 
country, hold otherwise; nor are all the text- writers so to be 
understood. "No precise words of contract are necessary in 
a promissory note, provided they amount, in legal effect, to a 
promise to pay." 6 

What Words and Phrases are Equivalent to the Word 
" Promise." — It is settled that a note need not contain the 
words 'promise to pay,' if there are other words of equivalent 
import." 6 What words are of "equivalent import" and are 
sufficient to raise a promise to pay, has occasioned much dis- 
cussion. "The distinction between the cases on this point, 
says Mr. Justice Story, in a note on the section above quoted, 
" is extremely nice, not to say sometimes very unsatisfactory. 

English Cases — As long ago as 1795, C. J. Eyre, sitting 

I Chitty on Bills, 428. 
a 3 Com., 74. 

I I Parsons on Notes and Bills, 14. 
4 Story on Prom. Notes, 14. 

* Byles on Bills, 8. 

* 1 Parsons on Notes and Bills, 24. 



»i 



>> 



66 CURRIER V. LOCKWOOD. [CHAP. 4, 

at Nisi Prius, held an *'/. O. U. eight guineas " to be merely 
an acknowledgment of a debt, and neither a promissory note 
nor a receipt. 1 In 1800, in the case of Guy v. Harris, 2 Ld. 
Eldon, whose authority is certainly not inferior to that of C. J. 
Eyre, held a similar paper to be a promissory note, and ruled it 
out when offered in evidence, because it had not a stamp. * ' I 
owe my father ,£470. Jas. Israel:" — This paper was offered 
in evidence before Ld. Ellenborough, and he said: " I enter- 
tain some doubts whether this paper ought not to have been 
stamped as a promissory note, but on authority of Fisher v. 
Leslie, 8 I will receive it in evidence, though unstamped."* // 
a time be named for payment, these instruments are differ- 
ently construed} In Brooks v. Elkins, "I. O. U. £20, to 
be paid on the 22d inst," was held to be either a promissory 
note, or an agreement for the payment of £\o and upwards, 
and in either case required a stamp. "/. 0. U. £83, to be 
paid May jth," was held to be a good promissory note. 6 

The cases are numerous where an instrument has been 
held to be a good note without an express promise to pay. 
41 1 do acknowledge myself to be indebted to A. in £10, to be 
paid on demand for value received." On demurrer to the 
declaration, the court, after solemn argument, held that this 
was a good note within the statute. 7 In the case of Morris v. 
Lee, 8 the words were, 4t I promise to be accountable to J. S., 
or order, for £$0, value received by me," and it was held a 
good promissory note. The court say they "will take the 
word accountable as much as if it had been pay. " They also 
notice the words value received. Fortescue, J. said, 44 This 

'Fisher v. Leslie, 1 Esp., 425. 

'Reported in Chitty on Bills, 526. 

8 1 Esp., 245. 

4 Israel v. Israel, 1 Camp., 499. Childers v. Boulnois, Dow. 
& Ry., Nis Prius cases, 8, decided by C. J. Abbot, is to the same 
effect. See also Tompkins v. Ashby, 6 Barn. & Cres., 541; 9 
Dow. & Ry., 543; 1 Mees. & Wels., 32; S. C. 

5 2 Mees. & Wels., 74. 

•Waithman v. Eizee, 1 Car. & Kirw., 35. 

7 Cashborne v. Dutton, 1 Selwyn, Nisi Prius, 320. 

8 1 Esp., 426. 



SJEC. 13.] CURRIER V, LOCKWOOD. 6j 

is a debt, being for value received, and said on account." 1 
S. C. 

American Cases. — Turning to the American cases, we 
find in our own court the case of Smith v. Allen.* This was 
brought on a paper in these words: " Due John Allen $94.91, 
on demand." The declaration counted on a promissory note, 
and alleged a promise to pay in the usual form, setting out 
the note in the declaration. The defendants demurred, and 
the Superior Court held the declaration sufficient. On writ of 
error brought, the Court of Errors sustained the decision. 

Here was manifestly no express promise to pay; but the 
court held that there was one implied, and so sustained the 
claim of the plaintiff. The difference between this and the 
case at bar is very slight. This contains the words il on de- 
mand, " that at bar the words * * value received, " The one by 
its terms is due on demand, and the promise to pay is, there- 
fore, implied by law, the other is, in legal effect, due on de- 
mand, and it is difficult to see a good reason why the law does 
not as readily imply a promise to pay such a debt, as one due 
on demand by its own terms. Besides a valuable considera- 
tion is expressed in the case at bar by the words * * value re- 
ceived," while none is expressed in the case of Smith v. Allen. 
Since the case of Edgerton v. Edgerton, 3 and the case of 
Bristol v. Warner,' it is quite clear that, by the law of this 
state, a promissory note, not negotiable, and not purporting 
on its face to be for value received, does not imply a consider- 
ation. Smith v. Allen and the case at bar, are alike in omit- 
ting the words, lt or order," and "or bearer," and so are alike 
non-negotiable. Such notes however are regarded as within 
the statute of 3 and 4 Anne. 1 

Passing from this decision in our own court to the courts 
of New York, where we are accustomed to find questions of 
mercantile and commercial law as ably discussed and as intel- 



! 8 Mod., 362; I Strange, 629; 2 Ld. Raym., 1396. 

*5 Day, 337. 

*8 Conn., 6. 

*i9 Conn., 7. 

5 Smith v. Kendall, 6 T. R., 123. 



68 CURRIER V. LOCKWOOD. [CHAP. 4, 

ligently decided as in any of our sister states, we find the case 
of Russell v. Whipple. ! The suit was on this paper, ' • Due 
S., or bearer, $10." This differs from the case at bar in add- 
ing the words "or dearer/ 1 and omits the words "value 
received. " The court says it was a promissory note, and that 
the case was too plain for argument. 

In Kimball v. Huntington, 2 this paper, "Due R. $325, 
payable on demand," was held admissible in evidence as a 
promissory note. Judge Nelson says: "The acknowledgment 
of indebtedness, on its. face, implies a promise to pay the 
plaintiffs, and the payment by its terms is to be in money, 
absolutely, on demand. 11 

In Luqueer v. Prosser, 3 Judge Cowan says: " If there be 
in legal effect an absolute promise that money shall be paid, 
all the rest is a dispute about words. * * * The whole 
inquiry is, does the paper import an engagement that tnoney 
shall be paid, absolutely ? If it do, no matter by what words, 
it is a good note. " 

In Sackett vs. Spencer,* this paper, " Due S. or bearer, 
$340, for value received with interest" the court says " is a 
good promissory note, and if it specifies no time of payment, 
it is, in legal effect, payable immediately, and without grace." 

In Franklin v. March, 6 the Supreme Court of New Hamp- 
shire held this paper, ' « Good to R. C. or order, for $30, bor- 
rowed money, " to be a good promissory note. 

In addition to the cases above cited, the following are 
very strong authorities to sustain the claim that this is a prom- 
issory note. 6 In Johnson v. Johnson, 7 the court say: "The 

1 2 Cow., 536. 

8 10 Wend., 675. 

8 1 Hill, 259. 

*29 Barb., 180. 

5 6 N. Hamp., 364. 

8 Cummings v. Freeman, 2 Humph., (Tenn.) 143, where the 
note read " Due J. F. £200 — borrowed Oct. 21"; Harrow v. Du- 
gan, 6 Dana, 341; Flemming v. Burge, 6 Ala., 373; Finney v. 
Shirley, 7 Mo., 42; McGowan v. West, id., 569; Lome v. Mur- 
phy, 9, Geo., 338. 

7 1 Ala., 263. 

Promissory notes must contain a specific promise to pay. The 



SEC. 13.] CURRIER V. LOCKWOOD. 69 

acknowledgment of a debt, due for a valuable consideration, 
clearly implies a promise to pay it on request." 

promise must be expressed or implied. No precise words of con- 
tract are necessary, provided they amount, in legal effect to a 
promise to pay. 

Byles on Bills, 8; Gordon v. Rundlett, 28 N. H., 435. A 
mere acknowledgment of indebtedness is not sufficient to consti- 
tute a promise. 

The Following Expressions have been held to Amount 
to Promises: "Due C. or order"; "due C. on the first day of 
May"; "due C. or bearer"; " good to bearer "; "due A. B. on 
demand"; "I acknowledge myself indebted to C. to be paid on 

demand". The words "on demand " and "to be paid on ..., 

day " and "or order", " or bearer " have been thought in them- 
selves to show that the debtor intended to do more than merely 
state the balance due on account. These words clearly recognize 
an obligation and a promise to pay. Where a writing contained 
nothing more than a bare acknowledgment of a debt, it does not, 
in legal construction, import an express promise to pay; but where 
a writing imports not only the acknowledgment of a debt, but also 
an agreement to pay it, this amounts to an express contract. Smith 
v. Allen, 5 Day, 337; Russell v. Whipple, 2 Cow., 536; Currier v. 
Lockwood, supra. 

A mere promise implied by law, founded on an acknowledged 
indebtedness will not be sufficient. Brown v. Gilman, 13 Mass., 
158. In order to constitute a good promissory note there should 
be an express promise on the face of the instrument to pay the 
money. While the promise need not be expressed in any particu- 
lar form of words, the language used must be such that the written 
undertaking to pay, may fairly be deduced therefrom. Gay v. 
Rooke, 151 Mass., 115. Therefore the following instrument, 
"I. O. U., E. A. Gary, the sum of seventeen dollars for value 
received. (Signed) John R. Rooke," is an acknowledgment of a 
debt by the maker, but not a promissory note. Gray v. Bowden, 
23 Pick., 282; Gay v. Rooke, 151 Mass., 115; Almy v. Winslow, 
126 Mass., 342. Some of the states, however, have by statute 
extended the law of bills and promissory notes to all instruments in 
writing whereby any person acknowledges any sum of money to be 
due to any other person. Rev. Sts. Ind., Sec. 5501; Rev. Sts. 111., 
C. 98, Sec. 3; Code, Iowa, Sec. 2085; Gen'l Laws, Colo., no, Sec. 
90; see also statutes of Idaho, Indiana and Mississippi. 

Upon the subject of this requisite, it must be said that there 
is great confusion and quite a conflict of authority. The general 
rule as stated above is undoubtedly true, but there are some cases 
which hold to the contrary. 

In some states it has been held that mere statements of indebt- 
edness are promissory notes. Thus: 
4 



70 CURRIER V. LOCKWOOD. [CHAP. 4, 

The record discloses the fact that the paper before us was 
given for the purchase of clothing, and that the price of it 
has never been paid. Our statute of limitation bars all right 



a 



*5*5 

Due G. S. Warren, on corn, five hundred and twenty-five dol- 
lars. J. Jacquin." 
Held to be a negotiable promissory note. Jacquin v. Warren, 
40 111., 459. 
Again: 

Due B. 1150.00. 

A". 
Held to be a note. Brady v. Chandler, 31 Mo., 28. 

Many cases have held that the addition of such words as, "on 
demand", " payable on demand", "to be paid", etc., were suffi- 
cient to convert due bills into notes. The principle may be best 
illustrated by citing and condensing a few cases: 
" $500.00. Rome, September 10, 1846. 

Due the Memphis Branch R. R. and Steamboat Co., of Geor- 
gia, five hundred dollars payable on demand, 

D. R. Mitchell." 
Held to be a good promissory note. 17 Ga., 574. 

" I do acknowledge myself to be indebted to A. in 500 pounds, 
to be paid on demand for value received. B." 

Held to be a note. The words "to be paid on demand" being 
held to amount to a promise to pay. Cashburne v. Dalton, P. on 
B. & N., 8th edit., 371. 

In Brooks v. Elkins, 2 M & W., 74, the following instrument 
was held to require a stamp: 

"nth October, 183 1. 

"I. O. U. 20 pounds to be paid on the 22nd instant, 

W. Brooks." 

" I have received the imperfect books which together with the 
cash overpaid on the settlement of your account amounts to 80 
pounds, which sum I will pay in two years." 
Held to be a note. Wheatly v. Williams, 1 M. & W., 533. 

A few cases showing a negative construction will further illus- 
trate the principle: 

" I have received the sum of 20 pounds which I borrowed 
from you and I have to be accountable for the said sum with inter- 
est." 

Held to be smagreement but not a note. Horn v. Redfearne, 4 Bing. 
N. C, 433. The phrase " to be accountable " is not an equivalent. 

"I. O. U. 45 pounds 13 shillings which I borrowed of Mrs. 
Melanotte, and to pay her 5 % till paid. 

Robert Teasdale." 
Held, not to be a note. Melanotte v. Teasdale, 13 M. & W., 216. 

"Memorandum. Mr. Sibree has this day deposited with me 



SEC. 13.] CURRIER V. LOCKWOOD. 7 1 

of action upon it, unless it is recognized as a promissory note. 
60 to recognize it will in my opinion do much less violence to 
law, than will be done to justice if we permit this defendant 

500 pounds on the sale of 10300 pound 3% Spanish, to be returned 
on demand. James S. Tripp." 

Held, not to be a note. Sibree v. Tripp, 15 M. & W., 23. 

"nth September, 1839. 

" I undertake to pay to Mr. Robert Jarvis the sum of 6 pounds 
4 shillings for a suit of clothes ordered by Daniel Page. 

S. W. Wilkins." 
Hfeld to be a guarantee > and not a note. Jarvis v. Wilkins, 7 M. 
& W., 410. 

In the above case Baron Parke said that had "supplied " been 
inserted instead of " ordered " it would have been a good note. 

"At twelve months after date, I promise to pay R. & Co., 
500 pounds to be held by them as collateral security for moneys 
now owing them by J. M., which they may be unable to receive on 
realizing the securites they now hold and others which may be 
placed in their hands by him." 

Held not to be a note. Robbins v. May, n Ad. & E., 213. 

It will thus be seen that it is by no means essential that the 
word " promise" be inserted in a writing to make it a promissory 
note. If, in fair legal intendment, it amounts to a "promise "to 
pay, courts will regard it as sufficient. In accordance with this doc- 
trine, certificates of deposit have been held to be notes, the necessary 
promise being inferred from the nature of the instrument. Miller 
v. Austin, 13 How., 218. 

And, if these certificates be payable to "A." or "Bearer," 
they are considered negotiable promissory notes payable to the 
holder. Maxwell v. Agnew, 21 Fla., 1154. 

See also, " receipts " for money when containing a promise of 
re-payment are promissory notes and are negotiable, Green v. 
Davies, 4 B. & C, 235. 

This is also true of receipts for money to be "returned when 
called for." Woodfalk v. Leslie, 2 Nott & McC, 585. 

But otherwise, when the receipt is merely for money " held 
subject to order. " Roman v. Terna, 40 Tex. , 306. 

Or when the receipt is for money "to be accounted for," it 
does not amount to a note. Tomkins v. Ashby, 6 B. & C, 541. 

What Words will Import a Promise to Pay. — 
The contract need not contain the words "promise to pay"; 
there are other words of equivalent meaning. It has been held 
that wherever there is an acknowledgment of a debt together with 
the use of any of the following words, the contract (if the other 
essentials appear) will be a good negotiable instrument: "On de- 
mand"; "value received "; " to be paid on May 5 "; " I promise 
to be ' accountable ' on demand"; " or order "; " or bearer"; " to 



72 CURRIER V. LOCKWOOD. [CHAP. 4, 

thus to escape the payment of an honest debt for the neces- 
saries of life. 

be paid"; " John Mason, 14th Feb., 1836, borrowed of Mary, his 
sister, the sum of 14 pounds in cash, as per loan, in promise of pay- 
ment, for which I am truly thankful," (Ellis v. Mason, 7 DowL, 598). 
In some jurisdictions the word "due " has been held to import a 
a promise to pay. Jacquin v. Warren, 40 111., 459; Lee v. 
Balcora, 9 Colo., 216; 11 Pac. Rep., 74; Anderson v. Pearce, 
36 Ark., 293; Brady v. Chandler, 31 Mo., 28. See statutes of 
your state. 

See upon the principal propositions, Green v. Davis, 4 B. & 
C, 239; Wheatley v. Williams, 1 M. & W., 533; Casborne v. Dut- 
ton, Selwyn's Nisi Prius, 329; Kimball v. Huntington, 10 Wend., 
675; Block v. Bell, 1 M. &R., 149; Israel v. Israel, 1 Camp., 499; 
Brooks v. Elkins, 2 M. & W., 74; Waithman v. Elsee, 1 C. & K., 
35; Dullea v. Emery, 2 Cr. & D. C. C, 506; Ellis v. Mason, 7 
Dowling, 598; White v. North, 3 Exch. Rep., 689 (18 L. J. Rep. 
[N. S.] Exch., 316); Shrivell v. Payne; 8 Dowling, P. C, 441; 
Forward v. Thompson, 12 Upper Canada, Q. B. Rep., 103; Rob- 
inson v. Bland, 2 Burr., 1077; Dickenson v. Teague, 23 L. T. 
Rep., 65; Ball v. Allen, 15 Mass., 433; Gordon v. Rundlett, 28 
N. H., 435; Smith v. Allen, 5 Day (Conn.), 337; Russell v. Whip- 
ple, 2 Corv. (N. Y.), 536; Carver v. Hayes, 47 Me., 257; Bacon 
v. Bicknell, 17 Wis., 523; Huyck v. Meador, 24 Ark., 191; Frank- 
lin V. March, 6 N. H., 364; Bank of Orleans v. Merrill, &c, 2 
Hill (N. Y. ), 295; Miller v. Austen, 13 How., 218; Poorman v. 
Mills, 35 Call., 118; Blood v. Northrup, 1 Kans., 28; Howe v. 
Hartness, 11 Ohio St., 449; Cate v. Patterson, 25 Mich., 191; 
Tripp v. Curtenius; 36 Mich., 494; Hunt v. Divine, 37 111., 137; 
Lafayette Bank v. Ringell, 51 Ind., 393. 

Due Bills. — In some jurisdictions an ordinary due-bill such 
as: "due A"; "I. O. U.", have been held to be good promissory 
notes. Jacquin v. Warren, 40 111, 459; Lee v. Balcon, 9 Colo., 
216; Fleming v. Burge, 6 Ala., 373; Brady v. Chandler, 31 Mo., 
28; St. Louis R. R. Co. v. Camden Bk., 47 Ark., 545. 

This, however, is clearly against the weight of authority. Cur- 
rier v. Lockwood, 40 Conn., 348; Fisher v. Leslie, 1 Esp., 425; 
Guy v. Harris (1800), Chitty on Bills, 426; Israel v. Israel, 1 
Camp., 493; Gay v. Rooke, 23 N. E. Rep. (Mass.), 835; Brooks 
v. Elkins, 2 M. & W., 74; Payne v. Jenkins, 4 Car. & P., 335; 
Smith v. Smith, 1 F. & F., 539; Gould v. Courbs, 1 C. B., 543; 
Bowles v. Lambert, 54 111., 237 (1870); Carson v. Lucas, 13 B. 
Mon., 213 (1852); Garland v. Scott, 15 La. An., 143. 

In order to amount to a promissory note the words used must 
at least be words from which a promise to pay money can be im- 
plied. Price v. Jones, 105 Md., 543; Strickland v. Holbrook, 75 
Cal., 268. 



SEC. 13.] CURRIER V. LOCKWOOD. 73 

I would admit the paper offered in evidence in support of 
the first count in the declaration. 

In this opinion Phelps J., concurred. 

An I. O. U. which does not contain any promise to pay is 
generally held not to constitute a promissory note, hut is a mere 
evidence of an account stated. Gray v. Bowden, 23 Pick., 282; 
Almey v. Winslow, 126 Mass., 342; Fisher v. Leslie, 1 Esp., 425. 
Israel vs. Israel, 1 Camp. 499; Carnwright v. Gray, 127 N. 

Y., 93- 

It has recently been held in New York that a written state- 
ment that a certain amount of money is due a payee therein 
named, followed by the signature of the maker of the statement, 
implies that the money is due from the maker and is an acknowl- 
edgment of indebtedness. The acknowledgment of the indebted- 
ness, and that it is due, implies a promise to pay it on demand. 
Hageman v. Moon, 131 N. Y.,- 462. 

An instrument merely acknowledging a deposit, cannot be 
regarded as a promissory note. There must be some word or 
statement raising a promise to pay. Kilgore v. Bulkley, 14 Conn., 
3^3, 3**3 ; Patterson v. Poindexter, 6 Watts & Serg., 227; Sibree 
v. Tripp, 15 M. & W., 23. In Tomkins v. Ashby, (6 B. & C, 
541) (1 M. & M., 32) it was held that the following memorandum, 
" Mr. T. has left in my hands 200 pounds" was not a promissory 
note. See also Payne v. Jenkins, 4 Car. & P., 335; Children v. 
Boulnois, Dow. & Ry., 8; Little v. Slackford, M. & M., 171. 

Neither will the written acknowledgment, on the back of a con- 
tract, acknowledging it to be due, signed by the promissor, create 
a promise to pay the sum named in the contract. Gray v. Bow- 
den, 23 Pick., 282; Almey v. Winslow, 126 Mass., 342; Daggett 
v. Daggett, 124 Mass., 149; Biskup v. Oberle, 6 Mo. App., 583. 

Promise to Give. — Where the words used in a negotiable 
contract import a promise "to give" simply a certain sum of 
money they will not create a promissory note. Caviness v. Rushton, 
101 Ind., 500; Johnston v. Griest, 85 Ind., 503; Williams v. Forbes, 
114 111., 167; Kirkpatrick v. Taylor, 43 111., 207; Pratt v. Trustees, 

93 HI-* 475- 



74 PEARSON V. GARRETT. [CHAP. 4, 



SECTION 14. 

THE ORDER IN A BILL AND THE PROMISE IN A NOTE MUST 
BE ABSOLUTE AND UNCONDITIONAL. 

PEARSON v. GARRETT, 1 

In the King's Bench, Trinity Term, 5 Will & Mary, 1694. 

[Reported in 4 Modern Rep, 242.] 

Form of Action. — John Pearson complains of John Gar- 
rett, being in the custody of the marshal, &c. , for that, to wit, 
Whereas the city of London is an ancient city; and also 
whereas in the same city; to wit, at the parish of St. Mary le 
Bow, in the ward of Cheap, there is and hath been, from time 
immemorial, an ancient and laudable custom, approved and 
used in the same, between merchants and other persons inhab- 
iting in the same city, namely, that if any person inhabiting 
in the said city shall make any bill or note in writing subscribed 
under his hand, and by the same bill or note he should prom- 
ise to pay any person any sum of money at any time or any 
times in the same bill or note mentioned, such person who made 
the same bill or note, by the same promise and consideration 
aforesaid, among merchants and other persons aforesaid, so as 
aforesaid used and approved, is bound to pay the same sum of 
money in the same bill or note mentioned to the same persons 
to whom promise of payment thereof by the same bill or note 
was made to pay the same at the time or times in and by the 
same bill and note for payment thereof is denoted, according 
to his promise aforesaid. And whereas, on the 21st day of 
October, in the fourth year of the reign of the Lord William 
and the Lady Mary, the now king and queen of England, &c, 
at London aforesaid, to wit, in the parish of St. Mary le Bow, 
in the ward of Cheap aforesaid, the same John Garrett was a 

*This case is cited in Chitty on Bills, 12, 135, 517; Story on 
Bills of Exchange, 46; Wood's Byles on Bills & Notes, 168; Ben- 
jamin's Chalmers on Bills, Notes and Checks, 27; Daniel on Ne- 
gotiable Instruments, 41; Tiedeman on Commercial Paper, 25; 
Randolph on Commercial Paper, 153; Norton on B. & N., 38; 
Ames, on B. & N., 30 n. 



SEC. 14.] PEARSON V. GARRETT. 75 

person residing in the city of London aforesaid, and so there 
residing on the same 21st day of October, in the fourth year 
aforesaid, in the parish and ward aforesaid, by a certain note 
in writing, subscribed with his own proper hand, promised to 
pay to the said John Pearson, or his assigns, sixty pounds 
within two months next after the aforesaid John Garrett should 
be lawfully married to one Elizabeth Petty, that is to say, fifty 
pounds thereof for himself, the aforesaid John Pearson, and 
ten pounds thereof for his wife. And the same John Pearson 
in fact saith, that the aforesaid John Garrett afterwards, to 
wit, on the 28th day of February, on the fifth year of the 
reign of the said lord the now king and lady the new queen, 
at London aforesaid, in the parish and ward aforesaid, to the 
said Elizabeth Petty was lawfully married; by which, and by 
force of the custom aforesaid, the aforesaid John Garrett be- 
came bound to pay to the said John Pearson the said sixty 
pounds, according to his promise aforesaid; and thereupon in 
consideration of the premises, the aforesaid John Garrett, then 
and there, to wit, on the 28th day of February, in the fifth 
year aforesaid, at London aforesaid, in the parish and ward 
aforesaid, undertook, and faithfully promised the said John 
Pearson, then and there, that he the said John Garrett the 
aforesaid sixty pounds to the said John Pearson, 
within two months next after the marriage aforesaid had, 
well and truly to pay and satisfy. Nevertheless the afore- 
said John Garrett, not regarding his promise and under- 
taking aforesaid, but contriving and fraudulently intending the 
said John Pearson in this behalf craftily and subtilely to de- 
ceive and defraud, the said sixty pounds, or any part thereof, 
to the said John Pearson hath not yet paid, although to do it 
the said John Garrett afterwards, to wit, on the 2d day of 
May, in the fifth year aforesaid, at London aforesaid, in the 
parish and ward aforesaid, by the same John Pearson was re- 
quired; but the same John Garrett to pay him the same, or 
him for the same hitherto in any wise to satisfy, hath alto- 
gether refused, and yet doth refuse. Therefore the said John 
Pearson says, that he is thereby injured, and hath received 
damage to the value of one hundered pounds. And therefore 
he produces the suit, &c. 



?6 PEARSON V. GARRETT. [CHAP. 4, 

Form of Defense. — To this declaration the defendant 
demurred, and the plaintiff joined in demurrer. 

The action was brought upon a note for the payment of 
sixty guineas when the plaintiff should marry such a person, 
&c, in which the plaintiff declared, as upon a bill of exchange, 
setting forth the custom of merchants, &C. 1 

The exceptions taken were, viz., ist, that the plaintiff 
does not aver that he was a merchant, or 2d, that the note 
was made secundum consuetudinem mercatorum; and 3d, 
neither has he laid any consideration. 

This is not such a custom amongst merchants of which 
this Court is obliged to take notice as part of the law of the 
land; for in truth there is no such custom; it is only an agree- 
ment founded upon a brokage, and therefore cannot be within 
the custom of merchants; neither was there ever yet any pre- 
cedents to pay money upon such a collateral contingency. It 
is no more than a voluntary note given with a present consid- 
eration; and if such should be allowed to be within the custom 
of merchants, then everything which is given without a con- 
sideration may be as well within the custom, which would 
quite change the law. 3 

Reply of Plaintiff. — The question is, Whether this custom 
be good or not ?■ It is sufficiently alleged in the declaration; it 
is not laid to be inter mercatores only, but inter alias personas 
residentes, &c; and if such a custom can be good, then it is 
admitted to be so by the demurrer. Dr. Witherly's son 
brought the like action upon a note; and he was a gentleman, 
and no trading merchant, but traveling into France, and had 
judgment, which was affirmed in the exchequer chamber. 4 No 

1 An action brought by the payee of a contract (as a negotia- 
ble contract), by which the drawer or maker promises to pay a cer- 
tain sum of money within two months after the drawer or maker 
shall have married cannot be sustained; for such a contract is not 
within the custom of merchants. 1 Salk., 129; 1 Strange, 674; 2 
Bl. Com., 446; 3 Burrows, 1637, 1670; 2 Ld. Raymond, 757. 

2 8 Mod., 265, 307, 362; 10 Mod., 286, 294; 11 Mod., 180; 
12 Mod., 15, 36, 380. 

8 1 Ld. Ray, 175, 281, 744, 759, 1481. 

*Sarsfield v. Witherley, 1 Show., 125; Comb., 45; 2 Ventris., 
292; Holt, 123. 



SEC. 14.] PEARSON V. GARRETT. 77 

reason can be offered why such a note should not bind as well 
as a bond, since the consideration for which it was given was 
very just, for it is lawful for one man to help another to a 
wife. 

The Decision. — If the note had been given by way of com- 
merce it had been good, but to pay money upon such a con- 
tingency cannot be called trading, a,nd therefore not within the 
custom of merchants. 

Judgment was given for the defendant. 1 

1 By 3 & 4 Ann. c. 9 it is provided that, "All notes in writing 
signed by any person, whereby such person shall promise to pay 
to any other person, or his order or unto bearer, any sum of 
money mentioned in such note, shall be taken and construed to be 
due and payable to the person to whom the same is made payable, 
and shall be assignable or indorsable over in the same manner as 
inland bills of exchange are or may be according to the custom of 
merchants; and the person to whom such money is, by such note, 
made payable, may maintain an action for the same as upon an 
inland bill of exchange, drawn according to the custom of mer- 
chants, against the person who signed the same; and the person to 
whom such note is indorsed may maintain his action for the money, 
either against the drawer or any of the indorsees, as in cases of 
inland bills of exchange." This act being for the benefit of com- 
merce, is to be liberally construed, 3 Wilf. 1; but no notes are 
within the benefit of it, unless they would, as bills of exchange, 
have been within the custom of merchants. Martin v. Chauntry, 
2 Stra., 271; Bull., N. P., 273; Joscelyne v. Lassere, Fort., 281; 
Jenny v. Hale, 8 Mod., 265; Jefferies v. Austin, 1 Stra., 674; Kyd 
on Bills of Exchange, 33 to 37; and see Beardsley v. Baldwyn, 2 
Stra., 1 15 1, in point. 

Payment Must Not Depend Upon a Contingency. — 
The order and the promise contained in commercial contracts 
must be simple, certain, unconditional and not subject to any con- 
tingencies. And hence, the general rule is, that a negotiable 
contract must not be limited in payment to particular circumstances 
and events, which cannot be known to the holder 0/ such instruments , 
in the general course of its negotiations; and if the contract wants 
upon its face this essential quality, or character of certainty y the 
defect is fatal It is then nothing more than a common law obli- 
gation. Carlos v. Fancourt, 5 Term R. 482; Dawkes v. Earl of 
Dolovaine, 2 Wm. Black., 782; Citizens Nat. Bk. v. Piollet, 126 
Pa. St., 194; Chandler v. Carey, 64 Mich., 237; Siegel v. Bank, 
131 111., 569; Culbertson v. Nelson, 61 N. W. Rep., 854. An 
order or promise to pay out of a particular fund will render the 
instrument conditional. If however the order or promise simply 
indicates a fund out of which reimbursement may be had, it is not 



78 PEARSON V. GARRETT. [CHAP. 4, 

conditional. Worden v. Dodge, 4 Denio, 159; Richardson v. 
Carpenter, 46 N. Y., 660; Munger v. Shannon, 61 N. Y., 251; 
Cota v. Buck, 7 Mete. (Mass.), 588; Miller v. Poage, 56 la., 96; 
Schmittler v. Simon, 10 1 N. Y., 554. Therefore, a promise to 
pay "out of my father's estate;" "or out of the growing substance;" 
"or on the return of this certificate;" "or in one and one-half 
years at my option;" or "a promise to pay with a right to extend 
the time of payment," or " with an understanding that the contract 
will be renewed at maturity," have been held not to be good com- 
mercial contracts on account of conditions. So also will a prom- 
ise to pay, "out of rents" or "out of A's money when he shall 
receive it," or "on the sale of certain property or produce" or 
"out of a certain fund," or "on account of freight" or "when 
the drawer shall come of age" or "thirty days after the ship 'A', 
shall arrive," be bad for uncertainty. Palmer v. Pratt, 2 Bing. R., 
185; Cc-lehan v. Cooke, Willes R., 393; Jenny v. Earle, 2 Ld. 
Raymond, 1361; Goss v. Nelson, 1 Bun. R., 226; Banbury v. 
Lisset. 2 Strange R., T211; De Forrest v. Frary, 6 Cow. (N. Y.), 
151; Ferris v. Bond, 4 Barn. & Aid. 679; Beardsley v. Baldwyn, 7 
Mod. R., 417 (reported also in 2 Strange, 1151); Willis, R., 399, 
(where the promise was to pay, "when the drawer shall marry," 
which was held to be conditional and therefore bad). Pearson v. 
Garrett, 4 Mod. Rep., 242; Brooks v. Hargreaves, 21 Mich.; 255; 
Chandler v. Carey, 64 Mich., 238; Cushing v. Field, 70 Me., 50; 
Costello v. Crowell, 127 Mass., 293; Woodburry v. Roberts, 59 
la., 348; ("when the estate of 'M* is settled up,") Husband v. 
Eqling, 81 111., T72; Jennings v. Bank, 22 Pac. Rep., 777. 

In some jurisdictions it has been held, that, where payment 
was a certain time after sight, or when realized, it was upon 
condition and therefore bad. Alexander v. Thomas, 16 Adol. & 
Ellis, 333; 16 Q. B., 333; Charlton v. Reed, 61 Iowa; 166. See 
also the following cases upon the general proposition; Blackman 
v. Lehman, 63 Ala., 547; Power v. Ward, 6 Gray, 175; Stults v. 
Silva, 119 Mass., 137; Worth v. Case, 42 N. Y., 363; Fleury v. 
Tufts, 25 III. App., 101; Blake v. Coleman, 22 Wis., 396; White 
v. Cushing, 88 Me., 339. 

If the bill or note contains, in addition to the order or prom- 
ise to pay money, an order or promise to do an act it will not be 
sustained as a negotiable instrument. Davies v. Wilkinson, 10 
Aid. & El., 98; Killam v. Schceps, 26 Kans., 310; Cook vs. Sat- 
terlee, 6 Con., 108; Leonard v. Mason, 1 Wend., 522; Valley 
Nat. Bk. v. Crowell, 148 P. St., 284; Osborn v. Hawley, 19 Ohio, 
130; First Nat. Bk. v. Slaughter, 98 Ala., 602; Hodges v. Shuler, 
22 N. Y., 114. 

The instrument may, however, contain a statement showing the 
facts out which the transaction arose without becoming conditional. 
Siegel of v. Chicago &c. Bank, 131 111., 569; Stevens v. Blunt, 
7 Mass., 240; Davis v. McCready, 17 N. Y., 320. 



SEC. 14.] PEARSON V. GARRETT. 79 

The Reason for the Rule. — Judge Story has well stated 
the reason for this essential of bills and notes, to be "that it 
would greatly perplex the commercial transactions of mankind, 
and diminish and narrow their credit, circulation, and negotiabil- 
ity, if paper securities of this kind were issued out into the world, 
encumbered with conditions and contingencies; and if the persons 
to whom they are offered in negotiation, were obliged to inquire, 
when these uncertain events would probably be reduced to cer- 
tainty, and whether the conditions would be performed or not." 
Story on Bills of Exchange, Sec. 46; Jenny v. Earle, 2 Ld. Ray- 
mond, 1361; Colehan v. Cooke, Willes, Rep., 393; Goss v. Nel- 
son, 1 Burr., R., 226; Dankes v. Earl, etc., 2 W. Black., 782; 
DeForest v. Frary, 6 Cow. (N. Y.), 151; Banbury v. Lisset, 2 
Strange, 121 1. 

In Clarke v. Perceval, 2 B. and Ad. 660, the instrument was 
in the following form: 
";£i2oo. "Warrington, 4th March, 1824. 

On demand, we promise to pay Mr. George Clark, or order, 
Twelve hundred pounds, for value received, in stock, ale, brewing 
vessels, etc., this being intended to stand against the undersigned 
Mary Perceval as a setoff for the sum left me in my father's will 
above my sister Anne's share. 

Thomas Perceval, 
Mary Perceval." 
(Witness) William Hall. 

The court of King's Bench held that the twelve hundred 
pounds was not payable at all events and the instrument was, there- 
fore, not a promissory note. 

The Bill or Note will be Sustained if the Condition is 
Sure to Happen. — A negotiable contract may be made payable 
upon some condition or the happening of some event, if the con- 
dition or the event is sure to come to pass. Thus a promise to 
pay "ten days after the death of A" will be sustained, for that 
event is sure to happen. Roffey v. Greenwell, 10 Al. & E., 222; 
Price v. Taylor, 5 Hurl. & N., 540; Protection Insurance Co. v. 
Bill, 31 Conn., 204; Goss v. Nelson, 1 Burr, 228. In the case 
of Andrews v. Franklin, the promise was "to pay within two 
months after the ship 'Swallow' is paid off." This was supported 
on the ground that the paying off of the ship is a thing of a public 
nature and will therefore come to pass. 1 Strange, 24 (17 17); 
Evans v. Underwood, 1 Wils, 262; Beardsley v. Baldwin, 7 Mod., 
417, 419. If the time of payment must surely come, though the 
particular day is not mentioned, nor perhaps ascertainable at the 
inception of the contract, the note or bill is good and negotiable. 
Thus notes payable a certain time after a man's death, have been 
held good; for it is certain that every man must die. Bristol v. 
Warner, 19 Conn., 7; Conn. v. Thornton, 46 Ala., 588. 

"As soon as realized" and "to be paid during the coming 



So PEARSON V. GARRETT. [CHAP. 4> 



season" occurring in the same note and read together have been 
held not a condition, as payment must be due before the close of 
harvest. Cota v. Buck, 7 Mete, 588. 

Notes Payable at the " Convenience " of the Maker are 
Payable Within a Resonable Time. — In the cases, we find in- 
stances of notes containing statements of the time of payment 
which, if taken literally, would enable the maker to refuse payment 
forever. In these instances, the courts have held the notes to be 
due a reasonable time after their date. Works v. Hershey, 35 la., 
340; Crooker v. Holmes, 65 Me., 195. 

In the 35 la., 340, the promissory note was in the following 
form: 

" On demand after date, I promise to pay to the order of Niles 
Brooks $2,512.87 payable at Cincinnati when convenient" 

Held, that the maker was bound to pay within a reasonable 
time after the date of the note. In discussing the construction of 
the note, Beck, C. J., said: "The words 'payable at Cincinnati, 
when convenient,'* cannot be construed to nullify the other words 
of the instrument, viz., 'On demand, I promise to pay.' If any 
force be given to them it will be that the maker bound himself 
within a reasonable time to pay the amount, after the date of the 
note. " 

In the 65 Me., 195, the language of the court was: "Where 
the maker of a note promises to pay a certain sum when he shall 
sell the place he lives on, the debt is absolute, though its payment 
may be postponed; it is the duty of the maker to sell within a rea- 
sonable time, that he may discharge his indebtedness; he cannot 
avoid liability by putting it out of his power to perform his 
contract." 

In De Wolfe v. French (51 Me., 420), it was held, that where 
a debt is due absolutely, and the happening of a future event is 
fixed upon as a convenient time of payment merely, and the future 
event does not happen as contemplated, the law implies a promise 
to pay within a reasonable time. In Sears v. Wright (24 Me., 278), 
this rule was followed where the note was payable "from the 
avails of the logs bought of M. M., when there is a sale made." 

In Smithers v. Junckers (41 Fed. Rep., 101), Gresham, J., held 
the following to be a good promissory note and payable within a 
reasonable time: 

"Chicago, III., Nov. 1, 1883. 
"For value received I promise to pay to S. F. Smithers two 
thousand and forty-eight and 25-100 dollars, payable at my conven- 
ience, and upon this express condition, that I am to be sole judge of 
such convenience and time of payment. 

A. Junkers. 

The same rule was applied in the case of Lewis v. Tipton, 10 
Ohio St., 88, where the promise was to pay "when I can make it 



9) 



SEC. 14.] PEARSON V. GARRETT. 8 1 

convenient.' ' Edwards on Bills of Exchange and Promissory 
Notes, 154, note 4, Capron v. Capron, 44 Vt, 410. 

Conditions may be Imposed by an Indorsement. — 
A negotiable contract, absolute in form, may be made condi- 
tional by an indorsement made before delivery. In the case of 
Barnard et al. v. Cushing et al. (4 Mete, 230), the contract was 
an absolute promise to pay with the indorsement " We agree not to 
compel payment for the amount of this note, but to receive the same 
when convenient for the promissor to pay it." It was held that no 
action could be maintained upon this promise. See also Hartley 
v. Wilkinson, 4 Camp., 127; 4 M. & S., 25. 

Inconsistent Conditions will be Disregarded. — Bayley 
in his work on Bills cites a case (2 Atk., 32) where the note 
read, "Borrowed of J. S. 50 pounds, which I promise never 
to pay." The court rejected the word "never" and held the 
promissor liable. A note payable "when payor and payee mutually 
agree" is payable in a reasonable time. Page v. Cook, June 21, 
1895 (Mass.); 41 Northeastern Rep., 115. In the case of Ubsdell 
v. Cunningham (22 Mo., 124), the promise was "as soon as col- 
lected from my accounts at P. ", and it was held to be an absolute 
promise to pay. 

A "promise to pay if my brother does not" upon a contin- 
gency will not be supported. Appleby v. Biddolph, 8 Mod., 
303 (17 1 7). A promise to pay "at four years after date, if I am 
then living, otherwise this bill to be null and void, is payable upon 
a contingency and not a good negotiable contract. Braham v. 
Bubb, Chitty on Bills of Exchange 87 (1826); Gillilan v. Myers, 
31 111., 525; Eldrhd v. Mallory, 2 Colo., 320; Hays v. Gwin, 19 
Ind., 19. "I promise to pay or cause to be paid," is not good, 
Lovell v. Hill, 6 C. & P., 238; Shenton v. James, 5 Q. B. Rep., 
199; Jarvis v. Wilkins, 7 M. & W., 410; Munger v. Shannon, 61 
N. Y., 251; McGee v. Larramore, 50 Mo., 425; Blake v. Coleman, 
22 Wis., 415. 

A Condition which Changes the Time of Payment 
Does Not Destroy the Bill or Note.— It is no objection to a 
note payable at a certain date that it permits payment before 
maturity. Thus a note at twelve months "or sooner if made out 
of a certain sale" is good. Mahoney v. Fitzpatrick, 133 Mass., 
134; Ernst v. Steckman, 74 Pa. St., 13; Walker v. Woolen, 54 
Ind., 164; Woolen v. Ulrich, 64 Ind., 120; Palmer v. Hammer, 
10 Kan., 464; Helmer v. Krolick, 36 Mich., 371. 

If it is made payable absolutely at some time certain uncon- 
ditionally, it will be sustained, even though by some possibility it 
may be paid sooner. 

To illustrate in the note as follows: 

"Ann Arbor, Mich., May 24, i8p8. 

"Six months after date I promise to pay John Doe or order, 
one hundred dollars, for value received, or as soon as I can sell my 
property. Richard Roe." 



82 PEARSON V. GARRETT. [CHAP. 4, 

There is an absolute promise to pay at a time certain, but may 
be paid at an earlier date. The fact that it may be paid before the 
time stated does not make the promise conditional. Ernst v. 
Steckman, 74 Pa. St., 13; Charlton v. Reed, 61 la., 166; Palmer v. 
Hammer, 10 Kans., 4643 Woolen v. Ulrich, 64 Ind., 120. 

Nor does it invalidate the note, if it recites that on payment, 
the payee shall sell a machine to the maker. Hawley v. Bingham, 
6 Or., 76. 

Nor does a reservation in the note of a right to pay in United 
States bonds invalidate the instrument as a negotiable security. 
Dinsmore v. Duncan, 57 N. Y., 573. 

The words, "payable on the return of this certificate," in- 
serted in the document, if a condition at all, constitutes a lawful 
one, being merely a demand for the surrender of the evidence of 
indebtedness. Smilie v. Stevens, 38 Ver., 316. 

Conditions, to be Binding, must appear upon the Bill 
or Note. — Conditions to effect negotiability must appear on the 
face of the written instrument, and when not so appearing, cannot 
be proven by parole. Jones v. Shaw, 67 Mo., 667; contra 4 Mete. 
230 supra. 

In discussing this question, a Texas court laid down the fol- 
lowing proposition: — "Where a bill payable at a certain day is 
presented for acceptance and dishonored, the payee may sue the 
drawer at once; and a plea by the latter setting up an oral agree- 
ment made previous to or contemporaneous with the drawing of 
the bill, that the drawer should not be liable to pay the amount of 
the bill until the time stipulated, is bad; for the reason that it pro- 
poses to vary by oral evidence the legal effect of a contract in 
writing." 

During the American civil war, notes were frequently given 
payable a certain time "after peace," or the "ratification of 
peace " between the United States and the Confederate States. In 
some states, these obligations have been held actionable upon 
the cessation of hostilities; while in others they have been declared 
invalid as being conditioned upon the success of insurrection. 
Brewster v. Williams, 2 S. Car., 455; Knight v. McReynolds, 37 
Tex., 204. 

A note or bill payable out of a particular fund is not payable 
at all events and unconditionally, inasmuch as the fund may prove 
deficient Atkins v. Marks, 1 Cow., 691. There is an exception, 
however, in case the person having possession of the fund drawn 
upon accept the bill so drawn. This establishes the negotiability 
of the instrument at once, and, as between drawer and payee it 
operates even before acceptance as an equitable assignment of the 
fund it refers to. Am. & Eng. Encyo., 320. 



SEC. 15.] RHODES V. LINDLEY. 8$ 

SECTION 15. 

THE ORDER IN A BILL AND THE PROMISE IN A NOTE 
MUST BE FOR THE PAYMENT OF MONEY ONLY. 

RHODES v. LINDLEY.* 

In the Suprkme Court of Ohio, December, 1827. 

{Reported in 3 Ohio, ff. ] 

Form of Action. — This was an action of assumpsit, 
upon a note of hand given by the defendant, to Hezekiah 
Rhodes or bearer, promising to pay fifty dollars, at a day sub- 
sequent, "in good merchantable whisky, at trade price." 
The declaration set forth, in terms, an assignment and deliv- 
ery of the note to the plaintiff, and claimed to recover as 
bearer. 

Form of Defense. — The defendant demurred, and 
assigned as a cause of demurrer, that the note was not nego- 
tiable. 

The court of common pleas in Trumbull county gave 
judgment for the plaintff, and the defendant obtained this writ 
of error, which was adjourned here for final decision. 

Decision. — At the common law, this paper was not assign- 
able; neither is it assignable under our statute. The plaintiff 
admits this; but claims to recover, on the ground, that being 
made payable to bearer, any person, who is the actual bona 
fide owner, may maintain the action as bearer. Were it a 
note for money, this position would be a correct one. But 
that doctrine has never been applied to executory contracts for 
the delivery of property, or for the performance of any partic- 
ular act. 

The case of Geddings v. Byington, a decided upon the cir- 
cuit, at Ashtabula, is supposed to have settled this doctrine 
differently. This inference is deduced, not from the point de- 

^his case is cited in Daniel on Negotiable Instruments, 55;. 
Tiedeman on Commercial Paper, 29; Norton on Bills and Notes, 
49. See also 14 Am. Dec, at 422, where the case is reported 
with extended notes. 

9 2 Ohio, 228. 



84 RHODES tf. LINDLEY. [CHAP. 4, 

cided, but from some remarks of the judge in giving the 
opinion. These were only intended to apply to a note for the 
payment of money, made payable to a payee or bearer. It 

General Rule. — It is the first and principal requisite that 
commercial contracts must be for the payment of money only, and 
such payment must be absolute and not contingent, either as to 
amount, event, fund or person; and if they are made payable in 
anything else, such as merchandise or other property susceptible of 
loss or variation in value, they will not be good commercial con- 
tracts, but of course will be sustained as common law contracts. 
Chitty on Bills, 153; Cook v. Satterlee, 6 Cow., 108; Worden v. 
Dodge, 4 Denio, 159; Archer v. Claflin, 31 111., 306; Tibbits v. 
Gerrish, 25 N. H., 41; Horton v. Arnold, 17 Wis., 139. 

Exception. — May be Payable in Merchandise if at the 
Option of the Payee. — Neither will the contract be sustained as 
a commercial contract if it is payable in money or merchandise in 
the alternative, unless the option of accepting the money or mer- 
chandise is exclusively in the holder, Dan. on Negot. Inst., Sec. 
55; Norton on Bills and Notes, Sec. 23; Auerbach v. Pritchett, 858 
Alar. 451; Hosstatterv. Wilson, 36 Bar!., 307; McClellan v. Coffins, 
93 Ind., 456; Hodges v. Shuler, 22 N. Y., 114. 

Exception. — Statutory Provisions. — By statute in some of 
the states; however, contracts to pay in property, to order, or to 
bearer, are made negotiable. Prather v. McEvoy, 8 Mo., 661 
Hyland v. Blodgett, 9 Oregon, 166; Spears v. Bond, 79 Mo., 470 
Weil v. Tyler, 38 Mo., 545; Rev. Stat, of Mo. (1879), Sec. 663 
McClellan v. Coffin, 93 Ind., 456. 

In Spears v. Bond, supra, the contract was as follows and was 
held to be a good prommissory note under the statute: 

"May 28, 1897, 

i ' Eighteem months after date, we, or either of us, promise to 
pay to the bearer the sum of 20, 000 feet of good salable lumber, for 
value received of him. J. W. Fox, 

his 

Riley A' Bond." 

mark. 

According to the weight of authority a "promise to pay," in 
goods and chatties, is nothing more than a special contract for the 
delivery of particular articles, and such contracts are not negotiable. 
Clark v. King, 2 Mass., 524; Auerbach v. Pritchett, 58 Ala., 451; 
Quinby v. Merritt, 11 Humph., 439; Roberts v. Smith, 58 Vt., 494 
(where the promise was to pay "an ounce of gold," and held not to 
be good); Jones v. State, 40 Ark., 347; Arnold v. Rock River Co., 
5 Duer., 207; Gordon v. Rundlett, 29 N. H., 435; Sachett v. Pal- 
mer, 25 Barb, 179; Dilley v. Van Wie, 6 Wis., 209; Palmer v. 
Ward, 6 Gray, 340; McCartney v. Smalley, n Iowa, 85; Wright v. 
Hart, 45 Pa. St., 454; Phoenix Ins. Co. v. Allen, 11 Mich., 501; 
Marine Bank v. Rushmore, 28 111., 463; Henschel v. Mahler, 3 



SEC. 15.] RHODES V. LINDLEY. 85 

was only to that point that the attention of the court was 
directed in argument. The negotiable character of the note 
was not made a subject of inquiry by either party. The 

Denio., 428; Martin v. Chauntry, 2 Strange, 1271; Digberty v. 
Darnel, 5 Yerger, 451; Jerome v. Whitney, 7 Johnson, 321; Has- 
brook v. Palmer, 2 McLean, 10; Butler v. Paine, 8 Minn., 324; 
Irwin v. Lowry, 14 Pet., 293; Lieber v. Goodrich, 5 Cow., 186; 
Shamokin Bank v. Street, 16 Ohio St., 1; Ellison v. Collinridge, 9 
C. B., 570; Judah v. Harris, 19 Johns., 144; Pardee v. Fish, 60 
N. Y., 265; Huse v. Hamblen, 29 la., 501; Lafayette Bank v. 
Ringel, 51 Ind., 393; Chrysler v. Renois, et al., 43 N. Y., 209; 
Thompson v. Sloan, 23 Wend., 71. 

It is now well established that a Bill or Note, although possess- 
ing every other requisite of a negotiable instrument, is bad, if the 
order ox promise be for labor or merchandise^ and not for money. 

The Reason for the Rule. — This requisite springs from the 
necessities of commercial intercourse. Money is the one standard 
of value, established by the law, recognized by the courts and 
demanded by the exigencies of trade and commerce. "All other 
commodities may rise and fall in value; but in theory, at least, 
money always measures this rise and fall, and remains the same.' 9 

If the promise be to pay in wheat or corn, it is impossible to 
determine from an inspection of the instrument on any given day, 
what its value will be on the succeeding day. This uncertainty 
and hazard necessarily destroy its negotiability. Such an instru- 
ment would obviously be unfitted for a circulating medium. For 
this reason, "a note payable in neat cattle," and a promise to pay 
"in a good horse, to be worth $80.00, and goods out of a store 
amounting to $20.00," are each non-negotiable. Jerome v. Whit- 
ney, 7 Johns, 322; Thomas v. Roosa, 7 Johns, 461. 

Money Defined. — The meaning of "money" as applied to 
negotiable instruments has been defined by the Acts of Congress 
known as the "Legal Tender Acts." Whatever is legal tender is 
money. The legal tender qualities of the money ordered or prom- 
ised at the place of payment of the bill or note determine whether 
the medium of payment specified is really legal tender or not. This 
test is not fixed and universal, however, " When by the statute of 
Victoria, ' Canada Bills ' were made legal tender, the court of Upper 
Canada said: 'It may be that a person can make a promissory note 
payable in a particular coin, as in gold or silver, because they are 
respectively money and specie; but I think he cannot make it 
payable in "Canada Bills," because they are not money or specie. 
They have no intrinsic value as coin has; they represent only, and 
are signs of value. Money itself is a commodity; it is not a sign; 
it is the thing signified.'" Gray v. Worden, U. C. Q. B., 535; 
Norton on Bills and Notes, 5 1 . 

To the general rule, however, there seems to be at least an 



86 RHODES V. LINDLEY. [CHAP. 4, 

plaintiff in error claimed a reversal, on the ground that the 
right of the original payee did not appear, by the declaration, 
to have passed to the holder, by assignment, delivery, or 



apparent exception. A bill or note made payable in money of a 
foreign denomination is still negotiable. This arises from inter- 
national recognition of standard or bullion value in moneys. Our 
courts, "Under the statutes of the United States, will take judicial 
notice of the fact that the value of foreign coin, as expressed in 
the money of account in the United States, shall be that of the 
pure metal of such coin of standard value; and that the value of 
the standard coin of the various nations of the world in circulation 
is estimated annually by the directors of the mint and proclaimed 
on the first day of January by the Secretary of the Treasury. 
These foreign denominations, therefore, can always be paid in our 
own coin of equivalent value to which it is always reduced on a 
recovery. " 2 Chitty Bills (Am. edit), 615-616. Deberry v. Dar- 
nell, 5 Yerg., 451. 

When action is brought upon a bill or note, however, it is 
necessary to prove the value of the sum expressed in our own 
money, as the courts can construe the instrument payable in no 
other. Thompson v. Sloan, 23 Wend., 71; Bayley on Bills, 23. 

Equivalent Words and Phrases for Money. — Descrip- 
tive terms prefaced to the word " money " have been held not to 
vitiate the instrument containing them. 21 Tex., 466; 38 Tex., 
214, 

In the first of these cases the descriptive words were, "other 
good cash notes"; in the second, "in good, solvent cash note." 
In each case the court held that the descriptive words did not 
vitiate the instrument. 

The words "current funds" and "currency" have been held 
to mean "money"; but the question is in dispute. 

Among others, the following cases hold the affirmative: Emi- 
grant Company v. Clarke, 47 la., 671; White v. Richmond, 16 
Ohio, 5; Wood v. Price, 46 111., 435. 

To the contrary: Nat. Bank v. Ringel, 51 Ind., 393; Johnson 
v. Henderson, 76 N. Car., 227; Haddock v. Woods, 46 la., 433. 

The rule under consideration forbids a promise to perform 
other acts in addition to the payment of money. The leading 
authority on this point is Martin v. Chauntry, 2 Strange, 1271. 
The language of the note was, "to deliver up horses and a wharf, 
and to pay money." This was held not to be a note within the 
Statute of Anne. Prof. Ames very clearly and concisely states the 
objections to such an instrument: " One could be indorsed, the 
other would have to be assigned. In some jurisdictions, the action 
could be brought by the indorsee in his own name, but as assignee, 
he could only sue in the name of his assignor. In the case of the 
negotiable instrument being in the hands of a bona fide holder, no 



SEC. 15.] RHODES V. LINDLEY*. 87 

otherwise, and that ground being considered sufficient for the 
purpose, the judgment was reversed without further examina- 
tion. In this case, the direct question is presented, whether 



defense of fraud or latent equity would avail; in the case of holder 
as assignee, all would avail." 

Contracts Payable in Bank Bills or Currency. — 
When we say that commercial contracts must be paid in 
"money," we mean that they must be paid in something which is 
tenderable for debt. Rev. St. U. S., Sees. 3584, 3590. Many 
expressions have been used which have been held to mean an order 
or promise to pay " money, " such as the following: "in current 
funds of the State of Ohio"; "current bank notes of Cincinnati"; 
"currency of this place"; "in funds current in the City of New 
York"; "in current Ohio bank notes"; "current money of Ala- 
bama"; "in good current money of this state." Sweetland v. 
Creigh, 15 Ohio, 118; White v. Richmond, 16 Ohio, 5; Lacy v. 
Holbrook, 4 Ala., 18. When the medium is expressed to be "good 
current money" or "current money," it is not objectionable, as 
legal tender money is intended. See also Burton v. Brooks, 25 
Ark., 215; Black v. Ward, 27 Mich., 191; Frank v. Wessels, 64 N. 
Y., 155; Warren v. Brown, 64 N. Car., 381; Swift v. Whitney, 20 
111., 144; Phelps v. Town, 14 Mich., 374; Pardee v. Fish, 60 N. Y., 
265; Sweetland v. Creigh, 15 Ohio, n8; White v. Richmond, 16 
Ohio, 5; Howe v. Hartness, 11 Ohio St., 449; Jones v. Fales, 4 
Mass., 245; Bull v. Kasson, 123 U. S., 112; Haddock v. Woods, 
46 la., 435; Klauber v. Biggerstaff, 47 Wis., 551. 

An Order or Promise to Pay in "Bills of Exchange " 
is not a Promise to Pay Money. — In the case of First Nat. Bk. 
of Brooklyn v. Slette 69 N. W. Rep., 1148, (Minn.), the promise 
was to pay "by New York or Chicago exchange," and the court 
said: "The holder of this instrument cannot demand in payment 
thereof dollars in money; for the maker is not bound to dis- 
charge his obligation, except by means of inland bills of exchange 
on New York or Chicago. Nor can the maker tender in payment 

dollars in money; for the promise is to make payment by 

inland bills, which he must purchase in the market. The instru- 
ment, then, is not payable in money, and is, therefore, not a 
promissory note within the law merchant." Easton v. Hyde, 13 
Minn., 90; Jones v. Fales, 4 Mass., 245; Irvine v. Lowry, 14 Pet, 
293; First Nat. Bk., &c, v. Greenville Nat. Bk., 84 Tex., 40. 

Must be Payable in Money, but may be in the Money of 
any Country. — While commercial contracts must be payable in 
money, it is not necessary that the money should be that current in 
the place of payment, or where the bill is drawn; it may be in the 
money of any country whatever. Story on Bills, Sec. 43; Dan. 
on Negot. Inst, Sec. 58. But when the contract is to be paid in 
the money of a foreign country, the specific denominations of the 



88 RHODES V. LINDLEY. [CHAP. 4, 

such a contract as this can be so transferred as to authorize a 
third person to maintain a suit in his own name. Our unani- 
mous opinion is that no such right can be transferred. The 

money should be given so that the court may be able to ascertain 
its equivalent value. Dan. on Negot. Inst., Sec. 58. 

In Black v. Ward, Campbell, J., said: "A note payable in 
Canada currency means no more and no less than that it is pay- 
able in Canada money at the Canada standard, and that it is 
governed as to the amount it calls for by the same rules as if it had 
been made in Canada, and payable in so many dollars without con- 
taining any further directions." 27 Mich., 193; 15 Am. R., 162. 
In New York, however, a note payable in "Canada money " was 
held not negotiable. In Thompson v. Sloan, Cowan, J., said: "A 
promissory note must, in order to be negotiable, be payable in 
money only, in current specie; or at least in what he can judicially 
notice as equivalent to money." 23 Wend., 71; 35 Am. D., 546. 
In this case, however, the court intimates that if the note had been 
made payable in pounds, shillings and pence, the exact amount 
might have been ascertained and been expressed in dollars and 
cents and would have been negotiable. Thompson v. Sloan, 23 
Wend. The decision of Thompson v. Sloan was made in 1840, at 
a time when the "dollar" was not a denomination of the lawful 
money of Canada. But at the time when the case of Black v. 
Ward arose, this had been changed and the denomination of Can- 
ada money corresponded with that of the United States. Upon 
this theory these cases may be reconciled. The opinion of Cowan 
clearly indicates that if the money named in the note had been a 
denomination of Canada money, so that its equivalent could have 
been ascertained, his conclusion would have been different. A 
note payable in Mexican silver dollars has been held to be a good 
promissory note. The fact that a note is payable in the money of 
a foreign country does not destroy its negotiability nor divest it of 
any of the attributes of a promissory note; the recovery, however, 
must be limited thereon to its value in American money. Hogue 
v. Williamson, 85 Tex., 553; Am. St. R., 823. So also a nego- 
tiable contract may be payable in either gold or silver coin. 
Strickland v. Holbrooke, 75 Cal., 268. 

The Amount Must not be Payable out of a Particular 
Fund. — Commercial contracts must not be made payable out of a 
particular fund. For that would make their payment depending 
upon the existence or supply of the fund, and therefore conditional. 
Worden v. Dodge, 4 Denio., 159; Richardson v. Carpenter, 46 N. 
Y., 661; Ehricksv. De Mill, 75 N. Y., 370; Turner v. P. & S. 
Ry. Co., 95 111., 134; Corbet v. Clarke, 45 Wis., 403. 

The Amount May be Charged to a Particular Fund. — 
If, however, the amount to be paid is to be credited to some 
particular fund; or if the person who is to pay the amount is 



SEC. 2.] RHODES V. LINDLEY. 89 

judgment must be reversed, and judgment be given for the 
defendant. 

referred to some fund from which he may reimburse himself, the 
contract will be sustained. Spurgin v. McPheeters, 42 Ind., 527; 
Munger v. Shannon, 61 N. Y., 258; Macleod v. Luce, 2 Strange, 
762; Turner v. P. & S. Ry. Co., 95 111., 133; Brill v. Tuttle, 81 
N. Y., 457; Union Trust Co. v. Chicago & R. R. Co., 7 Fed. R., 
513; Kelly v. Brookland, 4 Hill, 263. 

It Must not be for the Payment of Money and an 
Act. — The bill or note must be for the payment of money only. If 
it contains an order or promise to pay money, and also to do some 
other act, this will destroy it as a negotiable contract. In the case 
of Martin v. Chauntry (2 Strange, 1271), the order was "to pay 
money at a particular day and to deliver up a horse and a wharf, " 
and it was held not to be a negotiable contract. In Cook v. Sat- 
terlee (6 Cow., 108), the order was "to pay money and take up a 
certain outstanding note " which was held bad. See also Ayrey v. 
Fearnsides, 4 M. & W., 168; Gillilan v. Myers, 31 111., 525; 
Fletcher v. Thompson, 55, N. H., 208; Wright v. Travers, 73 
Mich., 484; Wise v. Charlton, 4 A. & E., 786; Follett v. Moore, 

4 Ex., 416; Davies v. Wilkinson, 10 A. & E., 98; Overton v. 
Tyler, 4 Barr, 346; Arnold v. The Rock River Ry. Co. v. Smith, 

5 Duer, 207; Hodges v. Shuler, 22 N. Y., 114; Owen v. Barnum, 
7 111., 461; Hosstatter v. Wilson, 36 Barb., 307; Cate v. Patter- 
son, 25 Mich., 191; Preston v. Whitney, 23 Mich., 260; Zimmer- 
man v. Anderson, 67 Pa. St. 421; Fancourt v. Thome, 9 A, & £. 
(58, E. C. L.), 312. 



90 SMITH V. NIGHTINGALE. [CHAP. 4, 

SECTION 16. 

THE ORDER AND THE PROMISE MUST BE FOR THE PAY 
MENT OF A CERTAIN AMOUNT OF MONEY. 

SMITH v. NIGHTINGALE.* 

In the King's Bench, at Nisi Prius (Trinity Term), June ii, 1818. 

[Reported in 2 Star kit, 37 J, also in 3 English Common Law Reports 

45*- 

This was an action by the plaintiffs in right of the wife, 
as administratrix of James Eastling. 

Form of Action. — The declaration contained a count 
upon a promissory note alleged to have been made by the 
defendant, on the 12th of October, 1807, f° r the payment of 
64 1 to James Eastling, payable three months after the date: 

'This case is cited in Story on Bills of Ex., Sec. 42; Chitty 
on Bills, 133, 145, 160; Tiedeman on Negotiable Paper, 28; Dan- 
iel on Negotiable Instruments, 53; Randolph on Commercial Pa- 
per, 134, 320; Wood's Byles on B. & N., 136; Norton on Bills & 
N., 55; Ames on B. & N., 73; Benjamin's Chalmers Bills, Notes 
and Checks, 17. 

By the rule that the amount must be certain is meant that the 
instrument must specify exactly the amount of money intended to 
be paid. The rule of construction is, however: "Id certum est 
quod certum reddi protest '." Indefiniteness or uncertainty will not 
vitiate the instrument if a simple mathematical calculation will 
reduce it to certainty. 

The leading case upon the subject is Smith v. Nightingale, 
supra. In this case, the writing purported to pay 65 pounds "and 
also all other sums which may be due. " Lord Ellenborough de- 
clared that the promise was neither definite, single, nor distinct; 
that reference must be had to books before the amount specified 
could be ascertained, and for this reason was void as a note. 

For the reasons above stated, the courts have held that in all 
such cases as a promise to pay 13 pounds "and all fines according 
to rule"; "whatever sums you may collect"; or "the demands of a 
sick club," the instrument must be denied negotiability. This 
result does not follow, however, when the instrument contains such 
terms as "with interest," "with current exchange," etc. Johnson 
v. Frisbie, 15 Mich., 286. 

Not only must commercial contracts be made payable in 
money, but the amount to be paid must be certain and stated in 
the body of the contract. If the amount can be ascertained upon 
the face of the contract, it will be sufficient; but if reference must 
be made to other papers or accounts in order to ascertain the 



SEC. l6. ] SMITH V. NIGHTINGALE. 91 

the declaration contained also the money counts, and a count 
upon an account stated. 

It appeared that Eastling had been employed by the de- 
fendant as a servant in husbandry, and that the defendant 
having in his hands monies belonging to James Eastling, gave 

amount, the contract will not be sustained as a commercial con- 
tract. Consequently a note which promises to pay without naming 
the amount, but where the amount is given in the margin, the same 
will be sustained. Strickland v. Holbrooke, 75 Cal., 269. 

If the note provides for a specified sum of money, and also 
for the payment of something else, the value of which is not ascer- 
tained: but depends upon extrinsic evidence, it will not be sus- 
tained. Lowe v. Bliss, 24 111., 168; Houghton v. Francis, 29 111., 
244; Laird v. Warren, 92 111., 204. 

Provision for the Payment of Attorney's Fees. — The 
fact that it contains a provision for the payment of interest without 
naming the amount of interest will not render it uncertain in 
amount, for the legal rate will be collected. Upon the question 
whether a condition to pay "collection or attorney's fee" 
in addition to the amount named affects the negotiability of these 
contracts or not, there is much conflict of authority. Some of the 
states have sustained the negotiability of these instruments; others 
have held that the condition destroys the negotiability of the 
instrument; while still others have held that the stipulation renders 
the contract void. A careful examination of all the authorities, 
especially of the more recent decisions, will show that the weight 
of authority is found in favor of the doctrine that the negotiability 
of a commercial contract is in no way affected by a stipulation for 
the payment of reasonable collection or attorney's fee. In the 
following states commercial contracts are sustained where such 
stipulation is added: Oregon, Arkansas, Mississippi, Minnesota, 
Iowa, Louisiana, Kansas, Illinois, Dakota, Nebraska, as well as 
by the courts of the United States. Benn v. Kutzschan, 24 Or., 
28; 32 Pac. R., 763; Overton v. Mathews, 35 Ark., 147; Meacham 
v. Pinson, 60 Miss., 226; Hamilton Gin Co. v. Sinker, 74 Tex., 
52; Dietrich v. Bayhi, 23 La. An., 767; Harris Mnfg. Co. v. 
Anfinson, 31 Minn., 182; Schlesinger v. Arline, 31 Federal Rep., 
648; Farmers' Nat. Bk. v. Sutton & Co., Fed. R., 191; Sperry v. 
Horr, 32 Iowa, 184; Seaton v. Scoville, 18 Kan., 433; Hurd v. 
Dubuque Bk., 8 Neb., 10. The attention of the student is called 
to the case of Bowie v. Hall, 1 L. R. A., 546; also 69 Md., 433. 

In the following states the contracts containing such stipula- 
tions have been sustained but are not negotiable. They may be 
enforced as common law contracts. Pennsylvania, Missouri, 
North Carolina, Minnesota, Wisconsin, California and Maryland. 
They are denied negotiability upon the ground that the amount 
to be paid is uncertain. Johnson v. Speer, 92 Pa. St., 227; First 



92 SMITH V. NIGHTINGALE. [CHAP. 4, 

him the following promise in writing, upon which the first 
count in the declaration was founded: 

"October, 12, 1807. 

4 • / promise to pay to James Eastling, my head carter, 

the sum of 65I, with lawful interest for the same, three 

months after date, and also all other sums which may be 

dua to him. 91 

Contention of Defendant. —On the part of the defend- 
ant it was objected, that this instrument could not be consid- 

Nat. Bk. v. Gay, 63 Mo., 33; First Nat. Bk. v. Bynum, 84 N. 
Carolina, 24; Jones v. Raditz, 27 Minn., 240; Savings Bank v. 
Strother, 28 S. C, 504; Adams v. Seaman, 82 Cal., 637; First 
Nat. Bk. v. Larsen, 60 Wis., 211; Maryland & Co. v. Newman, 
60 Md., 584; 45 Am. R., 750. 

While in the following cases the courts have held that such 
stipulations are absolutely void: Bullock v. Taylor, 39 Mich., 138; 
Myer v. Hart, 40 Mich., 517; Wright v. Travers, 73 Mich., 494; 
Altman v. Rellershofer, 68 Mich., 287; Tinsley v. Hoskins, in 
N. C, 340; Gaar v. Louisville Banking Co., 11 Bush (Ky.), 182; 
Kemp v. Claus, 8 Neb., 24; State v. Taylor, 10 Ohio, 378; 
Walker v. Woolen, 54 Ind., 163; Maynard v. Mier, 85 Ind., 317. 

Statutory Provisions. — In Indiana it has been provided 
by statute "that any and all agreements to pay attorney's fee 
depending upon any condition therein set forth and made part of 
any bill of exchange acceptance, draft, promissory note or other 
written evidence of indebtedness are hereby declared illegal and 
void." It has been held, however, that if the amount of fees 
are stipulated and unconditional, that the stipulation would be 
sustained. Maxwell v. Morehart, 66 Ind., 301. 

Mr. Daniel, in his valuable work on Negotiable Instruments, 
says: "It seems paradoxical to hold that instruments evidently 
framed as bills and notes are not negotiable during their currency, 
because when they cease to be current they contain a stipulation 
to defray the expense of collection. " So far from tending to check 
the circulation of these contracts, such a provision, it would seem 
in business circles, adds to its value, and thus renders it more 
available for commercial purposes. Staple ton v. Louisville Bank- 
ing Co., 95 Georgia, 802; Montgomery v. Crossthwait, 90 Ala., 
553; 24 Am. St. Rep., 832. 

There are at least four distinct holdings by our courts upon 
the effect of astipulation to pay "collections or attorney fees": 

1 st, That the stipulation is valid and enforceable (1 Daniel 
Neg. Inst., 4th ed. sec. 62, Montgomery v. Crossthwait, 90 Ala., 
553; 24 Am. St. Rep., 832; Benn v. Kutzschan, 24 Oregon, 28; 
Dorsey v. Wolf, 142 111., 589); 



I 



SEC. l6.] SMITH V. NIGHTINGALE. 93 

ered as a promissory note, since it was not made for the 
payment of any certain sum, and that it could not be given 
in evidence under the count upon an account stated, since it 
was an agreement, and for a larger sum than 20L, and ought 
to be stamped. 

Contention of Plaintiff. — The plaintiff, contended that 
it was certain to the extent of 65L and therefore that to that 
extent the plaintiff was entitled to consider it as a promissory 
note; but that, at all events, it was evidence of an account 

2nd, That the stipulation is valid, but such instruments are 
not negotiable — simply common law contracts, (Johnson v. Spear, 
92 Pa. St., 227; First Nat. Bk. v. Larsen, 60 Wis., 206; Bowie v. 
Hall, 69 Md., 434; Bank v. Wheeler, 75 111., 546; Adams v. Sea- 
man, 82 Cal., 637); 

3d, That the stipulation is void, and therefore does not affect 
the contract (Gaar v. Louisville Bk. Co., 11 Bush (Ky.), 182; 
Gilmore v. Hirst, 56 Kans., 626); and 

4th, Where such stipulation renders the transaction usurious, 
and therefore subject to the operation of the statutes against usury 
(Dow v. Updike, 11 Neb., 95; 7 N. W. Ref., 185; State v. Tay- 
lor, 10 Ohio, 378). 

Payment of an Amount Certain "with Exchange." — 
Some of the courts have held, where the negotiable contract 
provides for the payment of "current exchange," that the addition 
of these words destroys the negotiable character of the contract. 
Read v. McNulty, 12 Rich., 445; Lowe v. Bliss, 24 111., 168; Hill 
v. Todd, 29 111., 103; Clanser v. Stone, 29 111., 116, where these 
words were treated as surplusage. Bank v. Strother, 28 S. C, 504. 
While the above rule seems to have the best reason to support it, 
the weight of authority in this country seems to be in favor of 
supporting these contracts as negotiable instruments. Smith v. 
Kendall, 9 Mich., 241; Bullock v. Taylor, 39 Mich., 137; Legett 
v. Jones, 10 Wis., 34; Hill v. Todd, supra; Saxton v. Stevenson, 
23 Up. Can. C. P., 503; Sperry v. Horr, 32 Iowa, 184; Hastings 
v. Thompson, 54 Minn., 184; 55 N. W. Rep., 968; Johnson's 
Cases on B. & N., 33; Morgan v. Edwards, 53 Wis., 599; 11 N. 
W. Rep., 21. In the case of Hastings v. Thompson, supra, Mit- 
chell, J., in discussing this rule, said: "We have found no English 
cases directly in point, and none bearing on the question, except 
Pollard v. Harries (3 Bos. & P., 335), where such an instrument 
(one payable "with current exchange") was declared on as a 
promissory note. We have been unable to find that the supreme 
court of the U. S., or either Massachusetts, New York or Penn- 
sylvania, have ever passed upon the question. Now, we think we 
are safe in saying, and justified in taking notice of the fact, that if 



94 SMITH V. NIGHTINGALE. [CHAP. 4, 

stated, and that no stamp was essential to a mere acknow- 
ledgment of a debt. 

Decision. — Lord Ellenborough was of opinion, that the 
instrument was too indefinite to be considered as a promissory 
note: it contained a promise to pay interest for a sum not 
specified, and not otherwise ascertained than by reference to 
defendant's books; and that since the whole constituted one 
entire promise, it could not be divided into parts. He also 
held, that since the instrument contained an agreement to pay 
the money, it could not be received in evidence as an acknowl- 
edgment without a stamp. 

The plaintiff was non-suited. 

bankers or other business men accustomed to dealing in commer- 
cial paper were asked whether such an instrument is a promissory 
note, and whether they would deal with it as such, the answer 
would, in almost every instance, be unhesitatingly in the affirma- 
tive." Tied, on Com. Paper, Sec. 28a; Rand. Com. Paper, Sec. 
200; Churchman v. Martin, 54 Ind., 380; Dodge v. Emerson, 34 
Me., 96; Smith v. Marland, 59 la., 645. 

The Amount Should be Expressly Stated. —The amount 
to be paid should be stated with great caution in the body of the 
instrument. It is sometimes expressed also in figures, in the upper 
left hand corner of the contract, as well as in the body, for greater 
caution. If the sum in figures, on the superscription, differs from 
the sum written in the body of the instrument, the latter will con- 
trol, and parol evidence is not admissible for the purpose of 
showing that the sum intended was not that stated in words in the 
body of the instrument, but was stated in figures in the margin. 
Sanderson v. Piper, 5 Bing., 425; Norwich Bank v. Hyde, 13 
Conn., 281, 282; Master v. Miller, 4 Term R., 320. 

The Amount, When Certain. — The General Rule. — 
The amount of the contract is certain even though it is to be 
paid (1) with interest, or (2) by installments, or (Cooke v. Horn, 
29 Law Times, 369; Riker v. Sprague Manufacturing Co., 14 R. 
I., 402), (3) with a provision that upon default in payment of any 
installment or interest the whole shall become due, or (Riker v. 
Sprague Manufacturing Co., supra; Carlon v. Kenealy, 12 Mes. & 
Wei., 139; Oridge v. Sherborne, n M. & W., 374; Chicago Ry. 
Co. v. Merchants' Bk., 136 U. S., 268; Wilson v. Campbell, 68 
N. W. Rep., 278), (4) with exchange, or (Hastings v. Thompson, 
54 Minn., 184; Tiedeman Com. Paper, Sec. 28a; Daniel Neg. 
Inst, Sec. 54), (5) with costs of collection or attorney's fees (see 
cases supra). 



SEC. 17.] COLEHAN V, COOKE. 95 

SECTION 17. 

THE ORDER AND THE PROMISE MUST BE TO PAY AT 

SOME TIME CERTAIN. 

COLEHAN v. COOKE. 1 

In the Common Pleas, Hilary Term (16 Geo. 2), Feb. ioth, 1742. 

[Reported in Willes's Reports, jpj-] 

Form of Action. — The first count is on a promissory 
note dated 27th of May 1732, whereby the defendant prom- 
ised to pay to Henry Delany or order 1 50 guineas ten days 
after the death of his father John Cooke for value received; 
which note after the death of the father (which is laid to be 
the 2d of April 1741) was duly indorsed by Delany to the 
plaintiff. The second count is on a promissory note dated the 
15th of July 1732, whereby the defendant promised to pay to 
Henry Delany or order six weeks after the death of his father 
50 guineas for value received; the like indorsement laid after 
the death of the father as before. The third count is for 
money had and received etc., 250/.; but this is out of the 
case. The damage is laid at 300/. ; and a general verdict for 
the plaintiff on both notes. 

Contention of Defendant. — It was insisted (a)* on for 
the defendant in arrest of judgment that these notes are not 
within the stat. 3 and 4 Anne c. 9;* and if not that they are 
not indorsable, or assignable, and consequently that the plain- 
tiff who brings this action as indorsee cannot recover at law. 

To show that these notes are not within the statute a 
great many things were said on the argument of the case, and 
a great many cases and authorities cited both out of the com- 

1 This case is cited in Story on Bills of Exchange, 46, 47; 
Chitty on Bills, 128, 135, 136, 137, 144, 150, 517, 520; Daniel on 
Negotiable Instruments, 46; Wood's Byles on Bills and Notes, 146, 
170; Tiedeman on Negotiable paper, 25; Ames on Bills and Notes, 
33; Benjamin's Chalmers, Bills Notes and Checks, 26, 28, 65, 
276; Randolph on Commercial Paper, 146; Norton on Bills and 
Notes, 39 

2 This case was several times argued. 

* A promissory note payable to A. or order after the death of 
B. is assignable under the stat. 3 and 4 An. cr 9; and consequently 
the indorsee may maintain an action upon it against the maker. 



9^ COLEHAN V. COOKE. [CHAP. 4, 

mon and civil law books. But I think that all the objections 
that were made may be reduced to these two general posi- 
tions: — 

ist. That the act of Parliament only intended to put 
promissory notes on the same footing as bills of exchange; and 
that therefore, if bills of exchange drawn in this manner 
would not be good and consequently not assignable, it follows 
that notes drawn in this manner are not made indorsable or 
assignable by the statute. 

2nd. That the act was made for the advancement of 
trade ane commerce, and consequently was intended to extend 
only to such notes as are in their nature negotiable, and that 
these notes are not so. 

Before I consider these objections, I will state the words 
of the act of parliament on which the question must depend, 
3 and 4 An. c. 9, entitled "An act for giving like remedy 
on promissory notes as is now used on bills of exchange, and 
for the better payment of inland bills of exchange. " * ' Where- 
as it hath been held that notes in writing signed by the party 
who makes the same, whereby such person promises to pay 
to any other person or his order any sum of money therein 
mentioned, are not assignable or indorsable over within the 
custom of merchants, and that any person to whom such 
note shall be assigned, indorsed or made payable could not 
within the said custom maintain any action on such note 
against the person who first drew and signed the same, there- 
fore to the intent to encourage trade and commerce which 
will be much advanced if such notes shall have the same effect 
as inland bills of exchange and shall be negotiated in like 
manner, be it enacted that all notes in writing which shall 
after, etc. , be made and signed by any person or persons, etc. , 
whereby such person or persons do or shall promise to pay to 
any other person or persons, etc. , his, her or their order or 
unto the bearer any sum of money mentioned in such note 
shall be taken and construed by virtue thereof due and pay- 
able to any such person or persons, etc. , to whom the same is 
made payable, and also every such note shall be assign- 
able or indorsable over in the same manner as inland 
bills of exchange are or may be according to the cus- 



SEC. 17.] COLEHAN V. COOKE. 97 

torn of merchants; and that the person or persons, etc., 
to whom the sum of money is made payable by such 
note shall and may maintain an action for the same in such 
manner as he, she or they may do upon any inland bill of 
exchange, etc., and that the person or persons, etc., to 
whom such note is indorsed or assigned, or the money there- 
in mentioned ordered to be paid by indorsement thereon, 
shall and may maintain his, her or their action for such 
money either against the person or persons who signed such 
note, or against any of the persons who indorsed the same, 
in like manner as in case of inland bills of exchange." 
The title of the act seems to refer to bills of exchange, and 
they are likewise referred to in the preamble, and the remedy 
is to be the same. 1 But in the description of the notes which 
are to be made assignable there is no reference to bills of ex- 
change; but the words are very general, and I never understood 
that the plain words of an enacting clause are to be restrained 
by the title or preamble of an act. 2 It has indeed been often 
said, and I think very rightly, that if the words of an act of 
parliament be doubtful, it may be proper to have recourse to 
the preamble to find out the meaning of the legislature: but 
where the words of the enacting part are plain and express, I 
do not think that they ought to be restrained by the preamble; 
for the preamble may only recite some particular mischiefs 
which have happened, but the enacting clause may not only 

1 It was taken for granted in Tindal v. Brown, i D. and E., 
167; 2 D. and E., 186; both in the court of King's Bench and in 
the Exchequer Chamber, and solemnly decided in the cases of 
Brown v. Harraden, id. 4 vol., 148, and Smith v. Kendal, ib. 6 vol. 
123 (in which the dictum of Denison J. in Dexlaux v. Hood, Bull 
N. P., 274, and the determination of May v. Cooper, Fost, 376, to 
the contrary were over- ruled), that three days' grace are allowed on 
a promissory note (though it be a note payable to A. without ad- 
ding "or to his order, or to bearer." Smith v. Kendal, 6 D. and 
E., 123, ) as well as on a bill of exchange, by reason of the stat. 3 
and 4 An. c, 9, which puts them both on the same footing in all 
respects. 

2 Vid Copeman v. Gallant, 1 P. Wms., 320; Mace v. Cadell, 
Cowp., 232; Pattison v. Bankes; id., 543; Cox v. Liotard, H. 24 
Geo. Dougl., 167, n. (55), oct. ed.; and Bradley v. Clarke, per 
Buller J. 5 D. and E., 201. 



93 COLEHAN V. COOKE. [CHAP. 4 4 

be calculated to prevent these mischiefs but others also of a 
like nature. Now the words of the enacting part of this act 
are plain and clear and very general; and in order to bring a 
note within the description of that clause, it is only necessary, 

ist, That the note should be in writing; 

2d, That it should be made and signed by the person 
promising to pay; and 

3rd, That there be an express promise to pay to another 
or his order or bearer. But as to the time of payment, the 
act is silent, nor is there any particular form prescribed. 

And therefore, as to the first objection, that if a bill of 
exchange had been drawn in this manner it would not have 
been good; supposing it to be true, I do not think that it fol- 
lows that these promissory notes may not be within the gen- 
eral words of the statute, if they answer all the descriptions 
therein contained. However for argument's sake I will sup- 
pose that this consequence would hold; but we do not think 
that a bill of exchange drawn in this manner would be bad. 
Upon this head it would be but mispending time to run over 
all the passages which have been cited out of the civil law 
books in relation to bills of exchange, because I put a question 
to the counsel which will, I think, determine this point, whether 
there is any limited time mentioned in any of the books be- 
yond which if bills of exchange are made payable they are not 
good, and it was agreed by the counsel that they could find no 
such rule, and I am sure I can find none. But if a bill of 
exchange be made payable at never so distant a day, if it be a 
day that must come, it is no objection to the bill. There is 
but one passage in the books wherein any notion to the con- 
trary is so much as hinted at; and that is in Scacchius de com- 
merciiSy where it is said that it had been formerly an objec- 
tion against a bill of exchange, as contrary to the nature of it, 
that it was made payable at the end of seven months: but by 
his making use of the word formerly, it is plain that in his 
opinion the law was then held to be otherwise. If therefore 
the distance of time would not have made a bill of exchange 
bad if drawn in this manner, since it is drawn at a time that 
which must come, the only other objection that was made on 
this head was that in all bille of exchangs there must be a 



SfC. 17.] COLEHAN V. COOKE. 99 

par pro pari, which there cannot be in this case, because the 
value cannot be ascertained. But I shall show plainly that 
the value may be ascertained, when I come to the objection 
that these are not negotiable notes. 

Having answered the objections against these notes con- 
sidering them on the same footing as bills of exchange, I come 
now to the second objection, arising from the words and 
intent of the statute. And first I think that they are plainly 
within the words. They are made in writing; they are 
signed by the person promising to pay, and there is an express 
promise to pay to another or his order; and as no time of pay- 
ment is mentioned in the statute, the distance of time is no 
objection within the words of the act. 

Let us see therefore in the next place whether any objec- 
tion arises against them from the design ' and intent of the 
act; though I think it would be pretty hard to construe a note 
to be not within the intent of an act when it is manifestly 
within the words of it, and the words of the act are plain and 
express. When the words of an act are doubtful and uncer- 
tain, it is proper to inquire what was the intent of the legis- 
lature: but it is very dangerous for judges to launch out too 
far in searching into the intent of the legislature, when they 
have expressed themselves in plain and clear words. How- 
ever we think that these notes are within the intent as well as 
the words of the act. And to show that they are so, I will here 
take notice of all the cases which were cited to the contrary, 
and will show that they all stand on a different footing and are 
plainly distinguishable from the present. For they are all of 
them cases where either the fund out of which the payment 
was to be made is uncertain, or the time of payment is un- 
certain and might or might not ever happen: whereas in the 
present case there is no pretence that the fund is uncertain, 
and the time of payment must come, because the father after 
whose death they are made payable must die one time or 
other. The case of Pearson v. Garrett, 1 was thus; the de- 
fendant gave a note to pay 60 guineas when he married B. , 
and judgment was given for the defendant, because it was 

1 4 Mod. 242 and Comb. 227. 



IOO COLEHAN V. COOKE. [CHAP. 4, 

uncertain whether he would ever marry her or not, so the 
time of payment might never come. In the case of Jocelyn 
v. Le Serre, 1 the bill was drawn on Jocelyn to pay so much 
every month out of his growing subsistence ; how long that 
would last no one could tell, or whether it would be sufficient 
for that purpose: and therefore the bill was holden not to be 
good, because the fund was uncertain. In the case of Smith 
v. Boheme, 2 the promise in the note was to pay yoL or sur- 
sender a person therein named: if therefore he surrendered 
the person, there was no promise to pay anything, and there- 
fore the note was uncertain and not negotiable. In the case 
of Appleby v. Biddulph, 8 a promise to pay if his brother did 
not pay by such a time; held not to be within the statute, 
because it was uncertain whether the drawer of the note 
would ever be liable to pay or not. In the case of Jenny v. 
Herle,* a promise to pay such a sum out of the income of the 
Devonshire mines, held not a promise within the statute, be- 
cause it was uncertain whether the fund would be sufficient to 
pay it. So in the case of Barnsley v. Baldwyn, 14 Geo. 2 
B. R., 8 the promise was, as in the case of Peason v. Garrett, 
to pay such a sum on marriage; and held not to be within 
the statute for the same reason. And as these notes are 
plainly not within the intent of the statute because not nego- 
tiable ab initio, so when the words themselves come to be 
considered they are not within the words of it, because the 
statute only extends to such notes where there is an absolute 
promise to pay and not a promise depending on a contin- 
gency, and where the money at the time of the giving of the 
note becomes due and payable by virtue thereof ( so are the 
words of the statute), and not where it becomes due and pay * 
able by virtue of a subsequent contingency which may perhaps 
never happen, and then the money will never become payable 

1 Reported in 10 Mod. 294, and 316; and cited in 2 Ld. 
Raym. 1362, and in 8 Mod. 364. 

a Cited in 2 Ld. Raym. 1362. 

8 Cited in 8 Mod. 363. 

* Reported in 2 Ld. Raym. 1361. 

5 Since reported in 7 Mod. 417 oct. ed., and in 2 Str. 1151, 
by the name of Beardesley v. Baldwin. 



SEC. 17.] COLEHAN V. COOKE. IOI 

at all. And it can be said that there is a promise to pay 
money, or that money becomes due and payable by virtue of 
a note, when unless such subsequent contingency happen the 
drawer of the note does not promise to pay anything at all, 1 

But the present notes, and those cases where such notes 
have been holden to be within the statute, do not depend on 
any such contingency; but there is a certain promise to pay 
at the time of the giving of the notes, and the money 
by virtue thereof will certainly become due and payable one 
time or other, though it is uncertain when that time will come. 
The bills therefore of exchange commonly called Billce nundi- 
nales were always holden to be good, because though these 
fairs were not always holden at a certain time, yet it was 
certain that they would be held. The case of Andrews 
v. Franklyn, 2 depends on the same reason; for there the 
note was to pay such a sunt two months after such a ship 
was paid off ; and held good, because the ship would certainly 
be paid off one time or other. The case of Lewis v. Ord, 
was exactly the like case, and determined on the same rea- 
son. As to the same objection that these are not negotiable 
notes, because the value of them cannot be ascertained, the 
argument is not founded on fact, because the value of a life 
when the age of a person is known is as well settled as can 
be: and there are many printed books in which these calcula- 
tions are made. But if it were otherwise, the life of a man 
may be insured, and by that the value will be ascertained. 
And the same answer will serve to the objection which I be- 
fore mentioned against such bills of exchange. 

There was another objection taken, that the drawer 
might have died before his father, and then these notes would 
have been of no value: but there is plainly nothing in this 
objection, for the same may be said of any note payable at a 



1 But there may be a conditional acceptance of a bill of ex- 
change. Smith v. Abbot, 2 Str. 1152; Julian v. Shobrooke, 2 
Wilf. 9; Pierson v. Dunlop, Cowp. 574; and Sproat v. Matthews, 
1 D. and £. 182. 

> 1 Str. 24. 

3 T. 8 and 9 G. 2 B. R.; Cunningh. Bills of Exchange 113. 



102 COLEHAN V, COOKE. [CHAP. 4, 

distant time, that the drawer may die, worth nothing before 
the note becomes payable. 

We do not think that the averment of the death of the 
father before the indorsement makes any alteration, because we 
are of opinion that if the notes were not within the statute 
ab initio, they shall not be made so by any subsequent con- 
tingency. But for the reasons aforesaid we are of opinion 
(and so was the Ld. C. J. Baron Parker) that the plaintiff is 
entitled to his judgment, 1 and therefore the rule for arresting 
the judgment must be discharged." 8 

1 This judgment was afterwards affirmed in the Court of King's 
Bench on a writ of error. 2 Str., 12 17. 

2 See the following cases, in which the notes or bills of ex- 
change (for they are both on the same footing) were holden not to 
be good notes or bills, because they were payable out of a particu- 
lar fund or on a contingency: Banbury v. Lissett, 2 Str., 12 n; 
Dawkes v. Ld. Deloraine, 2 Bl. Rep., 782; 3 Wils., 207; Roberts 
v. Peake, 1 Burr., 323; Kingston v. Long, M. 25 G., 3 B. R. Bay- 
ley's Bills of Exchange, 71; and Carlos v. Fancourt, 5 D. & E., 
482. In these, the notes were holden to be good, because they 
were payable at all events: Burchell v. Burchell, 2 Ld. Raym., 
1545; Evans v. Underwood, 1 Wils., 262; Poplewell v. Wilson, 1 
Str., 264; Chadwick v. Allen, ib., 607; Goss v. Nelson, 1 Burr, 
226; and Haussoullier v. Hartsinck, 7 D. and E., 733. 

The Exact Time Need Not be Stated. — It is not neces- 
sary that the instrument state upon its face the exact time in days, 
months and years; but it certainly loses its negotiable character, if 
it is impossible to extract from the note any statement of the time 
of its maturity. A case upon this subject is found in the First 
National Bank v. Bey man (84 N. Car., 125). In this case the 
note stated that payment might be demanded " at any time they 
(the payees) may deem this note insecure, even before the maturity 
of the same." 

But it seldom happens that the courts find difficulty in apply- 
ing this rule; for the most general and indefinite expression will be 
so construed as to sustain the note or bill. Thus "at sight," "on 
demand, " means on showing and demanding payment of the in- 
strument. Dixon v. Nuttall, 6 C. & P., 320. 

" By Nov. 1 " means on that date. Preston v. Dunham, 52 
Ala., 217. 

So literally is this rule construed that if absolutely nothing is 
said as to the maturity it is by legal construction payable on de- 
mand, and valid as a demand note. Salinas v. Wright, 11 Tex., 
572; Porter v. Porter, 51 Me., 376; Pindar v. Barlow, 31 Ver., 529. 



SEC. 17.] COLEHAN V. COOKE. 103 



Lost Notes — When Due. — A lost note is presumed to have 
been payable on demand. Tucker v. Tucker, 119 Mass., 79. 

But a post dated note silent as to maturity is not due until the 
date day. Mohawk Bank v. Broderick, 10 Wend., 304. 

If the time of payment is expressed, it must be pleaded and 
proved; failure to do so is a fatal variance. McCrary v. New- 
berry, 25 111., 496. 

Notes Payable on Demand. — When Due. — Bills and 
notes payable "on demand," are due immediately without grace, 
unless the rule has been changed by statute. Palmer v. Palmer, 
36 Mich., 487; Wheeler v. Wilson, 47 N. Y., 519. 

"When called for," "on request," "at such time as A. may 
need for her support," have been held by the courts to be equiva- 
lent to "on demand." Bilderbeck v. Burlingame, 27 111., 338; 
Howland v. Edmonds, 24 N. Y., 30.7; Corbett v. Stonemetz, 15 
Wis., 187. 

In a few cases, phrases seeming to give the debtor an option 
as to paying at all have been similarly construed. Thus "when 
both parties have agreed,'' "when canvenient," "when my cir- 
cumstances will admit," have all been held to be equivalent to "on 
demand after the expiration of a reasonable time." Raraot v. 
Schotenfels, 15 la., 457; Works v. Hershey, 35 la., 340; Salinas 
v. Wright, 11 Tex., 572. 

It is not necessary to express the time of payment by date; a 
reference to any event, (as death), certain to occur, is enough. 
Conn v. Thornton, 46 Ala., 587. 

Marriage, however, is insufficient as to date or time of pay- 
ment, being too uncertain. Beardsley v. Baldwin, 2 Stra., 1151. 

And the same is true of a person coming of age, for he may 
die a minor. Goss v. Nelson, 1 Burr, 226. 

Payment by installments does not invalidate a note; and a pro- 
viso that the whole note shall fall due upon the maker's failure to 
pay a single installment is valid. German Mut. Ins. Co. v. Franck, 
22 Ind., 364. 

Payable in Installments. — A negotiable contract may be 
payable in installments, and the fact that it contains a provision 
whereby the whole amount shall become due and payable on fail- 
ure of payment of one installment, does not render the time of 
payment uncertain. Carlton v. Kenealy, 12 M. & W., 139; 
Oridge v. Sherborne, 11 M. & W. 374; Miller v. Biddle, 13 
Law Times, R. (N. S.) 334; Marrett v. Eq. Ins. Co., 54 
Me., 537; Wright v. Irwin, 33 Mich., 32; White v. Smith, 77 
111., 351; Crossmore v. Page, 73 Cal., 213; Palmer v. Ward, 6 
Gray, 340. The time of payment of each installment must be fixed 
and certain. Moffat v. Edwards, 1 Car. & M., 16. A note paya- 
ble in installments is overdue, when the first installment is overdue 
and unpaid, so that a purchaser thereafter may be charged with 
equities. Hart v. Stickney, 41 Wis. 630; Vinton v. King, 4 Allen, 



104 COLEHAN V. COOKE. [CHAP. 4, 



562; Field v. Tibbetts, 57 Me., 359. The fact that interest simply 
is overdue and unpaid, is not sufficient to charge a purchaser 
thereafter with existing equities. Kelly v. Whitney, 45 Wis., no; 
National Bank v. Kirby, 108 Mass., 497; Cromwell v. County of 
Sac, 96 U. S., — ; Railway Co. v. Sprague, 103 U. S., 762; Mc- 
Lane v. Sacramento, etc., Ry. Co., 66 Cal., 606; see notes to 30 
Am. Rep., 702, 703. 

Days of Grace. — Days of grace are a certain number of days, 
generally three, allowed to the maker or acceptor of a bill, draft, 
or note, in which to make payment, after the expiration of the 
time expressed in the contract itself. These days were originally 
granted as a matter of favor to the debtor, but it finally became 
an established custom among merchants, and was given the force 
of law by the courts and in some cases by statute, so that they are 
now, in many jurisdictions, demandable as of right. The number 
of these days varies in different jurisdictions, from three in the 
different States in the Union, Great Britain and Ireland to thirty 
in Genoa. Days of grace have been abolished in many of the 
States. See statutes of your State. Wiffen v. Roberts, 1 Esp., 
261; for a history of "days of grace," seek Trask v. Martin, 1 E. 
D. Smith, 506. 

What Instruments are Entitled to Grace? — Days of 
grace are allowed upon both promissory notes and bills of ex- 
change. It may be stated that they are allowed upon all instu- 
ments (unless abolished by statute) except those payable " on 
demand." They are allowed upon the contract whether it be pay- 
able on a certain event, at a certain day, at a certain mumber of 
days, weeks, months or years after date, or after or at sight. If 
the contract is payable in installments, each installment is entitled 
to grace. Brown v. Harraden, 4 Tenn. Rep., 148; Griffin v. Goff, 
12 Johns, 423; Pridge v. Sherborne, n M. & W., 374; Macloon v. 
Smith, 49 Wis., 20c; 5 N. W. Rep., 336. 

Where Grace is Allowed. — When Must Payment be 
Demanded. — Where grace is allowed, demand of payment before 
the last day of grace would be premature; but in order to bind per- 
sons whose liability is conditional, the demand must be made on the 
last day of grace. Donegan v. Wood, 49 Ala., 242; Pratt v. Eads, 
1 Blackf. (Ind.), 82; Bussard v. Levering, 6 Wheaton, 102. Pro- 
test may and should be made on the last day of grace; but an 
action upon the contract cannot be commenced on the last day of 
grace, for the reason that the debtor has all of that day (during 
business hours) upon which to make payment. Estes v. Tower, 
102 Mass., 65; Gordon v. Parmelee, 15 Gray, 413. 

Checks Not Entitled to Grace. — Checks are not entitled to 
grace for the reason that they are payable "on demand." An- 
drews et al. v. Blackly et al., n Ohio St., 89; Morrison v. Bailey, 5 
Ohio St., 13; Champion v. Gordon, 70 Pa. St., 476; Wood River 
Bankv. First National Bank, 36 Neb., 744; 55 N. W. Rep. 239. 



SEC. 17.] COLEHAN V. COOKE. 105 

Grace May Be Dispensed With. — The parties may, by a 
stipulation in the contract, dispense with "grace." Perkins v. 
Bank, 21 Pick., 483; Duruford v. Patterson, 7 Marh. (La.), 460; 
Bell v. First N. Bank, m'U. S., 382. 

Where a Negotiable Contract Falls Due on a Holiday 
— When Should Payment be Demanded? — Where a negotia- 
ble contract matures on a holiday, if it is entitled to grace, it is 
legally due on the day next preceeding and if that is also a legal 
holiday then on the next preceeding; but if it is not entitled to 
grace, then it is legally due on the day next subsequent. To illus- 
trate: If a promissory note, payable "at sight or a certain time 
after date," falls due (last day of grace) on a Sunday, it is due and 
payable on the Saturday next preceding, and if that is also a legal 
holiday, then on Friday; but if it is payable "on demand" and it 
falls due on a Sunday, it is not legally due until the Monday fol- 
lowing. Hirshfield v. Fort Worth Nat. Bank, 83 Tex., 452; 18 
S. W. Rep., 743; Avery v. Stewart, 2 Conn., 69; 7 Am. Dec, 
250; Salter v. Burt, 20 Wend., 205; Barrett v. Allen, 10 Ohio, 
426; Kuntz v. Temple, 48 Mo., 75; Morris v. Richards, 45 Law 
T. R., 210. 

What Days are Holidays? — The question of what are 
legal " holidays " is one to which reference must be had to the 
statutes and decisions of the various states for answer. The fol- 
lowing days are almost universally regarded as holidays: Christ- 
mas, New Year's Day, Labor Day, the 4th of July, the 2 2d of 
February, and the days observed according to religious customs 
or usages. Within the past few years many of the states have 
provided by statute that each Saturday afternoon shall constitute 
a legal holiday. 

Where no Time is Stated. — Commercial contracts are 
usually made payable at a specified time after date, or after sight 
or at sight. If no time for payment is specified, they are payable 
immediately upon demand. Convers v. Johnson, 146 Mass., 22; 
Dan. on Negot. Inst, Sec. 88; Bank v. Price, 52 la., 570; Jones 
v. Brown, 11 Ohio St., 601; Palmer v. Palmer, 36 Mich., 487; 
Keyes v. Fenstermaker, 24 Col., 329; Libbey v. Mikeborg, 28 
Minn., ^8; Wheeler v. Warner, 47 N. Y., 519; Jackett v. Spencer; 
29 Barb., 180; Meador v. Dollar Savings Bank, 56 Ga., 605; In 
re King's Estate, 94 Mich., 411, 425; 54 N. W. Rep., 178; Hitch- 
ings v. Edmands, 133 Mass., 338; Ferms v. Gay, 146 Mass., 118; 
15 N. E. Rep., 87; McMullen v. Rafferty, 89 N. Y., 456; Hall v. 
Toby, no Pa. St., 318. 

Where Interest is Provided for. — The fact that the note 
provides for the payment of interest where no time of payment is 
stated, does not raise a presumption that it was not to be paid im- 
mediately. Norton v. Ellam, 2 M. & W., 461; Barrough v. White, 
4 B. & C, 327; 3 L. J. Rep., K. B., 227; Hanes v. Kerrison, 2 
Taunton, 323; Mitchell v. Easton, 37 Minn., 335; Schreiber v. 



106 COLEHAN V. COOKE. [CHAP. 4, 

Richmond, 73 Wis., 12; Wilks v. Robinson, 3 Rich. (S. C), 102; 
Wheeler v. Warner, 47 N. Y., 519; Hill v. Henry, 17 Ohio St., 9; 
Dunkle v. Nichols, 101 Ind., 474. 

Payable "On or Before" a Day Named.— A negotiable 
contract payable "on or before" a day named is certain as to the 
time of payment. It is true that the maker may pay sooner if he shall 
choose; but this option if exercised would make the payment be- 
fore the legal liability to pay arises and nothing more. If a time 
of payment is fixed once certain, it is no objection that by some 
possibility it may be paid and discharged sooner. Mattison v. 
Marks, 31 Mich., 421; Smith v. Ellis. 29 Me., 422; Jordon v. 
Tate, 19 Ohio St., 586; Cisue v. Chidester, 85 111., 523; Noll v. 
Smith, 64 Ind., 511; Ernst v. Steckman, 74 Pa. St., 13; Conn v. 
Thornton, 46 Ala., 587 (where the promise was "One day after 
date, I promise to pay, or at my death," etc.); Stevens v. Blunt, 
7 Mass., 240; Capron v. Capron, 44 Vt., 410; White v. Smith, 77 
111. , 351; Stillwell v. Craig, 58 Mo., 24; Stulls v. Silva, 119 Mass., 
137; Cota v. Buck, 7 Mete, 588; Brooks v. Hargreaves, 21 Mich., 

254- 

Time of Payment Depending Upon an Event Certain 

to Pass. — They may be payable at some uncertain time, for in- 
stance upon the happening of some event, providing that event is 
sure to happen. They may be made payable after the death of a 
particular person; for that event is sure to happen. But to make 
them payable when a particular person arrives at his majority, or 
when he marries, would be bad on the ground of uncertainty of 
time, for the reason that either event may never happen. They 
may be made payable, however, at the "convenience " of the maker; 
or when the payor and payee mutually agree; or at the convenience 
of the maker upon the express condition that he is to be sole judge 
of what shall be a convenient time. Page v. Cooke, 164 Mass., 
116; Smithers v. Junker, 41 Fed. R., 101; Capron v. Capron, 44 
Vt., 412; Crooker v. Holmes, 65 Me., 195; Works v. Hershey, 35 
la., 340; Lewis v. Tippon, 10 Ohio St., 88; Garrigus v. Hone & 
Society, 3 Ind. App., 91; Carnwright v. Gray, 127 N. Y., 92. 

It has been held that a promise to pay "After my death, date, 
etc," is certain as to time and becomes due at once after the death 
of the maker. Shaw v. Camp, 160 111., 425. 

A note payable " twenty-four " after date, etc., is not void for 
uncertainty of time, nor a note on demand; but payable some time 
after date. Such a note is evidently payable at some time after 
the date, either days, months or years. In a case like the above 
where the time of payment has been omitted by mistake, the holder 
may insert the time intended. Coles v. Hulme, 15 Com. L. R., 
300; Waugh v. Russell, 1 Marshall, where the word "hundred" 
was supplied by the holder where it had been omitted by mistake, 
to render the amount certain; Loyd v. Lord, 1 Bro. Par. Cas., 379, 
where the name of one of the parties was supplied; Boyd v. Broth- 



SEC. 17.] COLEHAN V. COOKE. 107 



erson, 10 Wend., 93, where a note which was intended to be for 
" eight hundred dollars," the words "hundreds "and "dollars" 
were omitted, and consequently the holder inserted these words; 
Conner v. Routh, 12 How. (N. Y.), 176. 

Time — Computation of. — In computing the time when a 
commercial contract which is payable after date, or so many days 
" after sight" or demand, or after a particular event, the day of 
the date is always excluded. Avery v. Stewart, 2 Conn., 69. To 
illustrate: A note dated Jan. 1st, due thirty days after date, allow- 
ing grace, would fall due Feb. 3d. By excluding the 1st day of 
January, the day of its date, it would be "nominally due" on the 
31st day of January, that being the thirtieth day, and "legally 
due " three days thereafter, or the 3d day of February. If a note 
is dated Feb. 1st, due in thirty days after date, excluding the day 
of the date it would be nominally due the 3d day of March, and 
legally due the 6th day of March. In a leap year, however, the 
same note would be legally due on March 5 th. When a commer- 
cial contract is to run for a certain number of days, the actual 
number of days are counted, excluding the day of the date. If 
the contract is made payable a month or a certain number of 
months after date, the time is computed by counting from the day 
of the date to the corresponding day of the month in which the 
contract matures. To illustrate: If a note is dated Jan. 1st, due 
one month after date, it is nominally due on Feb. 1st, and legally 
due due on Feb. 4th. And, if a note should be dated on the 29th 
of February in a leap year, due one month after date, it would be 
nominally due on the 29th of March and legally due on the 1st day 
of April. Seaton v. Hinneman, 50 la., 3953 Roehner v. Knicker- 
bocker Ins. Co., 63 N. Y., 160; Story on Bills, sec. 330; Story on 
Notes, see 213a; Ogden v. Saunders, 12 Wheaton, 213; Bayley on 
Bills, ch. 7; Chitty on Bills, ch. 9; Fisher v. State Bank, 7 Black., 
610; Ammidown v. Woodman, 31 Me., 580; Ripley v. Greenleaf, 
2 Verm., 129; Coleman v. Sayer, 1 Barn., 303; Taylor v. Jacoby, 
2 Pa. St., 495. 

If a note is dated on the 31st day of July, due in one month, 
it will be nominally due Aug. 31st; but if it is dated Aug. 31st, 
due in thirty days, it will be dominally due on Sept. 30th. Wag- 
ner v. Kenner, 2 Robinson (La.), 120; Wood v. Mullen, 3 Robin- 
son (La.), 299. 

If a bill is payable five days after sight and is accepted on 
the 1st day of the month, it is legally due the 9th. Mitchell v. 
Degrand, 1 Mason, 176. 

Time — How Computed when Measured from an Act. — 
Some of the courts have held that when a computation of time is 
to be made from an act to be done, the day in which the act is 
done must be included. Rex v. Adderley, 2 Doug., 463, 464. 

But this rule has been rejected in the later cases. Lester v. 
Garland, 15 Ves., 248. 



108 COLEHAN V. COOKE. [CHAP. 4, 

So that now the day of the date as well as the act is excluded. 
Bemis v. Leonard, 118 Mass., 502; Webb v. Fairmaner, 3 M. & 
W., 473, where the earlier cases are critically reviewed. 

It may be stated as a general rule that where a power may be 
exercised up to and including a certain day of the month and that 
day is Sunday, it may be exercised on the following Monday. 
Street v. United States, 133 U. S., 299; Sands v. Lyon, 18 
Conn., 18. 

And this is the general rule also in the performance of all 
common law contracts. Salter v. Burt, 20 Wend., 205; Avery v. 
Stewart, 2 Conn., 69; Hammond v. American Mut. Life Ins. Co., 
10 Gray, 307, where the payment of a premium on an insurance 
policy which fell due on Sunday was permitted to be made on 
Monday. When the time to file a pleading expires on a Sunday 
the same may be done on the next day. Cox v. Bunn, 6 Johnson, 
326; Borst v. Griffin, 5 Wend., 84. If, however, the time within 
which an act is to be performed is fixed by statute, the general 
weight of authority is, that if the last day falls on Sunday, the 
time cannot be extended and the act must be performed on the 
day before. Caupfield v. Cook, 92 Mich., 626; Simonson v. 
Durffy, 50 Mich., 81; Harrison v. Sager, 27 Mich., 476, where it 
is held that a justice of the peace could not render judgment on 
the fifth day after the trial where the statute required that the 
judgment should be rendered within four days, the fourth being 
Sunday; Brown v. Vailes, 14 L. R. A. 120. 



SEC. l8.] MC CALL V. TAYLOR. IO9 

SECTION 18. 

THE PARTIES* TO A NEGOTIABLE CONTRACT MUST BE 

CERTAIN AND DEFINITE. 

McCALL v. TAYLOR. 1 
In the Common Pleas, May 26, 1865. 

[Reported in ig Common Bench, joi; 115 Eng. C. L., 301, also 
in 34 Law Journal (N. S.) Common Law, 365 ; 34 Law Jour- 
nal (O. S.)365] 

Form of Action. — This was an action upon an instru- 
ment in the following form, which was declared on as a bill 
of exchange and also as a prommissory note: 

11 £300.00. [No dale.] 

1% Four months after date, pay to my order the sum of 
Three hundred pounds, for value received. 
" To Captain Taylor, [No drawer's name.] 

' 4 Ship Jasper. " 

Across this document was written, in the handwriting of 
the defendant, the words " Accepted, William Taylor.'" 

There was also a count for goods sold and delivered, and 
the ordinary pleas. 

The cause was tried before Byles, J., at the sittings at 

1 This case is cited in Wood's Byles on Bills and Notes, pp. 
156, 162; Daniel on Negotiable Instruments, sec. 92; Benjamin's 
Chalmers Bills, Notes and Checks, p. 4; Norton on Bills and 
Notes, p. 60; Tiedeman on Commercial Paper, sec. 34; Edwards 
on Commercial Paper, pp. 62, 290. 

♦Parties to Bills of Exchange— How Designated. — 
The parties to a bill of exchange may be divided into: — 
(0) Original, and 

(b) Subsequent. 

The original parties are: — 

(a) The drawer who executes and delivers the instrument. 
(6) The drawee, the person upon whom the order is given, 
and who is expected finally to pay the money called for therein. 

(c) The payee, the person to whom the order is delivered 
and in whose favor it is executed. 

These three persons so designated may be the same person 
in fact, that is, a bill may be drawn by a party upon himself pay- 
able to himself. 



IIO MCCALL V. TAYLOR. [CHAP. 4, 

Guild-hall after the last Hilary Term. The plaintiff was a 
ship-chandler and provision-merchant. The defendant was 
the captain (and it was suggested owner also) of the ship 
Jasper. It appeared that the plaintiff had, in September, 
1862, pursuant to orders received through one Milne, the 
ship's broker, delivered goods to the amount of 299/. 19s. 2d. 
on board that vessel for San Francisco, and had received in 
payment a bill at six months accepted by one Bailey, which 
bill was not paid at maturity; and that the instrument de- 
clared on was given to the plaintiff by Milne about six months 
afterwards. It also appeared that Bailey had been debited 
for the goods in the plaintiffs books, and that an invoice had 
been delivered charging Bailey as the debtor. There was no 



The subsequent parties are: — 

(a) The acceptor who is the drawee after acceptance; 

(£) Endorsers or subsequent transferers. 

(c) Endorsees or subsequent transferees or holders. 

The holder is the person who has possession of the instru- 
ment, and who by the law merchant is entitled to the payment 
of the bill. 

Of course a bill may be drawn by two or more persons made 
payable to two or more persons and directed to two or more per- 
sons. They may also be payable to a person or to his order or 
to bearer. 

Parties to Promissory Notes — How Designated. — 
The parties to a promissory note maybe divided into two classes: — 

(a) Original. 

(£) Subsequent. 

The original parties to a promissory note are: — 

(a) The maker, or the person who executes and delivers the 
contract. 

(b) The payee or the person to whom the contract is exe- 
cuted and delivered and made payable. 

The subsequent parties are: 

(a) Endorsers or transferers. 

(6) Tranferees or holders. 

Parties to Checks — How Designated. — The parties to 
checks are designated exactly as the parties to bills of exchange, 
viz. : drawers, payees, and drawees. Cheeks are not usually pre- 
sented for acceptance, therefore there is no acceptor, but checks- 
being negotiable instruments there may be endorsers and endors- 
ees. The nature and liability of the respective parties to these 
various instruments will be discussed in the subsequent sections of 
this work. 



SEC. l8.] MCCALL V. TAYLOR. Ill 

evidence whatever to show that the defendant had any inter- 
est in the goods. 

Contention of Plaintiff. — The learned Judge intimating 
a pretty strong opinion that the instrument in question was 
not a bill of exchange, it was submitted by the plaintiff that 
it was a promissory note, for which reliance was placed on 
Cruchley v. Clarence. l 

Contention of Defendant. — On the part of the defend- 
ant it was insisted that the instrument declared on was not a 
bill of exchange, being wanting in that which is essential to 
constitute a bill of exchange, viz., a drawer and a payee; and, 
further, that it was not either in form or in substance a prom- 
issory note — referring to Stoessiger v. The South Eastern 
Railway Company. 2 

Upon the count for goods sold and delivered, the learned 
Judge left it to the jury to say upon whose credit the goods 
were delivered on board the Jasper — that of the defendant, or 
of Bailey — reserving for the court the question whether the 
instrument could properly be declared on either as a bill of 
exchange or as a promissory note. The jury returned a ver- 
dict for the defendant. 8 

Hannen, in Easter term last, pursuant to the leave 
reserved, obtained a rule nisi to enter a verdict for the plain- 
tiff, on the ground that the document declared on was a 
promissory note. He referred to Cruchley v. Clarence, 4 and 
Armfield v. Allport. 6 He submitted, that, though informal, 

1 2 Maule & Selw. 90 (1813). 

2 3 Ellis & B. 549 (E. C. L. R vol. 77); 23 Law J. Q. B., 293. 
8 In the course of the discussion at the trial, the learned Judge 

adverted to a case in this court, the name of which he could not 
at the moment remember. It was probably Brown v. De Winton, 
6 C. B., 336 (E. C. L. R. vol 60). It was there held, that, although 
no precise form of words is necessary to constitute a promissory 
note, still it ought to have all the essentials of a contract. Thus, 
a note payable to the maker's own order, is not per se a negotiable 
instrument within the 3 & 4 Anne, c. 9, s. 1; a payee must be 
expressly named, or must appear by necessary implication. But, 
when a note in that form is indorsed in blank, and put in circu- 
lation by the maker, it becomes in effect payable to the bearer. 

*2 Maude & Selw. 90. (1813). 

*27 Law J. Exch. 42. 



112 MCCALL V. TAYLOR. [CHAP. 4, 

it might, like a document drawn in favor of a fictitious payee, 
be treated as a promissory note payable to bearer. 

Argument of Counsel for Defendant. — The goods for 
which the instrument was given were not delivered to the 
defendant, but to another person, and the plaintiff's jour- 
nal and ledger, and also the invoice delivered of the goods, 
all show that the defendant was not the person to be 
charged: there is no reason, therefore, why the court should 
exercise any astuteness in favor of the plaintiff. The simple 
question is, whether the instrument amounts to a promissory 
note. It is submitted that it clearly does not. So far as it 
professes anything, it professes to be a bill of exchange wanting 
the name of a drawer. It is addressed to the defendant, 
and is accepted by him. The words "pay to my order" 
cannot mean the order of the defendant. In truth, it is an 
incomplete bill of exchange, and nothing else. The defend- 
ant does not promise to pay any sum on the demand of any 
person, or at any particular time; and there is no endorsement. 
|_Willes, J. — The document seems sufficiently to explain itself. 
It is an authority to some person to put his name to it as 
drawer. No one has done so. It is therefore not a complete 
instrument. Byles, J. — My strong impression at the trial was, 
that it was neither a bill of exchange nor a note, but I thought it 
better to reserve the point.] Stoessiger v. The Great Eastern 
Railway Company 1 is precisely in pointy There, a parcel de- 
livered to a railway company for carriage contained 9/. \os. 
in cash and an instrument bearing a bill of exchange 
stamp, in the following terms, "Thrre months after 
date pay to me the sum of ill. 10s., value received. 
To Mr. Cruttenden" etc.: and written across it was 
an acceptance by Mr. Cruttenden. The parcel was addressed 
to Goold, a creditor of Cruttenden; and the intention was 
that Goold should put his name to the instrument as drawer. 
In the course of transmission the parcel was opened, 
and the instrument and what it contained were abstracted. 
In an action against the company for the loss, it was held 

1 3 Ellis & B. 549 (E. C. L. R. vol. 77); 23 Law J. Q. B., 
293- 



SEC. l8.] MCCALL V. TAYLOR. IIJ. 

that the instrument was a lt writing," and not a "bill, note, 
or security for money," within the meaning of the Carriers 
Act; 1 but that it could not be considered of value, so as under 
that section to exempt the company from their common-law 
liabity as carriers. Ld. Campbell, in giving judgment, says: 
4 4 1 am clearly of opinion that it is not a bill of exchange, for 
it has neither drawer nor payee; and it is not a promissory 
note, because it does not contain a promise to pay any one, 
and it is entirely inconsistent with Cruttenden's intention that 
any person who got possession of it should put his name to it 
as drawer." The rest of the court agree that the instrument 
was neither a bill nor a note: and Erie, J., says, "This was an 
instrument in an imperfect state. " It is uttery impossible to 
distinguish that from the present case. 

Argument of Counsel for Plaintiff. — Though imperfect 
as a bill of exchange, this instrument may well have effect 
given to it as a promissory note, as it must have been 
intended by the party to be, viz., an engagement to pay 
the amount to a bona fide holder on demand. The plain- 
tiff might have put his name to it as drawer; and, if he 
had done so, the defendant would have had no answer. 
That is clear from Cruchley v. Clarance, 2 Crutchley v. 
Mann/ and numerous other cases. It is the same thing 
(as LeBlanc, J., observes in the former case), as if the 
defendant (the acceptor) had made the bill payable to 
bearer. [Byles, J. — What was wanting in Cruchley v. Clar- 
ance is present here; the marginal note is equivocal.] The 
name of the person sued is there: and it is held that he gives 
authority to any one who is a bona fide holder, to fill up the 
blank. "As the defendant has chosen," says Ld. Ellenbor- 
ough, "to send the bill into the world in this form, the world 
ought not to be ^deceived by his acts. The defendant, by 
leaving the blank, undertook to be answerable for it when 
filled up in the shape of a bill." It is upon the same princi- 
ple that a bill drawn in favor of a fictitious payee may be 

1 ii G. 4 & i W. 4, c. 68, s. i. 

2 2 Maule & Selw. 90 (1890). 

'5 Taunt. 529 (E. C. L. R. vol. 1); 1 Marsh. 29 (E. C. L. 
vol. 4). 



114 MCCALL V, TAYLOR. [CHAP. 4, 

declared on as a bill payable to bearer. In Fielder v. Mar- 
shall, 1 an instrument purporting on the face of it to be a bill 
of exchange drawn by A. , payable to the plaintiff or order, 
was accepted by B. , and handed to the plaintiff in satisfaction 
of a claim for rent due to her from A. In the place where 
the direction to the drawee is usually found, the name and 
address of the payee were inserted. The whole instrument 
(except the drawer's name) was in the handwriting of B. It 
was held that the payee was entitled to recover upon it as a 
promissory note of B. [Byles, J. — The address in the corner 
was treated as no address at all. The instrument could not 
be a bill of exchange. It could only be Marshall's promissory 
note. The court construed it so as to give effect to the obvi- 
ous intention of the parties. Montague Smith, J. — There 
were both maker and payee named there.] There cannot be 
any difference in principle between a blank left for the name 
of a drawer, and a blank for the payee, or, which is the same 
thing, a fictitious payee. Erie, C. J., in that case says: "It 
appears to me that the right way to deal with it is this, to 
treat the direction to ' Mrs. Emma Fielder ' at the foot of the 
bill as a mere informal repetition of the words in the body 
of it, 'pay to Mrs. Emma Fielder.' The effect of so con- 
structing it is, that the defendant, who accepts the bill, thereby 
promises to pay the amount at maturity to Emma Fielder. 
Feeling that we are at liberty so to construe the instrument, 
I have much satisfaction in giving effect to what must have 
been the intention of the parties, by holding that the plaintiff 
is entitled to recover." In the course of the argument, Willes, 
J., referred to a case of Miller v. Thompson, 2 where it was 
held that an instrument in the form of a bill of exchange, drawn 
upon a joint-stock bank by the manager of one of its branch 
banks, by order of the directors, might be declared upon as a 
promisory note; Tindal, C. J., in giving judgment, says: 
"It appears that the directors for whom the instrument in 
question purports to be drawn by their manager, are mem- 
bers of the company whose name and character are presented 



l 9 C. B. N. S. 606 (E. C. L. R. vol. 99). 

2 3 M. & G. 576 (E. C. L. R. vol. 42), 4 Scott N. R. 204. 



SEC. l8.] MCCALL V. TAYLOR. IIS 

on the face of it, and that the company is not a corporation, 
but a mere private association. We must, therefore, look 
upon it as an instrument drawn by one of several members of 
a firm, purporting that the sum therein mentioned shall be 
paid by the firm at a given time and place. In effect it is a 
promissory note, and nothing else. To constitute a bill of 
exchange, it is essential that there should be two parties, a 
drawer, and a person upon whom the bill is drawn. 1 I am 
clearly of opinion that this is a promissory note. " And the 
learned Judge (Willes, J.) adds, "If there be sufficient on the 
face of the instrument to indicate a promise to pay, it is a 
promissory note. In Peto v. Reynolds, 2 the plaintiff's agent 
at Cameroons, in Africa, drew an instrument in the form of a 
bill of exchange; but addressed to no one; across which the 
defendant's agent wrote an acceptance in the defendant's 
name, and delivered the bill to the plaintiff's agent, for value 
received. In an action on the bill, the plaintiff attempted to 
prove that the bill was presented to the defendant, when he 
promised to pay it. It being doubtful, however, from the evi- 
dence, whether the defendant had made an absolute or merely 
a conditional promise to pay the bill, the court, in granting a 
new trial; though disposed to think that the instrument was 
not a bill of exchange, declined to give an express opinion on 
the point; but it was held by Parke, B., Alderson, B., and 
Martin, B., that if the instrument was not a bill of exchange, 
it was clearly a promissory note, if there was. evidence of an 
absolute promise to pay it. In Armfield v. Allport,* the cir- 
cumstances were very similar to those of the present case. 
It was there held that an instrument drawn in the form of a 
bill payable to bearer, even if accepted in blank, and after- 
wards filled up by the drawer, may be declared on by the 
endorsee as a promissory note made by the drawer and en- 



1 And a person to whom the money is to be paid. 

2 9 Exch. 410. 

•27 Law, J., Exch. 42. 



Il6 MCCALL V. TAYLOR. [CHAP. 4, 

dorsed by the drawee. 1 In Byles on Bills,' it is said: "If the 
bill be not made payable either to any payee in particular, or 
to the drawer's order, or to bearer in general, it would seem, 
according to the opinion of the majority of the judges,' to be 
payable to bearer; but, according to the opinion of Eyre, C. 
J., in the same case, it is mere waste paper": and reference 

is made to Rex v. Randall,* where a bill "payable to or 

order" was held not to be a bill of exchange, because there 
was no payee; and to Rex v. Richards, 5 where the prisoner 

drew a bill upon the treasurer of the navy "payable to 

or order," and signed it in the name of a navy surgeon, and 
it was held, that, to constitute an order for the payment of 
money, there must be some payee, and that a direction "to 
pay to or order was not sufficient." 

Decision of Court. — I am of opinion that this rule should 
be discharged. The instrument in question is declared upon 
as a bill of exchange, and also as a promissory note. 
It was in this form, "Four months after date, pay to 
my order the sum of three hundred pounds, for value re- 
ceived" and it was addressed to the defendant, but it had no 
date and no drawers name. Across it was written an accept- 
ance by the defendant. 

The question is, whether the holder of this document has 
a right to declare on it either as a bill of exchange or as a 
promissory note. It is clearly not a bill of exchange, and in 
form it is not a promissory note. If I could be clearly satis- 
fied that I should be giving effect to the intention of the 
parties by holding this instrument to be a promissory note, I 
would endeavor so to construe it. But I am aware of no 



1 It is not easy to discoverer what was decided by this case. In 
a considered judgment, the Ld. Chief Baron is reported to have 
said: "A man who writes his name across a stamped paper as 
acceptor, there being a direction to him upon the paper, is liable; 
he gives his authority to anybody to draw upon him when it may be 
convenient to do so, or when the person to whom the paper is 
given may think it advisable to apply it for this purpose." 

2 8th edit. 73. 

'In Minet v. Gibson, 1 A. Bl. 608. 

♦Russ C. C. T85. 

5 R. & R. C. C. 193. 



SEC. l8. ] MC CALL V, TAYLOR. 117 

case, and the industry of the learned counsel has discovered 
none, which warrants us in holding this to be either the one 
or the other. It is an inchoate and imperfect instrument. If 
the holder had authority to make it a complete instrument 
either as a bill or a note, he was at liberty to do so; but, if 
he had no such authority, he might if he attempted to do so 

! 3 Ellis & B. 549 (E. C. L. R. vol. 77); 23 Law J., Q. B. 293. 

The meaning of the word "parties" in reference to negotiable 
instruments is used in a more restricted sense than when relating 
to "parties" to an ordinary contract. In the latter case, "par- 
ties " are those who in a strict legal sense are affected by the oper- 
ation of the contract; in the former case, "parties" as the courts 
usually designate them are those whose names appear on the face 
or back of the instrument. "A person is made a party by his 
signing, his signature or some other written emblem upon the 
instrument that he intends to be bound by the instrument. A sig- 
nature in pencil, a signature made by another person, but attested 
by a mark, an indorsement upon the back of the note in form of 
'7, 2, 8,' made with the intention of indorsing, or such evidences 
of intention. The question is whether the signer intended to bind 
himself or not." Norton on Bills and Notes, 38. Brayley v. 
Kelley, 25 Minn., 160. 

Certainty as to Parties is Promoted by Two Facts: — 

(1) That the instrument bears upon its face means of identi- 
fying the parties to it; 

(2) That these parties are capable of exact ascertainment. 
The absence of either or both of these requirements renders 

the instrument non-negotiable. 

Chief Baron Eyre, in Gibson v. Minet, declared: "If I put 
in writing these words: 'I promise to pay 500 pounds on demand, 
value received' without saying to whom it is waste paper. If I 
direct another to pay 500 pounds at some day after date, for value 
received, without saying to whom, it is waste paper. " 

This is necessary to the negotiability of the instrument. For, 
under the law merchant, a negotiable instrument must show upon 
its face by inspection who the parties are, except when made pay- 
able to bearer. 

This then is the general rule, that without a maker or drawer, 
a drawee or a payee the instrument is non negotiable. 

Exception in the Case of the Drawee. — The following 
exceptions may be noted in the case of the drawee: 

(1) If the drawee can be otherwise sufficiently identified 
from the bill it is sufficient. 

(2) An unaddressed bill accepted or a bill accepted where 
the drawer and acceptor are one and the same person, probably is 



Il8 MCCALL V. TAYLOR, [CHAP. 4, 

render himself liable to a charge of forgery. The case of 
Stoessiger v. The South Eastern Railway Company * seems to 
me to be precisely in point, without going into any of the 
other cases. Nothing is clearer to my mind than that, in the 
ordinary case of an acceptance with the drawer's name in 
blank, it is important, in order to constitute a contract, that 

to be treated as a promissory note, and is negotiable. Norton on 
Bills and Notes, 57. 

The Common Rules Concerning the Nomination of 
Payees may be Stated as Follows: — 

( 1 ) The payee of an instrument, except one payable to 
bearer, must be a person in being, natural or legal, and ascer- 
tained, at the time of issue. 

( 2 ) Where the payee and maker or drawer are the same per- 
son, the instrument is not issued until after its indorsement and 
delivery by the maker. 

(3) The payee may be a fictitious or non-existing person, 
but the instrument is then construed as payable to bearer, and 
title thereto is made by estoppel." Norton on Bills and Notes; 57. 

The parties to commercial contracts must be particularly des- 
scribed and must be a person or persons who are capable of being 
ascertained at the time the instrument is made. Chitty on Bills, 
156. But the parties may be made certain without inserting their 
names; for that is certain which may be rendered certain; and if 
the payee be so certainly described or referred to as to be easily 
ascertained by allegations and proofs the contract will be sustained. 
Adams v. King, 16 111., 169. The following contracts have been 
held to be sufficient as to parties: " Pay to bills payable," (signed) 
E. F. ; "I promise to pay to you," (signed) X. Chalmers on 
Bills and Notes, 7; "Pay to the administrators of Abner Chase, 
deceased," (signed) C. D. Adams v. King, 16 111., 169; or a 
promise to pay to "A or heirs," (signed) H. B. Knight v. Jones, 
21 Mich. 161. Where a note reads, "We promise to pay to the 
order of myself, etc.," extrinsic evidence is competent to show 
which* of the two obligors was intended as the payee. Jenkins v. 
Bass, 88 Ky., 397. In the case of Stoessiger v. The Southeastern 
Ry. Co. supra, (23 Law J. [N. S.] [Q. B.] 293), the following 
instrument: 

" Three months after date pay to me the sum of eleven pounds , 
ten shillings^ value received. . 

" To Mr. Cruttenden, Jeweller." "[2\Tol signed.'] " 

' ' A ccepted, Cruttenden. " 

Was held not to be a negotiable contract. Ld. Campbell, C. J., 
said: "I am clearly of opinion, that it is not a bill of exchange, 
for it has neither drawer nor payee; and it is not a promissory note, 



SEC. l8.] MC CALL V. TAYLOR. II9 

it should be known who is to be the drawer. It may have been 
important here that the instrument should be filled up as a 
bill drawn by the owner of the ship or the broker upon the 
captain. And it may be that the plaintiff had no authority to 
add his name as the drawer. But, whatever may have been 
the particular circumstances under which this document was 



because it does not contain a promise to pay any one, and it is 
entirely inconsistent with Cruttenden's intention that any person 
who got possession of it should put his name to it as drawer." 
Schultz v. Astley, 2 Bing., 544; 5 Law J. Rep. (N. S.) C. P., 130; 
Miller v. Race, 1 Burr. 452; Petilton v. Lorden, 86 111., 361; Gray 
v. Milner, 8 Taunton, 739; Shuttleworth v. Stephens, I Camp. R., 
407; Harvey v. Kay, 9 B. and C, 364; Edis v. Bury, 6 B. and C, 
433; Tevis v. Young, 1 Mete. (Ky.), 197; Allan v. Mawson, 4 
Camp, 115. 

In the case of Brown v. Gilman, 13 Mass., 158, the follow- 
ing instrument was held not to be a good promissory note for 
the reason that all the parties were not certain: 

" Boston , 15th May, 18/0. 
li Good for one hundred and twenty -six dollars on demand. 

"Gilman c- ffovt." 

In this case Parker, C. J., said, "It is not a negotiable prom- 
issory note. It is not a note payable to bearer. Its legal effect is 
nothing more than that of a memorandum between the parties to 
it, to operate as a promise to pay money; as a receipt for money; 
or as proof of a sum of money to be accounted for, according to 
the real intention of the parties." See also, Adams v. King, 16 
111., 169; Carpenter v. Farnsworth, 106 Mass., 561; Yates v. Nash, 
29 L. J., C. P., 306; 8 C. B., 581 (98 E. C. L. Rep.) 

It Is Sufficient to Describe the Parties. — It is sufficient if 
the parties are particularly described. They need not be named. 
Storm v. Sterling, 3 E. and B., 832 (77 E. C. L. R.); Cowie v. 
Stirling, 6 E. and B., 333 (88 E. C. L. R. ) 

If a note gets into the hands of a wrong payee, of the same 
name, he cannot acquire a title thereto; and if he indorses it he 
will be guilty of forgery. Mead v. Young, 4 Term, R. 28; Foster 
v. Shattuck, 2 N. H. , 446. So also if a note is given to one in a 
name different from his own, he may declare upon it and prove 
that he was the person intended. Patterson v. Graves, 5 Blackf. 
(Ind. ), 593; Jester v. Hopper, 8 Eng. (Ark.), 43. If the name 
is misspelled, parole evidence is admissable to show who was in- 
tended. Willis v. Barrett, 2 Stark., 29 (3 E. C. L. R.). A note 
payable to B. orC. will be bad for uncertainty of parties. Blanck- 
enhagen v. Blundell, 2 B. and AL, 417. Where the father and 
son have the same name it will be intended payable to the father 



120 MCCALL V. TAYLOR. [CHAP. 4, 

given, I act upon the case I have referred to. As it stands, 
the thing is inchoate and incomplete, and affords no founda- 
tion for the holder to sue upon it. 

Willes, J. — I am entirely of the same opinion. 

Byles, J. — I am of the same opinion. I thought at the 
trial, and still think, that the instrument in question could not 

until the contrary is shown. Sweeting v. Barrett, i Stark, 106. 
A note may be payable to "the trustees of A's will " and parol 
evidence is ad mis rib le to show who the trustees are. Adams v. 
King, 16 111., 169; Megginson v. Harper, 2 C. and M., 322. So 
also may a negotiable contract "be payable to the administrator 
of A's estate." Moody v. Threlkeld, 13 Ga., 56. The following 
is a good negotiable contract: "On demand I promise to pay 'A.,' 
'B.' and 'C.,' or to their order, or the major part of them, the 
sum of 100 pounds." Watson v. Evans, 32 D. J. R. Exch., 137. 
If the name be left blank, a bona fide holder may fill it up with 
his own name. Crutchly v. Mann, 5 Taunton, 529. In Grant v. 
Vaughn, the contract was payable to "ship Fortune or bearer," 
and it was held to be a good negotiable contract payable to 
"bearer" simply. 3 Burr., 1516. 

In the case of Knight v. Jones, 21 Mich., 161, the court held 
the following instrument to be a promissory note. 

"Detroit, Oct. 7, 1867. 
" I promise to pay to Mary Knight or heirs, the sum making 
four hundred and fifty dollars, on the first day of January, 1868. 

" William Jones." 

See also, Armstrong v. Harshman, 61 Ind., 52; Sittig v. Birke- 
stack, 38 Md., 158. 

Where a negotiable contract is issued in blank without the 
name of the payee there is an authority to a bona fide holder to 
insert a name. Cruchley v. Clarence, 2 M. and S., 90; Crutchly 
v. Mann, 5 Taunton, 529; Atwood v. Griffin, 2 C. & P., 368; 
Rich v. Starbuck, 51 Ind., 87. A promise "to pay to the order 
of the indorsees name," etc., was supported. 2 Hill, (N. Y. ), 
154; Kayser v. Hall, 85 111., 511; 118 Mass., 439. A promise 
"to pay to the trustees of the Wesleyan Chapel, Harrogate, or 
their treasurer for the time being," etc., was held good. Holmes 
v. Jaques, 1 Q. B. L. R., 376; Storm v. Stirling, 3 E. and B., 
842; 23 L. J. R. (Q. B.), 301; Harlow v. Roswell, 15 111., 56; 
Watson, etc. v. Evans, 1 Hurl, and C, 662; 7 E. and B., 234; 
Adams v. King, 16 111., 169; Moore v. Anderson, 8 Ind/, 18; Rob- 
ertson v. Sheward, 1 M. & G., 511; Megginson v. Harper, 2 Cr. 
and M., 322. In Bowles v. Lambetr, 54 111., 237, a note payable 
"to the estate of A.," was also held good. Tittle v. Thomas, 30 
Miss., 122; Lyon v. Marshall, 11 Barb., 241. 



SEC. l8.] MC CALL V. TAYLOR. 121 

be declared on as either a bill of exchange or a promissory 
note. It is not like a bill accepted in blank. 

Montague Smith, J. — I also think this case is not dis- 
tinguishable from Stoessiger v. The South Eastern Railway 



Parties — Capacity of, to make Negotiable Contracts. — 

The general principles which govern the capacity of parties to 
common law contracts control in their application to the law of 
commercial contracts. Want of capacity says Mr. Randolph in 
his valuable work on commercial paper may be either natural, 
legal or political, according as it proceeds from mental unfitness 
or from the requirements of local or public law. Examples of 
natural capacity are found in idiots, lunatics and all persons of 
unsound mind or insufficient understanding. Among those who 
are legally incapable may be mentioned infants, married women 
and corporations so far as their power is restricted by law. Among 
those who are politically incapable may be mentioned alien ene- 
mies and to a certain extent public officers and State and munici- 
pal governments. 

Infants — Capacity of. — Persons under twenty-one years of 
age are minors, or infants, and contracts made by them may be 
void, when they are clearly to the infant's disadvantage, or void- 
able which may or may not be to his advantage according to the 
circumstances, or they may be valid if entered into for the neces- 
sities of the infant or in satisfaction for his torts. The distinction 
between void and voidable contracts of infants is practically obso- 
lete; so that now all the contracts of an infant, which are not in 
themselves illegal are voidable only and may be ratified. 

Chancellor Kent in his Commentaries says, " it is held that 
a negotiable note given by an infant, even for necessities, is void, 
and his acceptance of a bill of exchange is void; and a bond 
with a penalty though given for necessities is void. It must be 
admitted, however, that the tendency of modern decisions is in 
favor of a reasonableness and policy of a very liberal extension 
of the rule, and that the acts and contracts of infants should be 
deemed voidable only, and subject to their election, when they 
become of age, either to affirm or disallow them. If their con- 
tracts were absolutely void it would follow as a consequence that 
the contracts could have no legal effect whatever. 2 Kent. Comm. 
Lect. 31; Harner v. Dipple, 31 O. St., 72. 

Liability of Infant for Necessaries. — The rule is well 
settled that an infant may bind himself by a negotiable contract 
fer necessaries. Bradley v. Pratt, 23 Vt., 378. 

He can not, however, bind himself for necessaries when he 
has a parent or guardian who supplies his wants unless he has 
authority from such guardian or parent to purchase them and bind 
himself for them. King v. Cole, Holt's Rep., 360; Coan v. 



122 MCCALL V. TAYLOR. [CHAP. 4, 

Company supra. There, upon an instrument precisely simi- 
lar to this, except that there it was dated, Ld. Campbell says: 
44 It is not a bill of exchange; there is neither drawer nor 
payee. Nor is it a promissory note to pay any one who might 
happen to be bearer; that Cruttenden should become liable 



Boroles, ib., 358; Thompson v. Leach, ib., 357; 3 Mod. R., 301; 
3 Salk., 196; Angell v. McClellan, 16 Mass., 228; Rundell v. 
Keeler, 7 Watts, 237. If an infant borrows money for necessar- 
ies and gives his note for the same he is not liable on such note 
unless he applies the money accordingly. 3 Salk., 196. 

Liability of Infant for Torts. — Infants are liable for their 
torts and injuries of a private nature, and for wrongs committed 
by them the same as adults. If the tort be committed by force 
the infant is liable at any age; for in case of civil injuries, with 
force, the intention is not regarded. Tift v. Tift, 4 Denio, 175; 
Bradley v. Pratt, 23 Vt., 378. 

The law makes him liable for his tort, and if he elects to 
settle or liquidate such liability by giving his promissory note or 
other commercial contract, we see no reason why he should not 
be held liable in an action upon the note, to the same extent that 
he would be if the action had been brought upon the cause of 
action which formed the consideration for the note. The com- 
mercial contracts having been given in settlement of a claim for 
which the infant was liable and no fraud or imposition having been 
practiced in obtaining it the plea of infancy is certainly not avail- 
able to defeat it. 

Infant as Payee. — An infant, says Mr. Daniel, may un- 
doubtedly be the payee of a bill or note, and may sue upon and 
enforce it, since it can not be but for his benefit if the considera- 
tion thereof does not move from himself, but from some third 
person, or if it be for a debt justly due to him. But whether or 
not an infant can personally receive payment is a different ques- 
tion. As a general rule, payment should be made to his guardian, 
and if it be made to the infant personally, and is thereby dissi- 
pated and lost, the payor would not be discharged. Story on 
Bills, Sec. 85; Dan. on Negot. Inst., Sec. 227; Phillips v. Paget, 
2 Ark., 80. 

Infant as Indorser. — An infant may also become the in- 
dorser of a commercial contract made payable to him or order 
and thereby pass the legal and equitable title so as to enable the 
endorsee to recover against prior parties. This is upon the theory 
that the prior parties by undertaking to pay to an infant or his 
order are estopped to deny his capacity to order payment to be 
made to the endorsee. Story on Bills, Sec. 85; Hardy v. Waters, 
38 Me., 450; Dan. on Negot. Inst., Sec. 227. "It would be ab- 
surd to allow one who has made a promise to pay one who is an 



SEC. l8.] MC CALL V. TAYLOR. 1 23 

generally to the bearer, was quite contrary to his intention." 
So here, I think we should be going entirely against the inten- 
tion of the defendant if we were to hold him liable upon this 
instrument as upon a promissory note payable to bearer. 

infant, or his order, to refuse to pay the money to whom the infant 
has ordered it to be paid, in direct violation of his promise." 
Nightingale v. Withington, 15 Mass., 272. 

Liability of Infant Upon His Indorsement. — An infant, 
as an indorser is no more liable than as maker or acceptor of com- 
mercial contracts. While his indorsement operates to transfer the 
title to the contract he is not liable thereon. He may indeed dis- 
affirm the contract of indorsement and intercept the payment to 
the endorsee. Or he may by giving notice to the anticedent par- 
ties of his avoidance of the contract of indorsement furnish them 
with a valid defense against the claim of the endorsee. But until 
he does avoid the indorsement it is to be deemed, as to such 
anticedent parties, a good and valid transfer. Story on Notes, 
Sec. 80. 

Infants' Liability — Ratification. — Since the commercial 
contract of an infant is not absolutely void but voidable only, he 
may ratify it after reaching full age, when he will be bound to pay 
the instrument according to its term. For by ratification he vali- 
dates the contract and it becomes the same as if it had been exe- 
cuted and delivered by an adult. The ratification enures to the 
benefit of all subsequent parties or holders. 

No particular form of words is necessary to a ratification. A 
mere recognition of the existence of the debt or contract is suffi- 
cient. The following statements have been held to amount to a 
ratification by the infant after reaching full age: "I will pay the 
note as soon as I can make it, but not this year; all that is justly 
your due shall be paid; I owe you and will pay you when I return; 
I will remit in a short time." The promise to pay the contract to 
amount to a ratification must be direct and certain and must be 
made to the party with whom, he contracted or his authorized 
agent; if made to a third person it will not be sufficient. Mere 
part payment by the infant, before maturity, will not of itself amount 
to a ratification by the infant after reaching his majority. Smith 
v. Mayo, 9 Mass., 62; Robbins v. Eaton, 10 N. H., 561. 

In many of the states statutes have been enacted which pro- 
vide that no action shall be maintained whereby to charge any 
person, upon any promise made after full age; to pay any debt 
contracted during infancy, or upon any ratification after full age, 
of any promise or simple contract made during infancy, unless 
such promise or ratification shall be made by some writing signed 
by the parties to be charged therewith. 



124 MCCALL V. TAYLOR. [CHAP. 4, 

Rule. Discharged. 

1 

Joint Note of an Infant and Adult. — If an infant executes 
a negotiable contract jointly with an adult, the latter will be bound 
by his contract and suit may be brought against the adult alone. 
Taylor v. Dansby, 42 Mich., 84; Reading v. Beardsley, 41 Mich., 
123; Burgess v. Merrill, 4 Taunton, 468; Slocum v. Hooker, 12 
Barb., 563. 

Joint Note of Infant Partner. — The same rule applies to 
infant partners. And the fact that an infant remains in the firm 
after he reaches his majority does not necessarily ratify his con- 
tracts. Crabtree v. May, 1 B. Mon., 289; Bush v. Linthicum, 59 
Md. 344; Adams v. Beal, 67 Md. , 53; Osburn v. Farr, 42 Mich., 
134; Continental Bank v. Strauss, 137 N. Y., 148, 553; Mehlhop 
v. Rea, 90 Iowa, 30; 57 N. W. Rep., 650; Bixler v. Kresge, 169 Pa. 
St., 405; 47 Am. St. Rep., 920; Shirk v. Shultz, 113 Ind., 571. His 
interest in the partnership property remains liable, however, to the 
partnership debts. Lovell v. Beauchamp, 19 Appeal Cases (L. R.), 
607; In re Howes, 3 Q. B., 628; In re Taylor, 8 D. M. and G., 254; 
Ex parte, Adam, 1 V. and B., 494; Ex parte Blain, 12 Ch. D., 522; 
Ex parte Henderson, 4 Ves., 163; Shirk v. Shultz, supra; Yates v. 
Lyon, 61 N. Y., 344, Pelletier v. Conture, 148 Mass., 269. Neither 
can the adult members of the firm repudiate these contracts upon 
the ground of infancy, for by admitting the infant to the firm they 
have thereby made him their agent. Adams v. Beal, 67 Md., 53; 
Am.' St. Rep., 379; Sparman v. Keim, 83 N. Y., 245. 

Lunatics — Capacity to Contract — Effect of Insanity. — 
It may be stated as a general rule, that where contracts are made 
with imbeciles or lunatics in ignorance of their weaknesses and no 
advantage is taken of them and the acts are in good faith in every 
respect, they are valid and binding upon the lunatic. Molton v. 
Cameroux, 4 Exch., 17; 2 Exch., 489; Beverley's Case, 4 Rep., 126; 
Freed v. Brown, 55 Ind., 310; Edwards v. Davenport, 20 Fed. Rep., 
756; Stewart v. Lispenard, 26 Wend., 299; West v. Russell, 48 
Mich., 74; Searle v. Galbraith, 73 111., 269; Moore v. Hershey, 90 
Pa. St., 196; N. N. Ins. Co. v. Blakenship, 97 Ind., 535; Scanlon 
v. Cobb, 85 111., 296. Contra see Seavers v. Phelps, 11 Pick., 304; 
Fitzgerald v. Reed, 9 S. and M. (Miss.), 94; Anglo- California Bank 
v. Aures, 27 Fed. Rep., 727. If, however, the lunatic has been 
put under guardianship his contracts are void. Ingraham v. Bla- 
duin, 9 N. Y., 45; Runnells v. Gerner, 80 Mo., 477; Mansfield v. 
Felton, 13 Pick., 206; Lynch v. Dodge, 130 Mass., 458. 

Capacity of Married Women to make Negotiable Con- 
tracts. — At common law the contracts of married women were 
void; and this rule exists yet except so far as removal by statute. 
In some of the states, by statute she may contract as kfeme sole, 
in others only as to her sole and separate property, while in others 
the common law rule is still in force. See statutes of your state; 



SEC. l8.] MC CALL V. TAYLOR. I25 



also Mason v. Morgan, 2 A. E., 30; Haly v. Lane, 2 Atk., 181; 
Lloyd v. Lee, 1 Strange, 94. In those states which permit her to 
bind her separate estate by contracts, the contract must show in 
some way that it was her intention at the time the contract was 
executed and delivered. Yale v. Dederer, 22 N. Y., 450; McVey 
v. Cantrell, 70 N. Y., 295; Second Nat Bank v. Miller, 60 N. Y., 
639; Kenton Ins. Co. v. McClellan, 43 Mich., 564; Todd v. Ames, 
60 Barb., 862; Wolf v. Van Metre, 23 Iowa 397. If these contracts 
are executed with a married woman as principal with a surety, the 
surety will alone be liable. At common law, where a man mar- 
ried a woman, who was a party to a bill, or note, he became res- 
ponsible for such contracts. 1 Black. Com., 443; Schonler's Do- 
mestic Rel. 69. She is not estopped by her own representation 
that she is a feme sole. Kemworth v. Sawyer, T25 Mass., 29; 
Waterbury v. Andrews, 67 Mich., 282 and cases there cited. 

Neither is she liable upon her promise made by her after her 
husband's death to pay a bill or note which she executed during 
his life time unless upon some new and good consideration. Phil- 
lips v. Wicks, 36 N. Y., 254; Hetherington v. Nixon, 46 Ala. 297. 

A married woman may, however, be the agent for her. husband 
and as such bind him by a note signed in her own name. Abbott 
v. McKinley, 2 Miles (Pa.), 220. 

Liability of Husband for the Ante-Nuptial Com- 
mercial Contracts of the Wife. — If a woman executes and 
delivers a commercial contract while single, and before the same 
is paid marries, the husband becomes liable for the payment there- 
of. This liability of the husband, however, terminates with the 
expiration of the coverature. If the husband dies before proceed- 
ings are instituted upon such contracts the wife alone will be 
liable. Byles on Bills and Notes, 66. 

If a commercial contract was given to a single woman and 
she married the property vested in her husband and he alone could 
indorse it at common law. At common law a note made payable 
to a married woman is in law a note to the husband and becomes 
instantly his property; and her indorsement transfers no property 
in the note unless the indorsement was made with the husband's 
knowledge and consent. Savage v. King, 17 Me., 301; Holland 
v. Moody, 12 Ind., 170; Stevens v. Beals, 10 Cush. (Mass.), 291; 
Miller v. Delamaker, 12 Wend., 433; Mason v. Morgan, 2 Ad. & 
Ellis, 30 (29 E. C. L, R.); Prestwick v. Marshall, 7 Bing., 565 
(20 E. C. L. R.). 

Liability of Wife — Exceptions to the General Rule. — 
"There are certain exceptional circumstances under which 
the contracts of a married woman may be binding upon her: (1) 
when husband is an alien enemy or civilly dead; (2) when wife has 
a separate estate; (3) when wife is a sole trader by special custom 
or statute; (4) when wife purchases necessaries; (5) when husband 



126 MC CALL V. TAYLOR. [CHAP. 4, 

adopts her name as binding on him; (6) when wife is agent of hus- 
band." Dan. on Negot. Inst. Sec. 244. 

If the husband is an alien enemy, he is prevented by law from 
coming to the aid of his wife; it is therefore necessary for her own 
maintenance and support to be permitted to make contracts. So 
also a married woman may become liable upon her contracts when 
in the execution thereof she intended to charge her sole and sepa- 
rate estate. In these cases, however, it is necessary that her con- 
tracts be entered into with reference to, and in the credit of, her 
separate estate. There must be an intention upon her part to 
make her separate estate liable. Some of the courts have held 
that this intention must be expressed in the contract itself; while 
others have held upon the contrary that it is sufficient if the inten- 
tion can be implied. Williams v. Urnston, 35 Ohio St., 296; (See 
Levi v. Earle, 30 Ohio St., 147); Frank v. Lilienfield, 33 Gratt., 
349; McVey v. Cantrell, 70 N. Y., 295; Conlin v. Cantrell, 64 N. 
Y., 219. 

In many of the states there are statutes empowering married 
women to engage in business upon their sole and separate accounts, 
and when so empowered they may execute and deliver and render 
themselves individually liable upon their commercial contracts. 
Canden v. Mulen, 29 Cal., 566; Wieman v. Anderson, 42 Pa. 
St., 311; Mudge v. Bullock, 83 111., 22. 

Married Women — Right to Contract — Statutory Rules. 
— By statute in many of the states the common law rule concern- 
ing the right of a married woman to contract has been abrogated; 
so that now the wife may enter into any engagement or transaction 
which she might if unmarried. 

Capacity of Partners to Bind the Firm upon Commer- 
cial Contracts. — It may be stated as a general proposition that 
each partner (except secret or dormant partners) has implied 
power to bind the firm. This authority is implied from the very 
nature and object of a partnership. It springs from the mutual 
agency of the co-partners for each other. This implied authority, 
however, depends largely upon the general character and purposes 
or objects of the partnership. If the partnership is a trading part- 
nership the borrowing of money becomes an ordinary incident of 
the trading and each partner has an implied authority to bind the 
firm by making, drawing, endorsing or accepting in its name a 
commercial contract for partnership purposes. This is true 
whether he signs the name of the firm, or his own name. Living- 
ston v. Roosevelt, 4 Johnson, 251; Gayno v. Samuel, 14 Ohio, 592. 

A partner has no right to bind his co-partners by a commer- 
cial contract except in a partnership transaction. If, however, the 
partnership is not a trading firm one partner has no implied au- 
thority to bind the firm by making, drawing, endorsing or accept- 
ing commercial contracts. The reason therefor being that the 
power of each individual of a partnership to make such contract in 



SEC. l8.] MC CALL V. TAYLOR. 127 



behalf of non-trading firms can only exist by virtue of the consent 
of all the partners. Pease v. Cole, 53 Conn., 53; Walker v. Walker, 
66 Vt., 285; Horn v. City Bank, ^ Kan., 518; Lee v. Bank, 45 
Kan., 8. 

Upon these principles a member of a law firm cannot bind the 
partnership by a promissory note or other commercial contract 
without the consent of all the members of the firm; neither can one 
of the firm of practicing physicians bind it except for the neces- 
saries of their profession. Dan. on Negot. Inst. Sec. 358; Tiede- 
man on Com. Paper, Sec. 97; Pease v. Cole, 53 Conn., 53; Bays v. 
Conner, 105 Ind., 415; Levi v. Lathan, 15 Neb., 509; Dowling v. 
National Bank, 145 U. S., 512; Crossthwait v. Ross, 1 Humph 
(Tenn.), 23. 

Partners— Form of the Signature of the Firm. — It is a 
strict rule that the name of the firm in the making, drawing, endorsing 
or accepting of commercial contracts, must be used, otherwise an 
action cannot be maintained against the firm; if, however, there is 
an immaterial variance the firm will be bound by the signature. 
But the firm will not be bound if the variance is material. It has 
been held that if the style of the firm was " John Burton," the firm 
will not be bound on a note signed by, "John Burton & Co." 
Kirk v. Burton, 9 M. & W., 284; Tiedeman on Com. Paper, 
Sec. 103. 

When the firm name is signed by a member of the firm to a 
commercial contract it may be done by using the name of the 
partnership simply or the use of the partnership name per the 
partner. Thus the signature may be either "John Smith & Co." 
or "John Smith & Co." by John Smith. No special formality is 
required; but it must appear on the face of the paper that the 
contract is the obligation of the firm. So also have these con- 
tracts which read "I promise," and signed by one of the firm for 
the rest as A. B. for A. B. & Co. been held to bind the whole firm 
and not the signing parties singly. Doty v. Bates, 11 Johns, 544. 

Capacity of a Corporation to Make Negotiable Con- 
tracts. — Corporations as a general rule have only such powers as 
are expressly conferred upon them by their charters and such im- 
plied powers as are necessary to the full and complete enjoyment 
of their express power. In order, therefore, to determine whether 
a corporation has authority to execute and deliver commercial con- 
tracts, an examination of its express powers — of its corporate 
charter must be made. If express authority, therefore, can not 
be found in its charter, then the inquiry arises is this power neces- 
sarily implied from the express powers or from the general nature 
or character of the institution. Dartmouth College Case, 4 
Wheaton, 636. 

According to the English rule all trading and banking corpor- 
ations may execute and deliver commercial contracts without 
-express authority so to do, because such acts are necessary to the 



128 MC CALL V. TAYLOR. [CHAP. 4, 

very object of their existence. Broughton v. Manchester, Water 
Wks., 3 B. 7. Aid., 1. 

In the United States it may be regarded as settled that the 
power of corporations to become parties to commercial contracts, 
is co-extensive with their power to contract debts. Whenever a 
corporation is authorized to contract a debt it may execute a nego- 
tiable contract to pay it. Every corporation, therefore, may 
become a party to commercial contracts for some purposes if it 
has the power to contract debts. A religious corporation which 
may need fuel for its rooms may give its note for the same. Par- 
sons on Bills and Notes, 164, 165; Catron v. I. & Society, 46 
Iowa, 108; Dan. on Negot. Inst., Sec. 381. 

A corporation, in order to obtain its legitimate and corpor- 
ate objects, may deal precisely, through its agents and officers, 
as an individual may who seeks to accomplish the same ends. 
Moss v. Averill, 10 N. Y., 447, 449. 

Where a corporation has power to purchase property or pro- 
cure money on a loan in the course of its business, the seller or 
lender may exact, and the purchaser or borrower must have the 
power to give, assurances which do not fall within the prohibitions, 
express or implied, of some statute. Curtis v. Leavitt, 15 N. Y., 
66; Olcott v. Tioga R'y Co., 40 Barb., 179; Monument Nat. Bk. 
v. Globe Works, 101 Mass., 57. 

Corporations Not Allowed to Become Accommoda- 
tion Parties. — Unless the corporation, however, has been ex- 
pressly authorized to become a party to commercial contracts it 
has not the power to bind itself upon accommodation paper; for 
an accommodation paper cannot be considered to be issued in the 
regular course of the corporation. But if the contract reaches 
the hands of an innocent endorsee the common law rule of nego- 
tiable paper applies, viz.: that the endorsee takes the paper free 
from the equitable defenses existing against it. So also will the 
corporation be liable upon its commercial contract in the hands of 
bona fide holders where the amount issued by the corporation is in 
excess of the amount authorized. Ellsworth v. St. Louis R'y Co., 
98 N. Y., 553; National Bank v. Wells, 79 N. Y., 498; National 
Park Bank v. German Am. & Security Co., 5 L. Rep. A, 673. 

It may be stated as a general rule that when a corporation has 
power under any circumstance to issue negotiable securities, the 
bona fide holder has a right to presume that they were issued under 
the circumstances which gave them the requisite authority. Lex- 
ington v. Butler, 81 U. S., 14. 

Corporations — Power to Indorse Commercial Con- 
tracts.— Corporations, says Daniel in his work on Commercial 
Paper, having a right to receive bills or notes in payment of debts, 
have the implied right to indorse them, or to dispose of them by 
assignment without indorsement as may suit their purposes. Mar- 
vine v. Hymers, 12 N. Y., 223; Hardy v. Merriweather, 14 Ind., 



SEC. l8.] MC CALL V. TAYLOR. 120 

203; Dan. on Negot. Inst., Sec. 385. And if authorized to bor- 
row money they may borrow a bill or a note and indorse it or 
assign it. 

Corporations — Form of Their Contract. — As a general 
rule, a corporation can only contract by a writing under its com- 
mon seal. But to this rule there are certain exceptions: (1) Where 
the contract is executed; (2) Where the acts done are of daily 
necessities to the corporation, or are too insignificant to be worth 
the trouble of affixing the common seal; (3) Where the corpora- 
tion as a head, as a mayor, or a dean, who may give command 
which a party may obey without the sanction of a common seal; 
(4) Where the acts to be done must be done immediately and it 
would be impossible to wait for the formality of attaching the 
common seal; (5 ) Where the corporation is incorporated for the 
purposes of trade the very object of these institutions requires 
that they should exercise the right to execute and deliver commer- 
cial contracts which if executed and delivered under seal would 
destroy their very object, "negotiability." Warren v. Lynch, 5 
Johnson, 239; East London & Co. v. Bailey et al., 4 Bing., 283; 
13 E. C. L. R., 435; Story on Bills, Sec. 62; Tiedeman on Corn- 
Paper, Sec. 117. 

Corporations — Authority of Agents. — Corporations can 
only act through their agents and therefore the power to appoint 
agents is necessarily implied. Usually the charter or by-laws of 
corporation provide or indicate the officers or agents of the cor- 
poration who shall have authority to bind the corporation in con- 
tract In such cases contracts executed and delivered by other 
officers or agents purporting to bind the corporation would bear 
upon their face evidence of irregularity and be notice to all. 
Therefore every purchaser or holder of a promissory note of a 
corporation takes it at the peril of the officers' lack of authority 
to execute and deliver that particular contract. Davis v. Rock- 
ingham & Co., 89 Va., 290. The corporation may be estopped 
to deny the authority of its officers or agents to execute and de- 
liverer promissory notes after they have received and used the 
proceeds. 

Corporations — Public — Power to Execute Commercial 
Contracts. — Unless there is some restriction in the organic law 
there is no doubt that both the state and federal governments may 
through the proper agents become parties to any specie of com- 
mercial contract. Miller, J., said "the authority to issue bills of 
exchange not being one expressly given by statute, can only arise 
as an incident to the exercise of some other power. When it be- 
comes the duty of any officer to pay money at a distant point, he 
may do so by a bill of exchange, because that is the usual and ap- 
propriate mode of doing it so when an officer or agent of the gov- 
ernment at a distance, is entitled to money here, the person hold- 
ing the funds may pay his drafts. And, whenever, in conducting 



130 MC CALL V. TAYLOR. [CHAP. 4, 



any of the fiscal affairs of the government, the drawing of a bill of 
exchange is the appropriate means of doing that which the depart- 
ment, or officer has a right to do, then he can draw and bind the 
government in so doing. But the obligation resting upon him to 
perform that duty, and his right and authority to effect such an 
object is always open to inquiry; and if they be found wanting, or 
if they be forbidden by express statute then the draft or acceptance 
is not binding on the government. Floyd Acceptances, 7 Wall. 
679. 

Corporations — Municipal or Public — Power to Execute 
and Deliver Commercial Contracts. — The term public or 
municipal corporation is here used to include counties, townships, 
cities, towns and incorporated villages as well as school districts, 
parishes, and police districts. These corporations differ only in 
the relative quantity of powers conferred by the state government. 
As a general rule the state in creating these public corporations, 
either under general or special laws, defines and determines their 
power. And it is a well settled rule of construction of grants by 
the legislature to corporations, whether public or private, that only 
such powers and rights can be exercised under them as are clearly 
comprehended within the words of the act, or derived therefrom by 
necessary implication, regard being had to the objects of the grant. 
Minturn v. Ladue, 23 Howard 435. Upon the question whether a 
municipal or public corporation may become a party to a com- 
mercial contract through its lawful agents, there is much conflict 
in the authorities. It has been the subject of much discussion by 
text writers and of numerous decisions by the legal tribunals of the 
country. There is a marked distinction between the powers of 
private and public corporations in their powers to execute and de- 
liver commercial contracts. As has been stated the right of private 
or trading corporations to issue commercial contracts or other evi- 
dences of indebtedness, unless restrained by their charters or the 
law of the land, may be conceded. Private corporations are or- 
ganized for the purposes of trade and business, and the borrowing 
of money and the issuing of obligations therefor may be necessary to 
carry the very object of the corporation into effect. The objects 
of municipal corporations are very different. The ends and ob- 
jects of municipal corporations are the comfort, protection and 
well-being of the people found within their geographical limits. In 
the case of the City of Williamsport v. The Common Wealth, 
Paxon, J., in discussing the rights of municipal corporations to 
borrow money and issue commercial contracts says, "taken in its 
broad sense, the power to borrow money and issue bonds therefor 
cannot be said to be among the implied powers of municipal cor- 
porations. For general purposes he continues such power does not 
exist, for the reason that it is not necessary for the objects for 
which it was created. Thus it has never been contended that a 
municipality may borrow money and issue bonds or notes for ob- 



SEC. l8.] MC CALL V. TAYLOR. I3T 



jects having no necessary relations to the performance of munici- 
pal duties. To admit such a principle would be destructive of 
such organizations, and place the tax-payers of a city at the mercy 
of the first band of plunderers who should happen to obtain the 
temporary control of its affairs. " 84 Pa. St., 487, 494. Judge 
Dillon says in his valuable work on Municipal Corporations that 
' * we regard as a like unsound and dangerous that a public or muni- 
cipal corporation possesses the implied power to borrow money for 
its ordinary purposes, and as incidental to that, the power to issue 
commercial securities. The cases on this subject are conflicting, 
but the tendency is to the view above indicated/' Whether it is a 
wise policy or not certainly the legislature in creating municipal 
corporations may grant them full power and authority to execute 
and deliver commercial contracts. This power, however, has 
seldom ever been granted. 

Parties — Executors and Administrators. — The rule is 
well settled that the executors or administrators have no power to 
bind the estate of the decedent by making, drawing, endorsing or 
accepting commercial contracts. King v. Thorn, 1 Term R., 489; 
Austin v. Munro, 47 N. Y., 360; Kessler v. Hall, 64 N. C, 60; 
Cornthwaite v. Nat. Bank, 57 Ind., 268; Rittenhouse v. Ammer- 
man, 64 Mo., 197. If, however, the executor or administrator does 
execute and deliver a commercial contract he thereby makes him- 
self personally liable even though it is stated in the most explicit 
manner to have been executed and delivered in his representative 
capacity. Edwards on Bills, Sec. 79; Christian v. Moris, 50 Ala., 
586; Wisdom v. Becker, 52 111., 346; Kirkman v. Benham, 28 
Ala., 501. 

Parties — Power of Personal Representatives to Trans- 
fer by Endorsement or Assignment. — While the personal re- 
presentatives of deceased persons may not bind the estate of his 
decedent, yet he may transfer negotiable contracts belonging to 
the estate by either an endorsement or assignment. In case, how- 
ever, such instruments are dishonored the personal representative 
is personally bound in such transfer unless he has expressly exemp- 
ted himself from liability by the terms of the transfer. Edwards 
on Bills, 248; Foster v. Fuller, 6 Mass., 58. Where there are two 
or more executors or administrators any one of whom may trans- 
fer negotiable contracts, (unless by the terms of their trust forbid- 
den), which were executed and delivered to the decedent during his 
life time. Dwight v. Newell, 15 111., 333; Wheeler v. Wheeler, 9 
Cow., 34. It has been held, however, where the negotiable con- 
tract was made payable to the executors or administrators, that 
they must all join in the endorsement or assignment; Smith v. 
Whiting, 9 Mass. 334. But the better opinion seems to recognize 
no such distinction and in both cases an endorsement or assign- 
ment by the one representative is considered as effectual as that of 
all. Bogert v. Hertell, 4 Hill, 492; Daniel on Negot. Inst. Sec. 266. 



132 MCCALL V. TAYLOR. [CHAP. 4, 



Parties — Agents— Capacity of to Make Negotiable 
Contracts. — It may be stated as a general rule that whatever a 
man may do by himself he may do by his agent. Combe's Case 
9 Rep. 75. An agency is a mere ministerial office, therefore in- 
fants, married women, persons attainted, out-lawed, aliens and 
others, though incapable of contracting on their own account, so 
as to bind themselves, may become agents. Chitty on Bills, 36. 

Parties — Agents — Authority of. — Agents may be appointed 
either verbally or by a writing, or by subsequent ratification. The 
authority of an agent to transfer commercial contracts may be con- 
ferred by any one of these methods whether the principal be an in- 
dividual or a corporation. Trudy v. Farrar, 32 Me. 225; Handy- 
side v. Cameron, 21 III. 588. No particular form of appointment 
is necessary to enable an agent to execute and deliver a commercial 
contract so as to charge his principal. He may be specially ap- 
pointed for this purpose or may derive his power from some im- 
plied authority. It has been held that a verbal authority from the 
principal to his agent to transact all his business confers the power 
to assign and transfer negotiable paper. The authority of the 
agent, however, must always depend upon the construction of the 
words used in his appointment. Bailey v. Rawley, 1 Swan (Tenn.) 
205; Rossiter v. Rossiter, 8 Wend. 494; Ward v. The Bank of Ky. 
7 Mon. (Ky.) 93. The authority of an agent will be presumed to 
continue till due notice of its revocation has been given. The 
agent, of course cannot delegate his authority unless specially au- 
thorized so to do. Combe's Case 9 Rep. 75; Breuster v. Hobart, 
15 Pick. 302; Lord v. Hall, 9 L. J., C. P., 147; 8 C. B. 627 (65 
E. C. L. R.) 

Parties — Joint Agents. — It is a general rule of the common 
law, that where an authority is given to two or more persons to do 
an act, the act is valid to bind the principal only when all of them 
concur in doing it; for the authority is construed strictly and the 
power is understood to be joint and not several unless words of 
severality are used. Story on Agency, Sec. 42; Hartford Fire Ins. 
Co. v. Wilcox, 57 111. 180; Union Bank v. Beirne, 1 Grat. 226, 

234, 539- 

Parties — Agents — Signatures of. — It may be stated as a 

general rule that no one is bound upon a commercial contract who 
is not expressly a party to it. Therefore, the agent should be very 
explicit in his signature in order to make his principal liable and 
not himself. The signature of the agent followed by the word 
" agent" as follows, A. B., Agent, of C. D. is not sufficient to bind 
the principal and the agent alone is liable. Such a suffix is deemed 
to be a mere descriptio persona and does not constitute any no- 
tice of the agency to the holder or endorsee. Collins v. The Buck- 
eye Ins. Co., 17 Ohio St. 215; Williams v. Robbins, 16 Gray 77; 
Kenyon v. Williams, 19 Ind. 45; Bishop v. Rowe, 71 Me. 263; 
Bartlett v. Tucker, 104 Mass. 338. The following have been held 



SEC. l8.] MCCALL0. TAYLOR. 133 

to be sufficient signatures by the agent to bind the principal: 4< A. 
B. by his agent C. D., or A. B. by C. D., or C. D. agent for A. 
B." Story on Agency, Sec. 274, 278; Long v. Colburne, 11 Mass. 
97; Haight v. Naylor, 5 Daily 219. The rule that no. person is 
liable upon a commercial contract unless his name, in some way, 
is disclosed upon the face thereof has been modified so that when 
the person signing his name with the word " Agent " added, is, in 
fact the agent of the principal, and the writing is executed in the 
course of the business of such agency, the principal is bound. 
Green v. Skeel, 2 Hun. 486; Lamed v. Johnson, 9 Allen 419. 

Parties — Guardians — Trustees — Power to Make Nego- 
tiable Contracts. — Guardians and trustees have no power to bind 
the estate which they represent by commercial contracts. If, there- 
fore, they execute and deliver commercial contracts in such capacity 
they will be personally liable even though they sign themselves as 
"Guardians or Trustees." Dan. on Com. Inst., Sec. 271; Story 
on Notes, Sec. 63. If a guardian or trustee as such takes a com- 
mercial contract payable to him or to his order that he may trans- 
fer the title to the same by endorsement or assignment; but in case 
of default of payment he of course will be personally liable. 
Thornton v. Rankin, 19 Mo. 193; Shaw v. Spencer, 100 Mass. 
382; Strong v. Straus, 40 Ohio St. 87. 

Parties — Drunkards — Power to Make Negotiable Con- 
tracts. — It is a general rule at common law that a contract made 
by a person in a state of intoxication may be subsequently avoided 
by him, but if confirmed is binding on him. Anson on Contracts, 
150. In order, however, that a drunken person may avoid his 
contract on account of intoxication it must appear that he did not 
understand the effect and consequence of his contract. Bush v. 
Breinig, 113 Pa. St. 310. It has also been held that a party to a 
contract cannot avoid it on account of intoxication unless another 
party to it uses means to induce such intoxication. Smith v. Wil- 
liamson, 30 Pac. R. 

Parties — Lunatics — Insane Persons — Power to Make 
Negotiable Contracts. — A contract of a lunatic or an insane 
person is voidable at his option if it can be shown that at the time 
of making the contract he was absolutely incapable of under- 
standing what he was doing and that the other party knew of his 
condition. Molton v. Camroux, 4 Exch., R. 19; Mutual Life Ins. 
Co. v. Hunt, 79 N. Y., 541; Dehrens v. McKenzie, 23 Iowa, 333; 
Wilder v. Weakly, 34 Ind., 181; Shoulters v. Allen, 51 Mich., 530. 
It has been held, however, that the *' fairness of the defendant's 
conduct cannot supply the plaintiff's want of capacity." Many 
courts have held that where the insane person receives no benefit 
whatever under the contract, the contract cannot be enforced 
against him, and if executed he may recover whatever of value he 
parted with, notwithstanding the other party to the contract may have 
acted in good faith without knowledge of the infirmity. Seavers 

8 



134 MCCALL 0. TAYLOR. [CHAP. 4, 



v. Phelps, 11 Pick., 304; Van Pattern v. Beals, 46 Iowa, 63; Wier- 
bach v. 1st. Nat. Bank, 97 Pa. St., 543; Moore v. Hershey, 90 
Pa. St., 196; N. W. Mutual Ins. Co. v. Blankenship, 94 Ind., 
535. Mere weakness of mind, however, not amounting to imbe- 
cility or insanity is no ground of defense provided no fraud has 
been practiced on the party. Dan: on Negot. Inst, Sec. 211; 
Stewart v. Lispenard, 26 Wend., 299. 



SEC. 19.] BURSON V. HUNTINGTON. 135 

SECTION 19. 
A NEGOTIABLE CONTRACT MUST BE DELIVERED. 

BURSON v. HUNTINGTON. 1 

In the Supreme Court, Michigan, Oct. iith, 1870. 

[Reported in 21 Mich., 415; 4 American Dec, 497*] 

This cause was brought into the Circuit Court for the 
County of Kalamazoo by appeal from the judgment of a 
Justice of the Peace, in an action in which Walter S. Hunt- 
ington was plaintiff, and John W. Burson defendant. 

Form of the Action. — The justice's transcript states that 
the plaintiff declared verbally on the common count in as- 
sumpsit and upon a promissory note, which was filed at the 
time of declaring, and of which the following is a copy, viz. : 

"Schoolcraft, Mich., Apr. 12th, 1866. 
1 ' Ninety days from date, for value received, I promise 
to pay A . N. Goldwood, or order, one hundred and twelve 
dollars, and fifty cents, with interest. 

John IV. Burson." 

Indorsed on the back, 

"A. N. Goldwood." 

Form of the Defense. — The defendant filed an affidavit 
denying the delivery of the note, and also a plea and notice 
in writing. 

The defendant, in the affidavit filed, with his plea and 
notice, deposed ' ' that the written instrument, declared on in 
this cause by said plaintiff, was never delivered by this defend- 
ant, to the said A. N. Goldwood, mentioned in said written 
instrument, nor to any other person for the said A. N. Gold- 
wood, or *any other person, and that this defendant never 
authorized any other person to deliver the written instrument 

l This case is cited in Tiedeman on Commercial Paper, 282; 
Edwards on Commercial Paper, 326, 328, 331, 335; Daniel on 
Negotiable Instruments, 122, 8^8; Wood's Byles on Bills and 
Notes, 254; Norton on Bills and Notes, 70, 250; Bigelow's Cases, 
on B. and N., 227; Bigelow on B. and N., 176, 178, 227; Benja- 
min's Chalmers on Bills, Notes and Checks, 59, 62. 



136 BURSON V. HUNTINGTON. [CHAP. 4, 

for him, (this defendant), to the said A. N. Goldwood, or to 
any other person; and defendant further says that this depon- 
ent never placed any United States internal revenue stamps 
upon said written instrument, and never authorized any other 
person to do so for him, or to cancel the same; that said 
written instrument was taken from the house of this defend- 
ant, in this defendant's absence from the same, by the said 
A. N. Goldwood, without the knowledge or consent of the 
deponent at the time." 

On the trial before the justice, the jury found a verdict 
for the defendant, and the plaintiff appealed. 

On the part of the defense in the Circuit Court, it was 
shown that Ellen Burson had been sworn as a witness before 
the justice, and that she had since died; * ' That Goldwood 
came to the house of defendant and told defendant he had 
come to finish up that matter. They sat down, and Gold- 
wood wrote this note. Defendant signed it. Goldwood said 
he wanted security or a signer. Defendant said he would go 
out and see his uncle. His uncle was at the barn at the time. 
Defendant laid the note on the table, and told plaintiff not to 
touch it until he came back. Defendant went out of the house 
to the barn, and before he returned, Goldwood picked up the 
note and started out doors with it. She told Goldwood to let 
the note be on the table until defendant came back. Gold- 
wood said he was going to take the note, or proposed to have 
it, or something to that effect, and went off with it. He 
started towards Kalamazoo. She said there was no stamp on 
the note at the time Goldwood took it away." 

The counsel for the defendant then asked the court to 
charge the jury: 

1st. That if they find that A. N. Goldwood, the payee 
named in the note, took this note after it was drawn and 
signed by defendant, without the knowledge, and against the 
will and consent of the defendant, and before the defendant 
had delivered the note to any person, the note thus obtained 
would be void in the hands of said Goldwood. 

2d. That such note would be void in the hands of any 
subsequent holder, deriving possession of the same from said 
Goldwood, whether for value or not. 



SEC. 19.] BURSON V. HUNTINGTON. 137 

3d. If the jury shall find that the plaintiff had notice of 
the means and manner used by A. N. Gold wood, as above 
stated, in getting possession of the note at the time he indor- 
sed and delivered it to the plaintiff, the plaintiff could not be 
considered an innocent holder of the note. 

4th. That whether the plaintiff in this cause had such 
notice, or not, is a question of fact to be found by the jury 
from all the testimony in the case. That the fact of the plain- 
tiff having such notice need not be proved by positive testi- 
mony, but may be proved by circumstances. 

5th. That this note in suit, if drawn and signed by the 
defendant, and if not afterwards delivered by him or by his 
authority .to some other person, has no legal existence, and is 
therefore void. 

And thereupon the Court charged the jury as follows: 

The present is an action of assumpsit, brought to recover 
the principal and interest moneys claimed to be due upon a 
negotiable promissory note. The plaintiff claims to be the 
holder of said note by purchase. The action is brougnt in the 
form prescribed by statute. The declaration consists of the 
common counts, with a copy of the note appended. The de- 
fendant having failed to deny the execution of the note on 
oath or by affidavit duly filed, it becomes unnecessary for the 
plaintiff to prove such execution on the trial of the case. By 
offering the note in evidence, then proving it to have been in- 
dorsed and delivered to him, the plaintiff in such case makes 
out a prima facie case for its recovery. 

The real questions raised upon this trial are those stated 
in the defense set up, and had reference almost solely to the 
doctrine of our commercial law and the rights of the parties 
interested in negotiable or commercial paper. As between 
first parties to such paper, as maker, payee, the right of de- 
fense is generally as ample in range, as the facts which would 
invalidate the contract or claim; as, for instance, illegality, 
fraud, want or failure of consideration or any unwarrantable 
means for obtaining it. A like rule prevails in an action be- 
tween the maker and a subsequent indorser, or holder, coming 
into possession or ownership after the note has matured, and 
become due and payable by its terms. 



138 BURSON V. HUNTINGTON. [CHAP. 4, 

The same rule governs also as between the maker and 
holder by purchase before maturity and for value, but with no- 
tice of existing infirmities in the paper, or its surroundings, 
which would invalidate the same, as, for instance, that the 
note had been given upon the sale and purchase of intoxica- 
ting liquor in this state. 

But when the action is between the maker and bona fide 
holder for value of negotiable paper, purchased before its ma- 
turity and without notice that the same is different, such 
holder is not subject to equities that may exist between first 
parties. The law commercial protects such holder from the 
defenses which might be set up, as between the parties. In 
general terms facts going to impeach or invalidate the paper 
cannot be resorted to on the defense. The rule itself is one 
of commercial necessity in order to impart confidence and 
steady value to this class of papers in commercial and business 
transactions. 

The counsel for defendant has presented to the court a 
series of seven requests to charge the jury, and to which the 
court will now direct your attention. As to the first request, 
the court declines to charge as requested, but modifies the 
request to charge (in this form provisionally) that if a party 
negligently allows his negotiable note to get into circulation, 
or if after it has passed from his possession he either acknowl- 
edged or by silence acquiesced in a claim of its validity, by 
the holder; to which refusal to charge as requested, and also 
to said modification of the request, the counsel for defendant 
excepted. 

As to the second request, the court declines to charge as 
requested; to which refusal to charge as requested in said 
second request, the counsel for defendant excepted. 

As to the third request, the court charges you as request- 
ed, with the addition, that if they also find that Goldwood 
obtained the note by unlawful means of which the plaintiff 
had notice, then the plaintiff cannot be considered an inno- 
cent holder of the note. To the charge contained in the 
addition made by the court to the request, counsel for defend- 
ant excepted. 

As to the fourth request, the court charges as requested. 



SEC. 19.] BURSON V. HUNTINGTON. 139 

As to the fifth request, the court charges that such note 
would be invalid in a suit between the original parties, but in 
the hands of an innocent holder for value before maturity and 
without notice, the rule would be subject to the qualifications 
and limitations already expressed in this charge. To the 
refusal of the court to charge as stated in this request, and to 
the charge as given by the court in relation thereto, counsel 
for defendant excepted. 

The jury found a verdict for the plaintiff, and judgment 
being entered thereon, the defendant brings the cause into 
this court by writ of error. 

The Claim of the Plaintiff.— That the court erred: 

1st. In refusing to charge the jury that, if this note was 
never delivered by the maker, or some person authorized by 
him, to any other person, but was fraudulently or stealthily 
taken from the possession of the maker and in his absence by 
the payee, the note in the hands of the latter would be void. 1 

2d. In refusing to charge the jury that such note in the 
hands of any other person deriving title from such payee 
would be void whether he gave value for it or not. 2 

3d. In refusing to charge the jury that, if they shall 
find that the note in question upon its face showed, at the 
time the plaintiff received it of Goldwood, or during the time 
Goldwood had the note, and plaintiff saw the same, that it 
was not properly executed and was invalid under the laws of 
the United States, for the want of a proper stamp, then the 
plaintiff cannot be considered as a bona fide holder, though he 
may have given value for the note. 8 

4th. In refusing to charge the jury that if the note bears 
upon its face an illegal stamping by the payee therein named, 
and did so bear such illegal stamping at the time it was in- 
dorsed to and obtained by the plaintiff, this fact alone should 
have been sufficient to put the plaintiff on inquiry as to its 

1 Story on Bills, §§ 185, 187, 203; 1 Cow. T. 209; 4 Green. /, 
28; 8 Vt., 94. 

2 3 Caines, 217; 9 Johns, 295; 12 Do., 306. 

"Int. R. L., June 30, '64, § 158; 3 Parsons on Cont., 313; 
Peak, 173; 4 B. and C, 235; 6 D. and R., 306; 3 Camp., 103. 



140 BURSON V. HUNTINGTON. [CHAP. 4, 

validity when he obtained it, and if he failed to do this he 
cannot be deemed an innocent purchaser for value. ! 

The Claim of Defendant. — The other question, as to 
the delivery of the note, had been long since settled. A par- 
tial or total want, or failure, or illegality of consideration, 
or even fraud or a defect or infirmity of title, in the per- 
son from whom he received it, is no defense to the title or 
bar to a recovery by a holder for value without notice before 
maturity. 2 

A note is not void in the hands of an indorsee except in 
the instances where a statute makes it so; and if transferred 
before due to a bona fide holder, it cannot be shown that it 
has never been delivered. By making the note, and leaving 
where *it is liable to be stolen or otherwise fraudulently put 
in circulation, he has enabled the fraudulent holder to impose 
upon the public; and if an innocent person must suffer, it 
should be that one who, by his acts, has enabled the third 
person to commit the fraud. 8 

Decision. — The defendant below having appeared before 
the justice and pleaded to the plaintiff's declaration, and twice 
obtained adjournments of this cause, it was too late, on the 
trial of the appeal in the circuit, to make any objection for 
want of proper service of the summons. After joining issue 
upon the merits, it was immaterial whether there had, in fact, 
ever been a summons issued. 

There was no error, therefore, in overruling the defend- 
ant's objection to the introduction of evidence upon this 
ground. 

The note declared upon was filed with the justice at the 
time of declaring; and by the statute,* the plaintiff was there- 
fore entitled to read the note in evidence without proving its 
execution, unless defendant denied its " execution on oath" at 
the time of pleading. 

1 Story on Notes, § 197; 12 Johns., 310; 3 Kent Com., 103; 4 
Mass., 370; 6 Pick., 258; 14 Pick., 268; 1 Doug., 413; 4 Hill, 442. 

3 Story on Bills, § 188; Bostwick v. Dodge, 1 Doug., 413; 
Outhwite v. Porter, 13 Mich., 533; Vinton v. Peck, 14 Mich., 287. 

3 Woodhullv. Holmes, 10 Johns. R., 231; Vallet v. Parker, 6 
Wend., 615; Rockwell v. Charles, 2 Hill, 499. 

*Comp. L., § 3767. 



SEC. 19.] BURSON V. HUNTINGTON. 141 

Defendant pleaded the general issue, with a notice that 
he would prove that the note was obtained from him by fraud 
and withont consideration, and other facts substantially the 
same as set forth in his affidavit made and filed with the plea 
and notice. This affidavit simply denied the delivery of the 
note by the defendant, or any other person on his behalf, to 
the payee or any other person for him, or that defendant ever 
placed any stamp upon it or authorized any other person to do 
so, or to cancel such stamp, and stated that the paper was 
taken from deponent's house, in his absence from the same, by 
the payee, without the knowledge or consent of deponent. 

It is unnecessary to determine here whether the execu- 
tion of the note under this statute would include its delivery 
as a part of the execution; since, granting the affirmative, the 
signature certainly constitutes a part of its execution, and the 
affidavit being special, — not denying the execution generally, 
but merely the delivery and the affixing and canceling of the 
stamp, — admits, by a very clear implication, his signature to 
the instrument, and clearly indicates that he intends to con- 
test only the delivery, the stamping and canceling of the 
stamp, and not his signature; otherwise, he would have de- 
nied the execution generally and brought himself within the 
language of the statute. The plaintiff, therefore, was not 
bound to prove such portion of the execution as was not de- 
nied, but admitted, viz. : the signature of the defendant. 

The case upon the trial stood in all respects as if the sig- 
nature of the defendant had been admitted in open court. 
And this admission is to have at least as full effect as the 
clearest proof of such signature. 

Now proof of such signature, together with the fact that 
the note is in the hands of, and produced by, the plaintiff (the 
indorsement being proved as it was here), furnishes strong 
presumptive evidence of delivery by the maker to the payee; 
and this is, in fact, all the proof ordinarily given by the plain- 
tiff of such delivery when the execution of the note is denied. 
It establishes a prima facie case upon this point; and it is for 
the defendant, if he contests the fact of delivery, to sustain 
his denial by proof. 

The indorsement by the payee having been proved, there 



I4 2 BURSON V, HUNTINGTON. [CHAP. 4, 

was, therefore, no error in allowing the note to be read in 
•evidence. 

We think the court erred in striking out the testimony of 
the witness, Fletcher, showing what the sister of the defend- 
ant testified to on the trial of this cause before the justice, she 
having since died. The ground upon which this was stricken 
out seems to have been, because the witness did not recollect 
the precise words of the former testimony, though he stated 
that he recollected and gave the substance. We think the ob- 
jection, under such circumstances, untenable, and that the 
evidence was admissible. 1 An additional ground of objection 
was stated, viz. : that plaintiff was shown to be a bona fide 
holder of the note; but the court could not have stricken out the 
evidence on this ground, as there was some evidence of cir- 
cumstances tending to show he was not such bona fide holder, 
and the court left this question to the jury. 

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 of a want 
of delivery or of consideration, or any other circumstance 
tending to invalidate it in the hands of Goldwood; and his evi- 
dence tended to show this, though there was evidence of some 
circumstances tending to show that he had notice of the cir- 
cumstances under which the paper had been obtained. 

There was also evidence on the part of the defendant, 
strongly tending to show that the note never was delivered by 
the defendant, but that Goldwood, 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 ar- 
rangement to this end, that it was understood and verbally 
agreed that Goldwood was to give him a deed of certain ter- 
ritory, 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 defendant's sister 
being present, Goldwood wrote this note, and defendant signed 
it; but as a surety was to be obtained, he laid the note on the 



1 See 1 Greenl. Ev. Sec. 165, and authorities cited. 



SEC. 19.] BURSON V. HUNTINGTON. 143 

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 defendant 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, Gold- 
wood wrote to defendant requesting him to come immediately 
to Kalamazoo "and sign stamp on the note," and saying if 
defendant was not there by Tuesday evening * * I shall con- 
sider that you refuse your signature, and shall act accord- 
ingly." The evidence also tended to show that defendant 
called upon Goldwood about that time, while the latter had 
the note, and demanded it, accusing him of stealing it, to 
which Goldwood replied, *• Never mind, we can fix that up," 
and said he was ready to do as he had agreed, and wanted de- 
fendant to get another signer, and he would give him a deed 
of territory; 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 bind- 
ing agreement of any kind, and was not to be until defend- 
ant should choose to get a surety on the note, and the payee 
should give him a deed of territory. Until thus completed, 
the defendant had a right to retract. 

The General Rule as to the Necessity of a Delivery. — 
As a general rule, a negotiable promissory note, like any other 
written contract, has no legal inception or valid existence, as 
such, until it has been delived in accordance with the purpose 
and intent of the parties. 1 

*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, 
Watkins, 16 Wis., 549; Mahon v. Sawyer, 18 Ind., 73; Carter v. 



144 BURSON V. HUNTINGTON. [CHAP. 4, 

Delivery is an essential part of the making or execution 

of the note, and it takes effect only from delivery (for most 

purposes); and if this be subsequent to the date, it takes 

effect from the delivery and not from the date. ! This is cer- 
tainly 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 dispense 
with delivery by the maker. 

When a note payable to bearer, which has once become 
operative by delivery \ has been lost or stolen 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. 2 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 



McClintock, 29 Mo., 464; Walker v. Ebert, 29 Wis., 94; Hills- 
dale College v. Thomas, 40 Wis., 6,1; Purviance v. Jones, 12a 
Ind., 162; Worth v. Case, 42 N. Y., 362; Contra, see Kinyon v. 
Wohlford, 17 Minn., 239; Shipley v. Carrol, 45 111., 285 (stolen 
note); Gould v. Seger, 5 Duer. (N. Y.), 268; Cooke v. U. S., 91 
U. S., 389. 

1 1 Pars., ubi supra. 

2 In the case of Burson v. Huntington, however, the note had 
never as yet received any vitality as a contract, for the reason that 
all the requisites necessary to give it an existence had not yet been 
complied with. 



SEC. 19.] BURSON V. HUNTINGTON. 1 45 

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 
case 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 con- 
fined within its proper limits. But the principle as a rule, 
has many exceptions; and the point of difficulty in its appli- 
cation consists in determining what acts or conduct of the 
party sought to be charged, can properly be said to have 
44 enabled the third person to occasion the loss," within the 
meaning of the rule. If I leave 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 max- 
im 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 reposing this confi- 



146 BURSON V. HUNTINGTON. [CHAP. 4 r 

dence 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 ques- 
tion. If the maker or indorser, before delivery to the payee, 
leaves the note in the hands of a third person as an escrow, to 
be delivered upon certain conditions only, or voluntarily de- 
liver it to the payee, or (if payable to bearer) to any other 
person for a special purpose only, as to be taken to, or dis- 
counted by a particular bank, or to be carried to any particu- 
lar 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 thus entrusted 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 

And when the maker or indorser has himself been de- 
ceived 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 fraudulently ob- 
tained from him, he must, doubtless, as between him and an 
innocent holder for value, bear the consequences of his own 

*i Parsons on Bills and Notes, 109 to 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. 



SEC. 19.] BURSON V, HUNTINGTON. 1 47* 

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 numerous; but they have no bearing 
upon the wrongful taking from the maker, when he never vol- 
untarily parted with the instrument. Much confusion, how- 
ever, has arisen from the general language used in the books 
and sometimes by judges, in reference to cases where the 
maker has voluntarily parted with the possession, though 
induced to do so by fraud; when it is laid down as a general 
rule, that it is no defense for a maker, as against a bona fide 
holder, 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 discussing — 
that "where one of two innocent parties must suffer," etc. — 
must be confined exclusively to cases where a confidence has^ 
been placed in some other person (in reference to delivery), 
and abused. There may be cases where the culpable negli- 
gence or recklessness of the maker in allowing an undelivered 
note to get into circulation, might justly estop, him from set- 
ting 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 1 was 
decided, where the acceptor tore the bill into halves (with the 
intention of canceling 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. 2 

'yC.B. (N. S.)., 82. 

2 See also by analogy Foster v. Mackinnon, Law Rep. 4 Com. 
B., 704. See also the cases where the execution and delivery were 
obtained through fraud and misrepresentation, Chapman v. Rose, 
56 N. Y., 137; Page v. Krekey, 137 N. Y., 313; Clark v. Pease, 41 
N. H., 414; Walker v. Ebert, 29 Wis., 194; De Camp v. Hanna,. 
29 Ohio St., 467; Green v. Wilkie, 66 N. W. Rep*, '046; Puffer v.. 
Smith, 22 Mich., 479. 



I48 BURSON V, HUNTINGTON. [CHAP. 4, 

But the case before us is one of a very different charac- 
ter. No actual delivery by the maker to anyone for any pur- 
pose. 

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 be- 
tween them had yet been made, and no consideration 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 household goods to his custody or 
confidence; and there was no more apparent reason to sup- 
pose he would take and carry off the one, than the other. 

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 crim- 
inal, 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 rights 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 Baron in Marston v. Al- 
len, 1 cited by Duer. J., in Gould v. Segee, 2 and that used by 
Williams J., in Ingham v. Primrose. 8 But a reference to the 
cases will show that no such question was involved, and that 
these remarks were wholly outside of the case. 

1 8 M. and W., 494. 

2 5 Duer. (N. Y. ), 260. 
»7 C. B. (N. S.), 82. 



SEC. 19.] BURSON V. HUNTINGTON. 1 49 

On the other hand, Hall v. Wilson, 1 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, 
et. al., 2 (case of maker) and Gould v. Segee. 8 But in neither 
of these cases can we discover that the court discussed or con- 
sidered 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 de- 
pend somewhat upon their statute, and the note being 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 dili- 
gence, and therefore more justly chargeable with negligence 
under the particular circumstances, than the maker in the 
present case. 

There is another case, Worcester Co. Bank v. Dorchester 
& Milton Bank, 4 where bank bills were stolen from the vault 
of the bank, which though signed and ready for use, had never 
been yet 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 bank bills 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 deliv- 
ery. But we think bank bills which circulate universally as 
cash, passing from hand to hand perhaps a hundred times a 
day, without such inquiries as are usual in the cases of ordin- 
ary promissory notes of individuals, stand upon quite different 
grounds. And, considering the temptations to burglars and 
robbers, where large masses of bank bills are known to be 

1 16 Barb., 548, 555, and 556. 

a 45 111., 285. 

'5 Duer. (N. Y.), 266. 

4 10 Cush., 488. 
9 



150 BURSON V. HUNTINGTON. [CHAP. 4, 

kept, and the much greater facility of passing them off to in- 
nocent parties, without detection or identification of the bills 
or the parties, and that the special business of banks is deal- 
ing in, and holding the custody of money and bank bills; it is 
not unreasonable to hold them to a much higher degree of 

Delivery Defined. — " Delivery, " says Mr. Daniel, "is the 
final step necessary to perfect the existence of any written con- 
tract; and, therefore, as long as a bill or note remains in the hands 
of the drawer or maker it is a nullity. And even though it be 
placed by the drawer or maker in the hands of his agent for de- 
livery, it is still undelivered as long as it remains in his hands, and 
may be recalled." Dan. on Negot. Inst., Sec. 63. 

Kinds of Delivery. — The delivery may be actual or con- 
structive; but it is essential to the validity of a commercial contract 
that it be delivered. Palmer v. Poor, 121 Ind., 138; McFarland 
v. Sikes, 54 Conn., 250. 

The mere act of signing a commercial contract, without deliv- 
ering it, does not make it the contract of the signer. Burrage v. 
Lloyd, 1 Exch. R., 32; Brind v. Hampston, 1 M. & W., 365; 
Hill v. Wilson, 16 Barb., 548; Mahon v. Sawyer, 18 Ind., 73. 

No particular form of delivery, however, is required. Whether 
there was a delivery or not, must in a great measure depend upon 
the peculiar circumstances of each case. The question of deliv- 
ery is one of intention. The delivery is complete when there is 
an intention manifested on the part of the maker of the contract 
to make himself liable thereon. The intention always controls the 
determination of what constitutes a sufficient delivery. The inten- 
tion may be manifested by words or acts and in the most informal 
manner. The act of delivery is not necessarily a transfer of the 
possession of the instrument to the payee. It is any act of the 
maker, indicated by acts or words or both, which shows an inten- 
tion on his part to perfect the transaction. It may be to the 
maker or to some third person for his use and benefit. Thatcher 
v. St. Andrews Church, 37 Mich., 269; Woodward v. Campbell, 22 
Conn., 459; Martin v. Flaharty, 13 Mont., 96; 32 Pac. R., 287; 
Hathaway v. Payne, 34 N. Y., 92; Newton v. Bealer, 41 Iowa, 
334; Shults v. Shults, 158 111., 654. 

The delivery may be, upon condition, to an agent or in escrow. 

Delivery — Sufficiency of. — While delivery, either actual or 
constructive, is essential to the validity of commercial contracts, 
yet it need not pass into the personal possession of the payee. If 
delivery is made to a person for the benefit of the payee uncondi- 
tionally, such delivery is sufficient. Gordon v. Adam, 127 111., 223. 

It must appear by the act of the party that he intended to 
make the contract an enforcible obligation against himself accord- 
ing to its terms by surrendering control over it, and intentionally 
place it under the control of the payee or of some third person 



SEC. 19.] BURSON V. HUNTINGTON. 151 

care, and to make them absolutely responsible for their safe 
keeping. We do not therefore regard this case as having any 
material bearing upon the case before us. 



for his use. Purviance v. Jones, 120 Ind., 162; Webber v. Chris- 
ten, 121 111., 91; Stone v. French, 37 Kang., 145. 

Delivery — Conditional. — A commercial contract may be 
delivered upon condition. And the maker will not be liable to the 
original parties or to those who take with notice of the condition, 
unless such conditions happen. If, however, the contract comes 
into the hands of a bona fide holder, he will be liable thereon 
whether the condition happens or not. Fisher v. Fisher, 98 Mass., 
303; Whitmore v. Nickerson, 125 Mass., 496; Gilman v. New 
Orleans &, 72 Ala., 566. 

Where one signs a commercial contract upon the express con- 
dition that it shall be signed by others before delivery, he is not 
bound thereby unless such signatures are procured. German- 
American Nat. Bk. v. People's Gas & E. Co. (Minn.), (1895), 65 
N. W. R., 90; Ward v. Johnson, 57 Minn., 301; McCormick Har- 
vesting Mach. Co. v. Faulkner, 64 N. W. R., 163; Ware v. Allen, 
128 U. S., 590. 

Whether a commercial contract has ever been delivered or 
not upon a condition may always be proved in order to avoid its 
effect as between the original parties. Roberts v. McGrath, 38 
Wis., 52; Cline v. Guthrie, 42 Ind., 227. 

If, however, the contract has actually been delivered and is 
complete upon its face and has been obtained without fraud, evi- 
dence of an oral agreement between the parties to it will not be 
received to contradict the obligation of the maker as stated in it. 
Chicago Cottage Organ Co. v. Swartzell, 60 Mo. App., 490; Hass- 
mann v. Holscher, 49 Mo., 87. 

If the condition imposed upon the delivery is meaning- 
less when read in connection with the rest of the note, it wil* 
have no effect. Cooper v. Chicago Cottage Organ Co., 58 111. 
App., 248. 

Delivery — When Made. — The delivery of a commercial 
contract must be made during the life-time of the maker; it fol- 
lows, therefore, that no delivery can be made after the death of 
the maker, by his executor or administrator. Clark v. Sigourney, 
17 Conn., 511; Clark v. Boyd, 2 Ohio, 35. 

Neither can it be delivered by the maker's agent after death, 
as death revokes the agency. Turnan v. Temke, 84 111 , 2863 Bar- 
rows v. Barrows, 138 111., 654. 

If there "be an unconditional delivery to a third per- 
son who holds as the agent of the payee, until after the death. 
of the maker it is a good delivery. The maker thereby lost con- 
trol of the note. Thompson v. Candor, 60 111., 244; Gordon v.. 
Adams, 127 111., 223. 



152 BURSON V. HUNTINGTON. [CHAP. 4, 

We think the Circuit Court erred in refusing to charge 
upon this point, as requested by the defendant below. 

We do not think there was any error in refusing to charge 
that the want of a stamp on a note would be such circum- 

In every case where if a party places his commercial con- 
tract beyond his control he will be liable thereon without refer- 
ence to conditions imposed if it gets into the hands of a bona fide 
holder for value. Collins v. Gilbert, 94 U. S. &, 53; Redlich v. 
Dall, 54 N. Y., 234; Clarke v. Thayer, 105 Mass., 216; Kohn v. 
Watkins, 26 Kan., 691; 40 Am. R., 336. 

It has been held that where the maker is induced by false and 
fradulent representations to execute and deliver a commercial con- 
tract to a fictitious person or order, supposing him to be real, and 
delivers the same with instructions to deliver it to the payee on 
receiving a mortgage security, and the fraudulent receiver nego- 
tiates the bill to an innocent person, the maker is liable, Phillips 
v. ImThurn, 114 E. C. L. R., 694; Forbes v. Epsy, 21 Ohio St., 
474; Kohn v. Watkins, supra. 

Delivery may be Compelled. — Where the payee has been 
induced to part with consideration or to advance money on the 
faith that a commercial contract has been delivered to a third per- 
son for his benefit, he is entitled to compel the delivery to be per- 
fected. Purviance v. Jones, 120 Ind., 162; 16 Am. St. R., 319. 

Delivery — Presumption as to the Time of. —In the ab- 
sence of any proof to the contrary, there is a presumption of law 
that a commercial contract was delivered on the day it was exe- 
cuted. Morgan v. Burrow, 16 So. R., 432. 

This presumption, however, may be rebutted by parol evi- 
dence showing that the contract was actually delivered on some 
other day. Lovejoy v. Whipple, 18 Vt., 379. 

Where, however, the contract is made payable at a certain 
time after date, the fact that it was not delivered at the time of its 
date will not be allowed to vary the time of maturity. Powell v. 
Watters, 8 Cow., 669; Tied, on Commercial Paper, sec. 34b. 

Delivery in Escrow.— Commercial contracts, like other 
contracts, may be delivered in escrow, which is a delivery to some 
third person to be delivered to the payee finally upon the perform- 
ance of some condition or conditions, when the title is to pass to 
the person for whom it is intended. 

A delivery in escrow to be good, the maker of the contract 
must part with the possession and divest himself of all power and 
dominion over it. Preutsman v. Baker, 30 Wis., 644; Lehigh 
Coal & Iron Co. v. West Superior Iron & Steel Co., 91 Wis., 122; 
Shults v. Shults, 159 111., 654; see also 37 Am. St. R., 259; 83 Am. 
Dec, 246; 6 L. R. A., 470; 7 L. R. A., 746; 11 Am. St. R., 313. 

In order that a writing may be in escrow, it must be placed in 
the hands of a third person to be delivered upon the happening of 



SEC. 19.] BURSON V. HUNTINGTON. 153 

stance of suspicion as to put the indorsee upon inquiry in tak- 
ing the note. Under our decisions the note would be valid 
and could be enforced in our courts without a stamp. 

Some other minor questions were raised, but we do not 
think they will be likely to arise upon a new trial. 

a contingency. It must not be delivered into the hands of the 
payee. Webber v. Christen, 121 111., 91; Wright v. Shelby &, 16 
B. mon., 4; Scott v. State Bank, 9 Ark., 36. 

If the contract is delivered to the payee, the delivery will be 
absolute notwithstanding conditions were imposed and the title 
passes to the payee. Fairbanks v. Metcalf, 8 Mass., 230; Jane v. 
Gregory, 42 111., 416. The maker will be liable thereon should the 
contract reach the hands of an innocent bona fide holder without 
the happening of the condition on which it was delivered. Vallett 
v. Parker, 6 Wend., 616; Fearing v. Clark, 16 Gray, 74; Graff v. 
Logue, 61 Iowa, 704. 

The delivery in escrow may be made to the payee if the con- 
dition is placed upon its face, and the maker thereof will not be 
liable thereon until the happening of such condition, even in the 
hands of a third person. Some cases have held, however, that 
where a contract was delivered in escrow and the custodian, with- 
out authority, delivers the same to the payee before the perform- 
ance of the conditions, that the maker is not liable thereon even 
to a bona fide holder. Chipman v. Tucker, 38 Wis., 43; Skaaraas 
v. Finnegan, 31 Minn., 48; Benton v. Martin, 52 N. Y., 574; Belle- 
ville Bank v. Borneman, 124 111., 205; Roberts v. Wood, 38 Wis., 
60. 

Where one signs a negotiable contract upon condition that 
certain other persons shall sign it also and delivers it to the payee, 
he is not liable thereon unless such other signatures are procured 
unless the same shall get into the hands of a bona fide holder. 
German- American Nat. Bk. v. Peoples Gas & Co., 65 N. W. R. 
90; Ward v. Johnson, 37 Minn., 301. McCormick Harvesting 
Mach. Co. v. Faulkner, 64 N. W. R., 163. 

It has been held that a bona fide holder for value, without no- 
tice, is entitled to recover upon any commercial contract which he 
has received before it has become due, notwithstanding any defect 
or infirmative in the title of the person from whom he derived it; 
as, for example, even though such person may have acquired it by 
fraud or even by theft or by robbery. Kinyon v. Wohlford, 17 
Minn., 239; Story on Promissory Notes, sec. 191; Goodman v. 
Simons, 20 How., 365; Wheeler v. Guild, 20 Pick., 545; Foy v. 
Blackstone, 31 111., 538. 

It is a general rule that the maker of a commercial contract 
which has not been delivered, is not liable thereon. If, however, 
through his negligence the contract gets into circulation and 
reaches the hands of a bona fide holder, he is liable upon the well 



154 BURSON V. HUNTINGTON. [CHAP. 4, 

The judgment must be reversed with costs, and a new 
trial awarded. 

The other justices concurred. 

settled principle that where one of two innocent persons must suf- 
fer, the loss should fall upon him who put it in the power of the 
third person to cause such loss. 

Delivery on Sundays. — In the absence of a statutory pro- 
vision to the contrary, commercial contracts may be executed and 
delivered on Sunday. There was no rule at common law for- 
bidding it. O'Rourke v. O'Rourke, 43 Mich., 58; State Capital 
Bank v. Thompson, '42 N. H., 369; Mackalley's case, 9 Coke, 
66b. 

In many of the states there are statutes which make contracts 
executed and delivered on Sunday void as between the original 
parties, but they are valid in the hands of bona fide holders. Stev- 
ens v. Wood, 127 Mass., 123; Sayre v. Wheeler, 31 Iowa, 112. 

If the note is executed on Sunday but not delivered until a 
week day it will be valid. Vinton v. Peck, 14 Mich., 287; Conrad 
v. Kinzie, 105 Ind., 287; Hilton v. Houghton, 35 Me., 143. 

The maker may ratify a contract executed and delivered on 
Sunday. King v. Fleming, 72 111., 21. 

Parol evidence is admissible to show that the note was actu- 
ally delivered on a different day from its date. King v. Fleming, 
supra. 

The rule which controls in the execution and delivery of com- 
mercial contracts on Sundays applies also to contracts of endorse- 
ments. State Capital Bank v. Thompson, 42 N. H., 370. 



SEC. 20.] STOESSIGER V. SOUTHEASTERN RY. CO. 155 

SECTION 20. 

A NEGOTIABLE CONTRACT MUST BE SIGNED. 

STOESSIGER v. THE SOUTHEASTERN RY. CO. 1 

In the Court of Queen's Bench, Easter Term, April 21, 1854. 

[Reported in j Ellis <5r* Blackburn (Q. B.), 549; (77 Eng. Com. 
Law, 548); 23 Law Jr. Rep. (N. S.) (Com. Law), 2pj.] 

The Form of Action. — The declaration stated that de- 
fendants were proprietors of a railway, to wit, a railway from 
Strood in Kent to London, and were common carriers of 
goods and chattels for hire: and plaintiff caused to be deliv- 
ered to defendants, as such common carriers, a certain parcel 
and divers goods and chattels of plaintiff contained therein, 
to wit, certain papers and documents of small value, and the 
sum of 9/. 10s. in cash, to be safely and securely carried and 
conveyed for plaintiff by defendants from Strood upon the 
said railway, and upon and by other railways and convey- 
ances, and to be caused by defendants to be safely and secure- 
ly delivered for plaintiff to the consignee of the said parcel, 
to wit, one Gideon Goold, at a certain other place, to wit, 
Birmingham, for certain reasonable reward: yet defendants, 
not regarding their duty as such common carriers, but con- 
triving, etc. , did not nor would safely or securely carry, etc. , 
the parcel to Birmingham, nor there cause the same to be 
safely and securely delivered for plaintiff to the consignee, 
but, being such carriers, so carelessly and negligently con- 
ducted themselves in the premises that, by and through the 
carelessness, negligence, and improper conduct of defendants 
in that behalf, the said parcel was opened after the same had 
been delivered to defendants as aforesaid, and before the same 
was delivered to the consignee: and the said sum of 9/. 10s, 
in cash, being part of the contents of the said parcel, was 
abstracted therefrom by some person or persons whose names 
or name are to plaintiff unknown: and the parcel and part 

1 This case is cited in Norton on Bills and Notes, 60; Daniel 
on Negotiable Instruments, 92; Tiedeman on Commercial Paper, 
11; Randolph on Commercial Paper, 62, 290; Wood's Byles on 
Bills and Notes, 156. 



I5<> STOESSIGER 0. SOUTHEASTERN RY. CO. [CHAP. 4, 

only of the said goods and chattels contained therein, to wit, 
the said papers and documents of small value, were delivered 
to said consignee; and the residue of the goods and chattels 
contained in the parcel, to wit, the said sum of 9/. iar. in 
cash, was never delivered to the consignee: whereby the said 
sum of 9/. 1 or. was not safely or securely carried or conveyed, 
or caused to be delivered as aforesaid, but became and is 
wholly lost to plaintiff. 

Form of Defense.— That the said parcel, at the time of 
the said delivery thereof to and receipt by defendants of the 
same, contained property of a certain description, to wit, 
money and current coin of the realm, and a bill of exchange 
for the payment of money; and the value of the same ex- 
ceeded the sum of 10/.: and that the said parcel, with its 
said contents, was delivered to defendants, as common carri- 
ers of goods by land, to be by them conveyed and carried as 
in the declaration mentioned at a certain office or receiving- 
house of defendants for the receipt of goods to be carried by 
them, as such carriers as aforesaid. That, before and at the 
time when the said parcel with its said contents were so deliv- 
ered at the said office or receiving-house, defendants had 
caused to be affixed, and there was then affixed, according to 
the form of the statute in such case made and provided, in 
legible letters or characters, in a public and conspicuous part 
of the said office or receiving-house, a notice stating that a 
certain increased rate of charge therein mentioned was re- 
quired to be paid, over and above the ordinary rate of car- 
riage, for the safe conveyance of certain articles in the said 
notice mentioned; and among which money and bills of ex- 
change were included and stated. That the nature and value 
of the said contents of the said parcel were not declared by 
plaintiff or by the person who sent or delivered the said par- 
cel and its contents at the said office or receiving-house; nor 
was the said increased charge, nor any engagement to pay the 
same, accepted by the person receiving the same at the said 
office or receiving-house. 

Replication. — That the value of the said parcel, and its 
contents, did not exceed the sum of 10/. 

On the trial the following facts appeared: The plaintiff 



SEC. 20.] STOESSIGER V. SOUTHEASTERN RY. CO. 157 

was a commercial traveller in the employment of Gideon 
Goold, named in the declaration, who resided at Birmingham. 
A person named Cruttenden, residing at Chatham, being in- 
debted to Goold to the amount of ill. 10$. gave to the 
plaintiff at Chatham, to be by him transmitted to Goold, an 
instrument of which the following is a copy: 

"£11: 10: o. " Birmingham, Sept., 1852. 

1 • Three months after date pay to my order the sum of 
eleven pounds and ios. f value received. 

[Across the face of this instrument was written *' Accep- 
ted payable at Bank. G. Cruttenden."] 

Goold was to complete this instrument, which was 
stamped with a two shilling bill stamp, by signing his own 
name as drawer. The plaintiff had no authority to draw or 
accept bills for Goold. He accordingly enclosed the docu- 
ment, together with gold and silver to the amount of 9/. iar., 
on account of a private debt of his own to Goold, in a parcel, 
which he directed to Goold at Birmingham, and delivered to 
defendants, at their station at Strood, to be carried; and which 
they received for that purpose. There was affixed, in a con- 
spicuous part of the office where the parcel was received, a 
notice, requiring an increased rate of charge, according to 
stat. 1 1 G. 4 and 1 W. 4 c. 68, ss. 1 and 2, for the articles 
specified in sect. 1. No notice of the value or contents of the 
parcel was given, nor any increased rate paid or agreed for. 
The cash was abstracted from the parcel, by some means 
tfhich did not appear, before it reached Goold: the remainder 
of the contents came safely to hand. 

Claim of Defendant.— On this evidence, the counsel for 
the defendants contended that the parcel contained, within the 
meaning of the Carriers' Act, stat. 1 1 G. 4 & 1 W. 4 c. 68, s. 
1, gold or silver coin of the realm, and a bill, note, or security 
for payment of money, or writing, the value of the whole ex- 
ceeding 10/., and that, no notice of the value or contents hav- 
ing been given, or increased rate paid or contracted for, the 
defendants were not liable for the loss. 

Claim of Plaintiff. — The plaintiff's counsel contended 
that the document, being incomplete, was of no value as a 



158 STOESSIGER V. SOUTHEASTERN RY. CO. [CHAP. 4, 

security or writing, and that therefore the parcel contained no 
articles, within the meaning of the statute, of the value of 
more than 9/. iar. 

The learned Judge directed a verdict for the plaintiff for 
9/. io*. , reserving leave to move to enter the verdict for the 
defendant if the skeleton bill was an article within the Car- 
riers' act, and was of such a value as to make together with 
9/. ioj. more than 10/. It was agreed that the jury were to 
be taken as finding, so far as it was a question for them, that 
the writing was of no value. 

The question is, whether this document was of any value 
as a bill or note, security or writing, within the meaning of 
the statute. It was not a bill of exchange; for there was no 
drawer. Nor was it a promissory note. In Petro v. Rey- 
nolds, 9 Exch., 410, a person drew a bill of exchange without 
any direction; and another person accepted it in defendant's 
name, professing to do so as agent for defendant. The Court 
appeared disposed to consider that this was not a bill of ex- 
change, though, if the defendant ratified the promise to pay, 
it might be treated as his promissory note. But there the 
document, whether a bill or promissory note, was a promise 
by a person named, to pay to the order of another named: 
here Goold has not become a party in any way; nor is he 
named. There is neither drawer nor payee. The only name 
on the document is that of Cruttenden; and he does not en- 
gage to pay, except to the order of a person not named, and 
who has in fact made no order. Cruttenden can not have 
meant to pay the bearer generally. Nor does it fall under the 
head of "securities for payment of money." In Rex v. 
Hart, 1 a person signed a blank acceptance on a paper which 
had a six shilling stamp: it was afterwards taken away and 
filled up as a bill of exchange for 500/. Littledale, J., Bol- 
land, B., and Bosanquet, J., held that this, at the time of 
such taking, was not a ' * bill, note, warrant, order, or other 
security whatsoever for money or for payment of money, " 
within stat. 7 & 8 G., 4, c. 29, s. 5. Littledale, J., said that 
the instrument was 4 ' only in a sort of embryo state. " [Ld. 
Campbell, C. J. — It is more like an authority for making a 

l 6 C. & P., 106 (E. C. L. R., vol. 25). 



SEC. 20.] STOESSIGER V. SOUTHEASTERN RY. CO. 1 59 

security than an actual security.] Further, if it is contended 
that this was a writing of the value of n/. ios., the answer 
is that the value which is to bring the case within the statute 
must be a value existing at the time of the delivery to the 
carrier. But, as no one had the authority to complete the 
instrument besides Goold, the paper could never acquire any 
value till it reached Goold's hands, that is, till the duty of 
the carrier was over. The value at the time of the deliv- 
ery, was merely that of the paper; no value derived from 
the writing on it existed at that time. The supposed value is 
in the piece of paper plus the authority to do something to it 
which has not been done here. The piece of paper was sent 
by the carrier; the authority could not be sent: and neither 
of these elements apart from the other is sufficient to make 
the instrument of value. A similar reasoning was pursued in 
Rex v. Clark. 1 There are many oases in which a party to an 
incomplete instrument becomes liable upon the completion; 
Schultz v. Astley 2 is an instance, and represents a class of 
cases. But the liability never arises, and consequently the 
value of the instrument never is created, unless the comple- 
tion is by an authorized party. Suppose this instrument to 
have been lost, no one except by means of forgery, or at 
least of some fraud, like that in Reginav. White, 8 could make 
it valuable. If Goold had died during the transit, could his 
executors have completed the instrument ? They could not. 
Whose name could they sign ? If the carrier had lost the 
paper, could Goold have recovered the sum named in it by an 
action for damages against the carrier ? He could not. And 
this shows that the object of the statute does not require the 
interpretation for which the defendants must contend; because, 
if the instrument be worthless, the carrier requires no protec- 
tion from the consequences of its loss. 

Decision. — Ld. Campbell, C. J. — I am of opinion that 
this rule ought to be discharged. The case of the defendants 
is clearly 'Untenable unless this paper can be brought within 
Sect. 1 of the Carriers' Act, u G. 4 & 1 W. 4, c. 68. It 

'Russ & R., 181. 
2 2 New Ca., 544. 
•i Den. Cr. C, 208. 



l6o STOESSIGER V. SOUTHEASTERN RY. CO. [CHAP. 4, 

must be shown to be a bill, order, note, or security for pay- 
ment of money, or writing, of such value as to make up, with 
the 9/. 1 os., more than 10/. It is not a bill of exchange; 
there is neither drawer nor payee. Nor is it a promissory 
note to pay any one who might happen to be the bearer; that 
Cruttenden should become liable generally to the bearer was 
quite contrary to his intention. Nor is it a security for money; 
for we must look at the time of the delivery to the carrier; 
and at that time nothing could be claimed on it. I think it is 
a writing; it would be very difficult to define a writing so as 
not to include this paper. Then the question is as to the 
value. If this writing possesses any value beyond that of the 
paper material, that value must be n/. 10s. Now can it be 

What Constitutes a Signature — Who are Liable upon 
Negotiable Paper. — It is necessary to the validity of all these 
commercial contracts that the name of the party who is liable 
thereon should appear upon the face of the instrument. No per- 
son is liable as a party to a commercial contract whose signature 
does not appear upon it. It does not matter upon what portion of 
the instrument the name of the person who is to become liable 
thereon appears, so long as it was added with the intention to be- 
come liable. It is usual to place the signature at the lower right 
hand corner. This is not important, however. The name need 
not necessarily appear if it be indicated who the party is. The 
full name should be given; but this is not necessary absolutely — 
the initials simply will be sufficient. And it has been held that 
any mark which the party uses to indicate the intention to bind 
himself will be as effectual as his name. So also a note which 
reads "I, A. B., promise to pay, etc.," is as good a commercial 
contract as if the note read "I promise to pay, etc.," subscribed 
by "A. B." Brown v. Butcher's Bank, 6 Hill, 443, where the fig- 
ures " 1, 2, 8," were held to take the place of the signature of the 
parties. Taylor v. Dabbins, 1 Strange, 399, where it is held that 
"I, A. B.," will take the place of a signature if the contract is 
written by A. B. himself. Sanders v. Anderson, 21 Mo., 402, 
where it was held that a note signed "Steam Boat Ben Lee and 
owners" was a sufficient signature to bind the owners of the boat. 

Where the note is signed by some mark or initials simply, 
which the party uses to indicate his intention to bind himself, it 
should be witnessed. This is not absolutely necessary, however. 
Shank v. Butsch, 28 Ind., 19; Willoughby v. Moulton, 47 N. H., 
205; Hilborn v. Alford, 22 Cal., 482; Flowers v. Billing, 45 
Ala., 488. 

It frequently happens that a person carries on a business- 
under an assumed or fictitious name in which case he will be liable 



SEC. 20.] STOESSIGER V. SOUTHEASTERN RY. CO. l6l 

said that the writing bore that value at the time of its deliv- 
ery to the carrier? I do not see that it was of intrinsic value 
to any person. It empowered a particular individual to claim 
to that amount, by putting his name to it; but that had not 
been in fact done by the individual, Goold. I cannot agree 
that the executors of Goold could have made it valuable by 
putting to it his name, or their own, or any name whatever. 
Nor could any one have bestowed value on it, who, not being 
contemplated by Cruttenden, had found it. It is therefore in 
accordance with all the authorities, to hold that this writing 
was of no value at the time of delivery to the carrier. 

Wightman, J. — The question is whether that which be- 
yond all doubt was a writing was, at the time of its delivery to 

upon commercial contracts executed and delivered in that name. 
Bartlett v. Tucker, 104 Mass., 336; Lockwood v. Coley, 22 Fed. 
Rep., 192. 

By Whom Made. — The signature, however, need not be 
made by the party himself provided it is made by some one hav- 
ing authority. Woodbury v. Woodbury, 47 N. H., 11. The 
authority to execute and deliver commercial contracts for another 
may be either express or implied. Right, etc., v. First Nat. Bk., 
42 Mich., 461. 

Form of the Signature — It May be Written or 
Printed. — The signature may be written or printed; it may be in 
ink or in pencil. Pennington v. Baehr, 48 Cal., 565; Brown v. 
Butcher's Bank, 6 Hill, 443; Geary v. Physic, 5 Barn. & Cress., 
234; Reed v. Rorak, 14 Tex., 329. When the signature is printed 
the holder must show that that particular signature has been 
adopted by the maker of the coutract. Brown v. Butcher's, supra; 
Pennington v. Baehr, 48 Cal., 565. 

Signature by Two or More Persons — Nature of Their 
Liability. — Of course two or more persons may join in the execu- 
tion and delivery of commercial contracts, in which case their 
liability will be joint or joint and several depending altogether 
upon the language used in the contract. If two or more persons 
are named in the contract who are liable the presumption is that 
their liability is joint unless words of severance are used. John- 
son v. King, 20 Ala., 270. If the contract reads " we promise " 
and signed by two or more persons their liability is joint; but if 
the contract reads "I promise, etc.," signed by two or more per- 
sons, their liability is joint and several, and they may be sued 
jointly or severally. Maiden v. Webster, 30 Ind., 317; Bill v. 
White, 52 Wis., 169. If the note reads "We or either of us 
promise to pay," it will be joint and several. First Nat. Bk. v. 
Fowler, 36 Ohio St., 524. 



1 62 STOESSIGER V. SOUTHEASTERN RY. CO. [CHAP. 4, 

the carrier, of a value exceeding 10/. The fallacy of the ar- 
gument lies in attempting to make the power of conferring the 
value at the end of the destined carriage the criterion of the 
value at the time of the delivery. I think the rule should be 
discharged. 

Erie, J. — I am of the same opinion. This being an im- 
perfect instrument, and not a complete bill, order, note, or 
security for money, but clearly a writing, we are not bound to 
say that, in point of law, it was of value. I use that express- 
ion, because it may be that, this being, except for the absence 
of the name of the drawer, an accepted bill of exchange, a 
jury may in a similar case find that the writing is of value; 
and I do not wish to preclude myself from considering whether 
such a finding might not be sustained. 

Rule. Discharged. 

Signature by Agent — His Liability. — An agent may have 
authority to execute and deliver negotiable contracts for his prin- 
cipal. If his signature is in the form "A." "agent," he alone is 
liable. He must use some word or words which are not designa- 
te persona simply, but which indicate that his act is for and on 
behalf of his principal, as "A" agent for "B" or "B" by "A," 
his agent, or "B" per "A" agent. Owen v. Van Uster, 20 L. 
J. Rep., 61; O'Kell v. Charles, 34 L. T. Rep., 422; Bartlett v. 
Tucker, 104 Mass., 336; White v. Madison, 26 N. Y., 117. 

It is undoubtedly well settled that, where an ordinary simple 
contract is signed by an agent in his own name, with the addition 
of the word "agent" thereto, the principal may be made liable 
thereon, whether his (the principal's), name appears on the paper 
or not. Story on Agency, Sec. 160 a. But for commercial rea- 
sons, a distinction is made, between ordinary contracts and nego- 
tiable paper. As to negotiable contracts, the agent must either 
sign the name of the principal to the contract, or at least it must 
appear on the face of the paper itself, in some way, that it was 
drawn for him, or the principal will not be bound. Edwards on 
Bills, 80; Andenton v. [Shoup, 17 Ohio St., 125; Eastern R. R. 
Co. v. Benedict, 5 Gray, 561; Emly v. Lye, 15 East, 7; Becham 
v. Drake, 9 M. & VV., 92; Dewitt v. Walton, 5 Seld. (N. Y.), 
571; Sparks v. Dispatch Transfer Co., 104 Mo., 531. 

Some courts have held where the commercial paper was 
signed by the officers of Banking Corporations as A. B., Cashier, 
or C. D., President, and where the name of the principal appears 
in the heading, that the principal was liable. Chipman v. Foster, 
119 Mass., 198; Hitchcock v. Buchanan, 105 U. S., 416. 



I 



CHAPTER V. 
Non-Essentials of Negotiable Contracts, 



SECTION 21. 
(i). NEGOTIABLE CONTRACTS NEED NOT BE DATED. 

DE LA COURTIER v. BELLAMY. « 
In the Court of King's Bench, Michaelmas Term, 36 Chas. II. (1683.)' 

[Reported in 2 Showers 411.'] 

The Form of Action. — Action on the case on a bill of 
exchange from parts beyond the seas, payable at double usance 
from the date thereof: custom alleged accordingly; and the 
fact was alleged to be, that the party beyond the sea drew 
such a bill such a day, and the same was afterward presented 
to, and accepted by the defendant. 

And exception was taken, that the date of the bill was 
not set forth: 

And per totam Curiam held, it was well enough, and 
they would intend it dated at the time of drawing it. 

Judgment for the plaintiff. 2 

— -_ _ — — 

1 This case is cited in Chitty on Bills, 148, 149, 563; Story on 
Bills of Exchange, 37; Wood's Byles on Bills and Notes, 142;. 
Daniel on Negotiable Instruments, 66, 83; Tiedeman on Com- 
mercial Paper, 10; Randolph on Commercial Paper, 85, 88 , 275, 

342. 

2 In an action on a foreign bill of exchange, if the date be 

omitted, the court will intend it dated at the time it is stated to 
have been drawn. 

In the case of Hague v. French, 3 B. & P., 173 (1802), it was 
argued that the action could not be sustained for the reason that 
the bill contained no date; the bill being payable at two months, 
without date, it was impossible to ascertain the time of payment. 
The court held that it might be intended that the date of the bill 
was the day of the drawing. The court in this case cited and 
approved the case of De la Courtier v. Bellamy. In the case of 



164 DE LA COURTIER V. BELLAMY. [CHAP. 5, 

Giles v. Bourne, 6 Maule & Selevin, 74 (18 16), the case of Hague 
v. French, supra, was discussed and approved. See also Clark v. 
Sigourney, 17 Conn., 511; Woodford v. Dorwin, 3 Vt., 82; Mehl- 
berg v. Tisher, 24 Wis., 607; Seldonridge v. Connable, 32 Ind., 
375. 

A Bill or Note Delivered Without Sum or Date. — 
Authority to fill Such Blanks. — "An indorsement on a blank 
note, without sum or date or time of payment, will bind the indor- 
ser for any sum, payable at any time, which the person, to whom 
the indorser intrusts it, chooses to insert." Mechanics and Farm- 
ers Bank v. Schuyler, 7 Cow. (N. Y. ), 337. 

' l Such a note is a letter of credit for an indefinite sum: Russell v. 
Langstaffe, Dougl., 514; 5 Cranch, 151; 2 M. & S., 90; 4 Mass. Rep., 
54, 5. If there is an implied discretionary authority in such case 
to fill all the blanks, it would seem to follow that such an author- 
ity must equally exist to supply one, if only one be left. Accord- 
ingly, if the amount be left blank, any sum may be inserted; if the 
time of payment, it may be fixed at the pleasure of the holder, and 
in the hands of a bona fide indorsee the indorser cannot question 
the transaction, though the blanks may have been filled in a man- 
ner entirely different from the understanding and expectation of 
the indorser when he put his name upon the note." 

"In the case of M. & F. Bank v. Schuyler, supra, it is said 
that the note in this case was perfect without a date. // is true 
that the date is not essential to the validity of a bill or note; for 
where they have no date the time, if necessary, may be inquired into, 
and will be computed from the day they were issued: 2 Ld. Raym., 
1076; 2 Show, 422; Chitty on Bills, 78; 3 B. & P., 173; 2 John, 
303; 13 East, 5. Nor is it necessary to the validity of a note that 
a time of payment should be expressed in it. If none be fixed it 
is payable on demand: Chitty on Bills, 79; 7 T. R., 427. But if 
a note is indorsed, perfect in every respect but the time of pay- 
ment, and that is left blank, can there be any question of the au- 
thority of the maker, if the note be redelivered to him, to insert 
any time of payment he may think proper before he puts it in cir- 
culation? Can the indorser, in such a case, protect himself from 
liability on the ground of an alteration of the note? If not, upon 
what principle can the insertion of the date, where that is left 
blank, be considered an alteration ? If it be conceded, as it must 
be, that the maker in this case had an implied authority to fill up 
the blank at all, the indorser, and not the innocent indorsee, must 
suffer the consequence of an abuse of that authority, if it has been 
abused. It is not, in judgment of law, an alteration of the note. 
The defendant must have contemplated the addition of the date 
before the note was to be passed, for it was payable at the Mech- 
anics' and Farmers' Bank. It is believed to be the invariable cus- 
tom of banks to discount paper without a date. " Mechanics, etc. , 
Bank v. Schuyler, supra. 



SEC. 21.] DE LA COURTIER V. BELLAMY. 1 65 

Parol evidence is admissible to show from what time an un- 
dated instrument was intended to operate. Davis v. Jones, 17 
C. B., 625. It may also be shown that there was a mistake in the 
date. Drake v. Rogers; 32 Me., 524; Seldonridge v. Connable, 32 
Ind., 375; Almich v. Downey, 45 Minn., 460; Germania Bank v. 
Distler, 67 Barb., 333; McSparran v. Neely, 91 Pa. St., 17; Giles 
v. Bourne, 6 M. & S., 74. 

Effect of Dating on Sunday. — A negotiable contract 
signed and delivered on Sunday, but bearing date on another day, 
is valid in the hands of a bona fide holder. Love v. Wells, 25 
Ind., 503; State Bank v. Thompson, 42 N. H., 376; Vinton v. 
Peck, 15 Mich., 287. If in fact it is dated on Sunday but actually 
delivered on another day, it will be sustained. Bank v. Mayberry, 
48 Me., 198; King v. Fleming, 72 111., 21; Benson v. Drake, 55 
Me., 556. At common law there was no rule forbidding the execu- 
tion and delivery of commercial contracts on Sunday. 

Date — Where Placed. — It is customary to place the time 
or the date on which commercial contracts are executed and de- 
livered at the upper right hand corner of the instrument. The 
date, however, is not essential to the validity of commercial con- 
tracts. Michigan Ins. Co. v. Leavenworth, 30 Vt, 11; McSpar- 
ran v. Neely, 91 Pa. St., 17; Mechanics, etc. Bank v. Schuyler, 7 
Cow., 337; Mehlberg v. Fisher, 24 Wis., 607. Where there is no 
date, the time, if necessary, may be inquired into and will be com- 
puted from the day they were issued. Mechanics, etc. Bank v. 
Schuyler, supra; Lean v. Lozardi, 27 Mich., 424. If the bill or 
note bears no date it will be considered as dated at the time it was 
made or at the time of its delivery. Seldonridge v. Connable, 
32 Ind., 375. While the date is not essential to the validity of 
commercial contracts it may become a matter of importance. For 

instance where the note is payable " time after date," 

or where they draw interest from date; or where the statute of 
limitations is interposed as a defense. 

Ante-Dating and Post-Dating. — A commercial contract 
may be ante-dated or post-dated and parol evidence is admissible to 
show on what day such contract was actually delivered and it will 
take effect from that date; but such evidence will not be admitted, 
however, to invalidate the title of a bona fide holder. McSparran 
v. Neely, 91 Pa. St., 315; Knox v. Clifford, 38 Wis., 651; Frazier 
v. Troy. Printing Co., 24 Hun., 281; Almich v. Downey, 45 Minn., 
460; 1 Parsons on B. & N., 49. If by reason of the ante-dating or 
post-dating the contract should appear to have been executed and 
delivered at a time when by reason of, the date, — coverature, in- 
fancy, — or anything by reason of that date the contract is invalid 
it may be shown by parol evidence in behalf of any of the parties,, 
that at the time of its actual date or delivery no such facts existed. 
Story on Notes, Sec. 48; Daniel on Negot. Inst, Sec. 85; Tied. 

on Com. Paper, Sec. 11. Post-dating or ante-dating will not be 
10 



1 66 DE LA COURTIER V. BELLAMY. [CHAP. 5, 

allowed when it is done for the purpose of evading rules of law 
which render contracts invalid. Bailey v. Taber, 5 Mass., 286; 
Dan. on Com. Inst., Sec. 85. Ante-dating or post-dating does 
not vitiate the paper. Burns v. Kohn & Furst; Brewster v. Mc- 
Cardel, 8 Wend., 479; Almich v. Downey, 45 Minn., 460. 

Mistake as to the Date. — Where a bill or note is intended 
to bear a date as of the time of its delivery, but by mistake 
another date is written on the face of the instrument, such mis- 
take may be corrected, by parol, unless innocent indorsees or 
purchasers would be prejudiced thereby. 2 Parsons Notes and 
Bills, 574; Brutt v. Picard, R. & M., 37. See Miller v. Gille- 
land, 19 Pa. St., 119, for the effect of such correction upon the 
rights and liabilities of sureties. 



SEC. 2 2.] POPLEWELL V. WILSON. 1 67 



SECTION 22. 

(a). NEGOTIABLE CONTRACTS NEED NOT CONTAIN A 

STATEMENT OF CONSIDERATION. 

POPLEWELL v WILSON. 1 

In the King's Bench, Hilary Term (6 Geo.), 1719. 

[Reported in i Strange, 263.] 

The Form of Action.— Error of a judgment in C. B., in 
case upon a promissory note entered into by A. to pay so much 
to B.for a debt due from C. to the said B. And it was objected, 

1 This case is reported in Wood's Byles on Bills and Notes, 
i54> 2I 9» 22 35 Story on Bills, 63, 183; Edwards on Negotiable 
Paper, 276; Tiedeman on Negotiable Paper, 31, 152, 170; Daniel 
on Negotiable Instruments, 108, 186; Ames on Bills and Notes, 
635. See also upon the principal proposition: — 2 Ld. Raym., 
1481; Garnet v. Clark, 11 Mod., 226; Smith v. Knox, 3 Espin- 
asse, 46; Buchanan v. Bank, 78 111., 500; Grant v. Ellicott, 7 
Wend., 227; Brown v. Mott, 7 Johnson, 361; Brix v. Braham, 1 
Bingham, 281; 2 Black. Com., 446. 

The General Rule — Consideration Presumed In 
Commercial Contracts. — It may be stated as a general rule 
that a bill of exchange or a promissory note imports a considera- 
tion whether it is negotiable or not. In the case of Carnwright v. 
Gray, 127 N. Y., 92, the following instrument was held to be a 
good negotiable contract without words of "negotiability" or a 
statement of "consideration": 

(< Quarry ville, Sept. 2, 187 1. 
" Thirty days after death, I promise to pay to Cornelius Carn- 
wright fifteen hundred dollars, with interest. 

Samuel P. Freligh." 

In this case the defendant moved to dismiss, upon the ground 
that no proof had been given that the instrument sued upon had 
any consideration. This motion was denied, and the court in- 
structed the jury that the instrument was a promissory note and 
therefore a consideration was imported, and that the burden rested 
upon the defendant to show that it was without a consideration. 
Downing v. Backinstoes, 3 Caines, 137; President v. Hurtin, 9 
Johnson, 217; 6 Am. Dec, 273; Kimball v. Huntington, 10 Wend., 
675; 25 Am. Dec, 590; Hatch v. Trayes, 11 Ad. & E., 702; Hall 
v. Farmer, 5 Denio, 484; Siegel v. Chicago, etc Savings Bank, 131 
111., 569. In this last case the consideration was executory and 
was supported. 19 Am. St. Rep., 51; Davis v. McCready, 17 N. 
Y. t 230; State Nat. Bank v. Cason, 39 La. Ann., 865; McGowen 



1 68 POPLEWELL V. WILSON. [CHAP. 5, 

that this note not being for value received, it was not within 

v. West, 7 Mo., 569; 38 Am. Dec, 468; Chapman v. Remington, 
80 Mich., 552; County, etc. v. Auckley, 90 Mo., 126. 

Where no consideration is recited, extrinsic evidence is ad- 
missible to show that there was a consideration between the original 
parties. Green v. Shepherd, 5 Allen, 589; Martin v. Stubbings, 
126 111., 387; 9 Am. St. Rep , 620. See also, as between the orig- 
inal parties, may a different consideration be proved than that ex- 
pressed. Miller v. McKenzie, 95 N. Y., 575; Johnson v. Suther- 
land, 39 Mich., 579; Everhart v. Puckett, 73 Ind., 409. 

The Use of the Phrase "Value Received." — Necessity 
of. — The words for "value received " are almost universally in- 
serted in bills and notes, but it is in no wise necessary to do so. 
Dean v. Carruth, 108 Mass., 242; Grant v. DaCosta, 3 M. & S., 
351; 4 Douglass, 427; Benjamin v. Fillman, 2 McLean (U. S. ), 
213; Townsend v. Derby, 3 Mete. (Mass.), 363; Bourne v. Ward, 
51 Me., 191. There are some old cases which hold that words ex- 
pressing a consideration are as necessary in these contracts as they 
are in common law contracts. Cramlington v. Evans, 1 Showers, 
5. As between the original parties the consideration may always 
be inquired into; and if it is shown that there was no consideration, 
or that it has failed, a recovery will be defeated. Rice v. How- 
land, 147 Mass., 407; Monson v. Tripp, 81 Me., 24; Cooper v. 
King, 73 Iowa, 136; Chenault v. Bush, 84 Ky., 528; Slade v. Hal- 
sted, 7 Cow., 322; Collis v. Emmett, 1 H. Blk., 313; Molloy v. 
Delves, 7 Bing., 428; 5 M. & P., 275; 4 C. & P., 492 (19 E. C. L.) 
And where the actual consideration between the original parties is 
less than the amount of the bill or note, no recovery can be had 
beyond the real consideration. Brown v. Mott, 7 Johns. (N. Y.), 
361. A different rule obtains, however, where the instrument gets 
into the hands of an innocent third party. In this case the ques- 
tion of consideration between the original parties cannot be raised, 
provided he secured it before maturity, for value, in the due 
course of business and without knowledge of any equities existing 
against it. 

Effect of a Failure in the Consideration. — A want or fail- 
ure of consideration will, as between the original parties, or per- 
sons standing in no better situation, defeat a commercial contract 
in the same manner as other contracts, even though it is expressed 
to be for "value received;" Thatcher v. Densmore, 5 Mass., 299; 
Parish v. Stone, 14 Pick., 198; Stevens v. Mclntire, 14 Me., 14. 
In an action upon these contracts the onus probandi lies on the de- 
fendant and the holder is not bound to prove that he gave value 
until the defendant has first made out a case showing: 

1. That the plaintiff is not a bona fide holder; or 

2. That there was fraud in the inception of the contract; or 

3. That there was suspicion of fraud which would make him 
guilty of bad faith. Jennison v. Stafford, 1 Cush., 168, 170; Saw- 



SEC. 2 2.] POPLEWELL V. WILSON. 169 

the statute, and prima facie the debt of another and is no 
consideration to raise a promise. 



yer v. Vaughn, 25 Me., 337, 339; Lewis v. Parker, 4 Ad. & El., 
838; Collins v. Martin, 1 B. & P., 65i;Hayly v. Lane, 2 Atk., 182; 
Lickbarrow v. Mason, 2 T. R., 71; Ford v. Beech, 11 Adolph. & 
E., 854. 

What Consideration will Support a Negotiable Con- 
tract. — Love and Affection not Sufficient. — As between the 
original parties the rule relating to consideration in common law 
contracts applies to negotiable contracts. A valuable consider- 
ation is necessary; a good consideration will not support these 
contracts. In an action upon the following note: 

"Pleasant Valley, III., Oct., 25th, 1875. 
" Whereas, my niece, Lillie Williams, has performed for me 
personal services for a long period of time, for which I desire shall 
receive ample compensation from my estate, and feeling able at pres- 
ent to fully compensate her, I therefore and hereby acknowledge my- 
self indebted to her in the sum of $2,500, with interest, but not to be 
due until my death, unless at my option. 

Deliliah Deeds." 

Scholfield, C. J., said: "A note executed without any other 
consideration than that of natural affection, or one without any 
valuable consideration, intended as a mere gift, cannot form the 
ground of recovery in an action at law. A gift is always revocable 
until it is executed; and a promissory note, intended purely as a 
gift, is but a promise to make a gift in the future. The gift is not 
executed until the note is paid. Kirkpatrick v. Taylor, 43 111., 
207; Blanchard v. Williamson, 70 111., 647; Pratt v. Trustees, 93 
111., 475. It is not pertinent for us here to inquire how slight a 
valuable consideration would support this promise, for the appel- 
late court finds as a matter of fact that it is supported by no valu- 
able consideration, — that the promise is to make a gift only." 
Williams v. Forbes, 114 111., 167; 28 N. E. Rep., 463. A nego- 
tiable contract, executed and delivered as a gift to a son or other 
relation, is not sufficient to support it. Fisk v. Cox, 18 Johns, 
145; Blogg v. Pinkers, 1 Ryan. & Mood., 125. While some cases 
have attempted to hold that this was a good consideration, [Tate 
v. Hilbert, 2 Ves. Jr., in; Seton v. Seton, 2 Bro. Ch., 610; Daw- 
son v. Kearton, 25 L. J. Ch., 166], the rule seems well settled now 
that a promissory note is ineffectual to perfect a gift either "inter 
vivos " or "causa mortis" Williams v. Forbes, supra; Fink v. Cox, 
18 Johns., 145; Richardson v. Richardson, 148 111., 563; Shaw v. 
Camp, 160 111., 425; Voorhees v. Combs, 33 N. J. L., 494; Pope 
v. Dodson, 58 111., 360, (gift inter vivos); Raymond v. Sellick, 10 
Conn., 480, (gift causa mortis); Parish v. Stone, 14 Pick., 198; Sec- 
ond Nat. Bk. v. Williams, 13 Mich., 282. 



I70 POPLEWELL V. WILSON. [CHAP. 5, 

Decision. — But the court held it to be within the statute, 

In the case of Rice v. Rice, 68 Ala., 216, it was held that the 
" presumption of consideration" fails in a negotiable contract 
when it shows on its face that it was given for the purpose of a 

gift. 

Money Consideration — Consideration Other Than 
Money — Total or Martial Failure of Consideration. — 

There is a distinction between a money consideration and a valua- 
ble consideration other than money. In the latter the slightest 
consideration will support the promise to the full extent, while the 
former will only support the promise to the extent of the money 
forming the consideration. 

In the case of Sawyer v. McLough (46 Barb., 350), the action 
was brought to recover the amount of a note without date, but 
proved to have been given by Joseph Sawyer, the defendant's in- 
testate, in June or July, 1861. The note was in the following 
words and figures: 

"For value received, I promise to pay I. Af. Sawyer, if living, 
if not, to his son Joseph Sawyer, fifteen hundred dollars, on the first 
of October, 1862. Joseph Sawyer. 91 

Upon the trial at the Ontario circuit, in May, 1865, the plain- 
tiff gave evidence tending to show the execution of the note by the 
testator, by proving the signature to be genuine, and by the testi- 
mony of Edward S. Gray, who testified that he was present and 
saw the testator sign the note, and deliver it to the plaintiff. He 
further testified that on the occasion of the execution of the 
note, the plaintiff handed the testator, his father, a roll of bills, 
who took it, and looked it over, and said it was all right, and then 
handed the plaintiff the note; that the witness did not count the 
roll of bills; that he saw the intestate count it; that there was 
nothing said as to the amount, and the witness had no knowledge 
as to the amount; that he did not see the denomination of any of 
the bills; that he saw the size of the roll; that it was rolled up; 
that he could not tell as to the amount; that the plaintiff handed 
it to the testator, and asked him if it was all right, and he said he 
believed it was. 

There was no evidence showing that the amount of the money 
paid or delivered by the plaintiff to the testator, on the occasion 
of giving the note, except what might be implied or inferred from 
the amount of the note, and the fact that the giving the note and 
the payment of the money were concurrent acts, and one and the 
same transaction. 

The theory of the defense was, "that if the money so handed 
to the testator was the only valuable consideration of the note, 
and of less amount than the note, the plaintiff could recover noth- 
ing beyond the amount of such money consideration." 

It was contended on the argument, in behalf of the defend- 



SEC. 22.] POPLEWELL V. WILSON. 171 

being an absolute promise, and every way as negotiable as if 

ants, that there was a distinction between a valuable consideration 
other than money and a money consideration; that while in the 
former case the slightest consideration would support a promise to 
pay the largest amount, to the full extent of the promise, in the 
latter the consideration will support a promise only to the extent 
of the money forming the consideration; that this leaves the meas- 
ure of the value of a valuable consideration, other than money, 
for a promise to pay money, to the parties to the contract; but 
money, being the standard of value, is not subject to be changed 
by contract, and will support a promise to pay money, only to the 
amount of the consideration. It seems to me this is a correct 
statement of the law on the subject. 

Judge Story, in his treatise on promissory notes, states the 
law as follows: "The objection to a note may be, that there is a 
total want of consideration to support it; or that there is only a 
partial want of consideration. In the first case it goes to the 
entire validity of the note, and avoids it. In the latter case it 
affects the note with nulity, only pro tanto. The same rule ap- 
plies to cases where there was originally no want of consideration, 
but there has been a subseqent failure thereof, either in whole or 
in part. For a subsequent failure of the consideration is equally 
fatal with an original want of consideration, not indeed in all 
cases, but in many cases; at least where it is a matter capable of 
definite computation, and not mere unliquidated damages." Story, 
Prom. Notes, § 187. 

It was not necessary for the plaintiff to prove any considera- 
tion for the note, as it imported a sufficient consideration; and if 
it was inadequate or illegal for any reason, or had failed in whole 
or in part, it was incumbent upon the defendants to prove it. The 
testimony of the witness Gray did not tend to prove inadequacy 
of consideration, and there was no other evidence in the case 
which would authorize the jury in finding an inadequate considera- 
tion. Gray's testimony on that subject was given on cross-exam- 
ination, and was an attempt on the part of the defendants to prove 
such inadequacy, but which attempt was an entire failure. It 
proved that, when the note was made and delivered by the intes- 
tate to the plaintiff, the latter handed the former money, the 
amount of which the witness did not know; but, after the testator 
had counted it, he said it was all right; that the testator executed 
and delivered the note to the plaintiff was put beyond a doubt, 
and the testimony of Gray, as before stated, did not tend to prove 
that the money paid was less than the amount of the note. There 
was no evidence to contradict the testimony of Gray, and upon 
that, if believed, the legal presumption was that the money ad- 
vanced by the plaintiff was equal to the amount secured by the 
note; and until that presumption was rebutted, the jury would be 
bound so to find. 



172 POPLEWELL V. WILSON. [CHAP. 5, 

it had been generally for value received. And the judgment 
was affirmed. 

Pre-existing Debt as a Consideration for a Commer- 
cial Contract. — The weight of authority now clearly supports 
the rule, that one who takes negotiable paper in payment of an 
antecedent or pre-existing debt, before maturity, and without 
notice, actual or otherwise, of any defects, thereby receives it in 
•due course of business and becomes a holder for value. Swift v. 
Tyson, 16 Pet. (U. S.), i (1842); Poirier v. Norris, 2 E. & B. (75 
E. C. L.), 89; Bank v. Gilliland, 23 Wend., 311 (1840); First 
Nat. Bk. v. McAllister, 46 Mich., 397; Merchants Ins. Co. v. 
Abbott, 131 Mass., 397; Evans v. Speer Hardware Co., 45 S. W. 
Rep., 370 (1898), (Ark.); Phoenix Ins. Co. v. Church, 81 N. Y., 
225; Mix v. Nat. Bk., 91 111., 20; Bardsley v. Deep, SS Pa. St., 
420. The antecedent debt must, however, be cancelled by the 
bill or note when given and accepted. Mix v. Nat. Bank, supra; 
Carlisle v. Wishart, 11 Ohio St., 172. If the commercial con- 
tract is given as a conditional and not an absolute payment of the 
pre-existing debt then it will not be a good and valuable consider- 
ation. See the leading case contrary to this general doctrine. 
Bay v. Coddington, 5 Johnson's Ch., 54; Coddington v. Bay, 20 
Johnson, 637. 



SEC. 23.] NON-ESSENTIALS. 1 73 

SECTION 23 

<0 NEGOTIABLE CONTRACTS NEED NOT STIPULATE A 

PLACE OF PAYMENT. 

There is no requirement that the place of payment of 
commercial contracts shall be expressly named upon its face. 
Mehlberg v. Tisher, 24 Wis., 607; Maiden Bk. v. Baldwin, 
13 Gray (Mass.), 154. In the absence of a place of payment 
named there is a presumption that it is payable at the place 
of execution. The place of payment may also be in the 
alternative. Pollard v. Hemes, 3 B. and P. (1791), 335. If 
no place of execution, however, is named there is a presump- 
tion that it is payable at the place of business or residence of 
the maker. McCruden v. Jonas, 173 Pa. St., 507. It has 
been held that if no particular place of payment is specified 
in a commercial contract, the law of the place where it is 
made determines, not only its construction, but also the obli- 
gation and duty it imposes upon the maker. Barrett v. 
Dodge, 16 R. I., 740; 37 Am. St. R., 777. In some of the 
states, however, the law of the place of payment and not the 
place of execution governs in its construction as well as the 
obligation and duty it imposes upon the maker. Dan. on 
Negot. Inst., Sec. go a. The contract may provide, however, 
whether it is to be construed by the laws of the state where 
made or by the rules of the place where it is to be executed. 
New England, etc. Co. v. McLaughlin, 87 Ga., 1. If no 
place of payment is named in a note, the place of payment is 
understood to be where the maker resides; and if a bill, then 
at the place where the drawee resides. 

While there is no requirement that a * « place " of execu- 
tion or performance shall be named in a commercial contract, 
yet it may become a question of a good deal of importance in 
the construction, interest, liability of parties, time and place 
of presentment for payment or acceptance, etc. These ques- 
tions will be discussed under their respective heads. 



174 KENDALL ET AL. V. GALVIN. [CHAP. 5, 

SECTION 24. 

(J). A COMMERCIAL CONTRACT NEED NOT CONTAIN THE 

INDICIA OF NEGOTIABILITY. 

KENDALL ET AL. v. GALVIN. 1 

In the Supreme Court, Maine, June, 1838. 

[Reported in ij Maine, /J/.] 

The Form of Action. — The action was assumpsit, on an 
account, charging the amount paid N. K. Seaton on the de- 
fendant's order. The declaration also contained the money 
counts. On the trial the plaintiffs offered in evidence a paper, 
of which the following is a copy: 

"Messrs. Kendall & Kings bury \ Gents. — Please pay 
N. K. Seaton four hundred fifty-five dollars, thirty-six 
cents, and charge the same to my account. 

* l Calais, June 7, iSjo. Geo. I. Galvin. " 

The plaintiffs also proved by Seaton the acceptance and 
payment of the order or bill by them. The defendant's coun- 
sel contended, that the plaintiffs had not entitled themselves 
to recover, and requested the judge to instruct the jury that 
the acceptance and payment of the order, by the plaintiffs was 
prima facie evidence of funds of the defendant in their hands, 
and that it was incumbent on the plaintiffs to rebut that pre- 
sumption to entitle them to recover. The Judge refused to 
give this instruction, and did instruct them, that if the plain- 
tiffs have shown an order drawn by the defendant on them, 
and that they accepted and paid it, that makes out their 
case; that the plaintiffs were not bound to show that they had 
not funds of the defendant in their hands; and that if Galvin 
had funds in their hands, it was competent for him to show it. 
The verdict was for the plaintiffs, and the defendant excepted. 
Claim of Defendant. — It was argued for the defendant 
that the instrument relied on was a bill of exchange. 2 The 

1 This case is cited in Daniel on Negotiable Instruments, 88, 
108; Wood's Byles on Bills and Notes, 155, 604. See also Mehl- 
burg v. Tisher, 24 Wis., 607. 

2 Chitty on Bills, 1, 50; Bayley on Bills, 1. 



SEC. 24.] KENDALL ET AL. V. GALVIN. I 75 

acceptance of a bill of exchange is prima facie evidence of ef- 
fects of the drawer in the hands of the acceptor. 1 Where the 
law presumes the affirmative of any fact, the negative of such 
fact must be proved by the party averring it. a And in an ac- 
tion for money paid, the acceptor must prove such facts as he 
ought to state in the special count. 3 

Claim of Plaintiff. — The plaintiff, contended that this 
was a mere order, or request to pay a sum of money for the 
defendants, and not a bill of exchange. It wants the essen- 
tial requisities of a bill: 

1st. In not being payable to order or bearer. 

2d. It does not appear to be for value received. 

3rd. No time is fixed for the payment. 

4th. It is not made payable at any particular place, nor 
is even the residence of the party on whom the order is drawn 
stated. The law does not require the negative to be proved, 
and yet the defendant's case requires it. 4 

Decision. — The acceptance of a bill of exchange by the 
drawee, is presumptive evidence that he had effects of the 
drawer in his hands. It is so stated by the elementary writers 
upon bills, and the authorities authorize it. 6 

Whether the instructions given were correct must de- 
pend, therefore, upon the instrument offered in evidence by 
the plaintiffs. If it is to be regarded as a bill of exchange, 
the instructions were erroneous, because no testimony was of- 
fered to rebut this presumption at law. If it can be regarded 
as an order or request to pay money, and not a bill of ex- 
change, and so not within the rule applicable to them, then 
the instructions were correct. 

No precise form of words are necessary in a bill of ex- 
change.* There are certain essential requisities; such as, that 
it be payable at all events, not on a contingency, not out of a 

1 Chitty on Bills, 365, 410; 3 T. R., 183; 1 Wilson, 185; 2 
Stark. Ev., 276. 

2 2 Harrison's Dig., 1115; 3 East, 192; 3 Campb., 10; Varrili 
v. He aid, 2 Greenl., 91; 2 Stark. Ev., 276; Chitty on Bills, 399. 

8 Bayley on Bills, 312. 

4 Chitty on Bills, 212; note 1. 

6 2 Stark Ev., 167, 8; Vere v. Lewis, 3 T. R., 183. 

* Morris v. Lee, Ld. Ray., 1396. 



CHAPTER VI 

Acceptance. 



SECTION 25. 

THE DRAWEE OF A BILL OF EXCHANGE IS NOT LIABLE 

THEREON UNTIL HE HAS ACCEPTED THE SAME. 

SWOPE v. ROSS ET AL. 1 
In the Supreme Court of Pennsylvania, July 25, 1861. 

[Reported in 40 Pa. St., 186; 80 Am. D., 567.] 

The Form of Action. — This was an action of assumpsit 
in the Common Pleas, entered February Term, i860, between 
George Ross & Co. , plaintiffs, and Swope & Karns, in which 
the following case was stated for the Opinion of the court in 
the nature of a special verdict. 

Ross Forward gave to Swope & Karns the following 
instrument of writing: 

"$616.00. "Somerset, Pa., August 18 th, 18 jp. 

* * George Ross & Co. , Bankers, pay to Swope & Karns, 
or order, ninety days from date, six hundred and sixteen 
dollars. Ross Forward" 

On or about the 1st of September thereafter, Swope, one 
of the firm of Swope & Karns, delivered this paper (indorsed 
Swope & Karns) to the plaintiff's bank, had the same dis- 
counted, and received the money thereon less the discount, 
$16.40. 

At the time this check was given, and when it was dis- 
counted at the bank, Ross Forward was one of the firm of 
George Ross & Co., but went out on the 19th of September, 

1859- 

1 This case is cited in Daniel on Negotiable Instruments, 480, 
501; Wood's Byles on B. & N., 406; Bigelow on B. & N., 42, 
243; Bigelow's Cases on B. & N., 361; Norton on B. & N., 81, 
84, 281; Benjamin's Chalmers Bills of Exchange and Promissory 
Notes, 44, 53* 2 33- 



SEC. 25.] SWOPE V. ROSS ET AL. 1 79 

When the day of payment named in the check came round, 
Forward had no funds in the bank, and the paper was regu- 
larly protested for non-payment on the 19th of November, 1 859. 

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 No- 
vember 19th, 1859; otherwise judgment for defendant with 
costs. Notice of dishonor of the bill was admitted in the ar- 
gument. , The court below entered judgment for plaintiffs for 
$616, with interest from November 19th, 1859. 

Argument of Plaintiff. — The plaintiffs in error, argued 
that the drawee of a check, payable in the future, who discounts 
it to the payee before it is payable, is not entitled to recover 
the money from the payee on account of the insolvency of the 
drawer. A check is, in form and' effect, a bill of exchange. 
If George Ross & Co. had accepted this check, their liability 
to pay at maturity would not be questioned, whether the 
drawee had funds or not; the acceptor being the principal 
debtor. 1 

Payment before maturity is equally conclusive, and the 
bank can only resort to Forward for reimbursement. 

As the check was to the order of Swope & Karns, their 
indorsement was necessary, of course, and would have been 
so if it were payable on demand. 

If they had received the money on this from any other 
party than the drawee, their endorsement would have made 
them liable on failure of payment by the drawee; but here the 
drawee pays the money according to the request of the drawer, 
and receives from the holder $16.40 for present payment. 
Besides, the drawer was a member of the firm of George Ross 
& Co. , the drawees, so that the doctrine of the court below is, 
that a man may draw a check on himself, payable in future, 
speculate on it before maturity, and, on his insolvency, com- 
pel the payee to refund the whole amount. 

Argument of Defendant. — The paper in controversy, 
not being due, was not presented, for payment, nor did the 
plaintiffs agree to accept it to be paid when due, but they did 

1 3 Kent. , 85 . 



180 SWOPE V. ROSS ET AL. [CHAP. 6 

agree to discount it on defendant's endorsement, as other un- 
due paper is discounted. This indorsement by plaintiff, with- 
out acceptance, waived the acceptance, and guaranteed the 
other member of the firm of George Ross & Co. , that For- 
ward would pay it at maturity, which having failed to do, the 
indorsees become liable. 

Although a check is in effect a bill of exchange, it is also 
true that bills payable to order are negotiable; and a transfer 
by indorsement is similar to making a new bill, the indorser 
being a new drawer. 1 A blank indorsement is an equivocal 
fact, and it is in the power of the holder to use it as an ac- 
quittance to discharge the bill, or as an assignment to charge 
the indorser. 2 

It was not a payment of their own paper. Forward, 
though a member of the firm of Ross & Co. , was as much a 
stranger in this transaction as any other person. 

Decision. — 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 ac- 
cording to its tenor and effect when it becomes due. A bill is 
paid only when there is an intention to discharge and satisfy 
it. In Burbidge v. Manners, 3 Ld. Ellenborough said "that 
even payment of a bill before it became due, does not extin- 
guish it any more than if it were merely discounted," and 
added that ' ' payment means payment in due course and not 
by anticipation." His lordship evidently thought that dis- 

1 1 Wheaton's Selwyn, 285. 
2 2 Id., 287. 
8 3 Camp., 194. 



SEC. 25.] SWOPE V. ROSS ET AL. l8l 

counting a bill by a drawee is neither payment nor extinguish- 
ment. 

In Attenborough v. McKenzie, 1 in the English Court 
of Exchequer, it was held that if the acceptor of a bill dis- 
counts it, he may reissue it so as to charge the drawer; that 
nothing will discharge the drawer but payment, i. e. , payment 
when due, or payment for the purpse of discharging and sat- 
isfying the bill. Therefore if the acceptor discounts the bill 
for the drawer and then indorses it away, the drawer will be 
liable upon it to the holder, and the transfer by the drawer to 
the acceptor will operate as an indorsement, although, at the 
time, the drawer does not intend to transfer by way of indorse- 
ment, being under the impression that the bill is discharged 
by coming into the hands of the acceptor. Nor will the pay- 
ment 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 trans- 
feree 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, maintain an 
action on it against the drawer or indorser if it be protested 
for non-payment and notice be given? He is not a party to 
the bill until he has accepted it. Until then, he has not as- 
sumed the position of principal debtor •, nor undertaken any 
obligation in regard to it. His discounting 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, 
indorser by the fact that the bill was directed to him? 

The Drawee May Become an Indorser. — 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 prior indorsers. 2 In such cases the fact that the- 

*36 Eng. Law and Eq., 562. 

a Chitty on Bills, 375. 
11 



I 



~\ 



182 SWOPE V. ROSS ET AL. [CHAP. 6, 

bill was drawn upon him does not incapacitate him from ac- 
quiring the rights of an indorsee. No reason is apparent for 
a different rule where the drawee becomes the holder by dis- 
counting the bill before its dishonor. Uncertain whether the 
drawer will put funds into his hands to meet the bill at matur- 
ity, he may well refuse to accept, and yet may discount it on 
the credit of both 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. He is but purchasing the con- 
tract, and the contract thus purchased is that the drawee will 
pay the bill on presentment, when it shall fall due, or in case 
of his failing to do so, that the parties whose names are already 
upon it will pay, if due notice of its dishonor be given to 
them. The promise is made by the parties to the bill. The 
purchaser enters into no engagement. 

These views accord with the doctrine laid down in Desha 
Shephard & Co. v. Steward, 8 a case which more closely resem- 

2 6 Alabama, 852. 

Acceptance Defined. — An acceptance is the act, by which 
the person, on whom a bill of exchange is drawn, gives his assent 
to comply with the request of the drawer. In other words an ac- 
ceptance is an undertaking by the drawee of a bill of exchange to pay 
the same according to its terms. 2 Bl. Com., 469; Swope v. Ross, 
40 Pa. St., 186; Norton on Bills and Notes, 80; Ellison v. Colling- 
ridge, 9 B. and C, 570. It has also been defined "as a promise 
to pay a bill of exchange in money when due " Gallagher v. Nich- 
olas, 60 N. Y., 438 (1875); ^ a y v - Faulkner, 73 111., 469 (1874); 
Bonnell v. Mawha, 8 Vt, 200; Spear v. Pratt, 2 Hill (N. Y. ), 
582. 

Form of an Acceptance. — There is no particular form re- 
quired for an acceptance under the law merchant. No form of 
words were necessary under the Lex Mercatoria to constitute a 
valid acceptance of a bill of exchange. It was sufficient if the 
drawee, in fact, undertook or promised to pay the bill, by any 
form of expression. Coffman v. Campbell, 87 111., 98; Espy v. 
Cincinnati First Nat. Bk., 18 Wall., 604. 

(a). May be by Parol orin Writing. — Under the law mer- 
chant an acceptance might be either by parol or in writing; and it 
might be upon a separate piece of paper even. Sturges v. Fourth 
Nat. Bk., 75 111., 595; Wilden v. Merchant's Bank, 64 Ala., 1; 
Miller v. Neihaus, 51 Ind., 401. Many of the states now require 
acceptance to be in writing. See statutes of your state. 

( b. ) May be of a Bill not yet Drawn. — So also might there 



SEC. 25.] SWOPE V. ROSS ET AL. 1 83 

bles the present than any case 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 dis- 
honored, even though they obtained the bill before its dis- 

be an acceptance of a bill not yet drawn, and this acceptance 
might be either by parol or in writing; and the acceptance would 
be binding even though the exact amount of the bill and the time 
for payment have not been fixed. Parker v. Greele, 2 Wend., 545; 
Kennedy v. Geddes, 3 Ala., 581; Bank of Michigan v. Ely, 17 
Wend., 508; Coolidge v. Payson, 2 Wheat, 66; Jones v. Council 
Bluffs Bank, 34 111., 313; Burns v. Rolland, 40 Barb., 368; Bank 
of Rutland v. Woodruff, 34 Vt, 89; Mason v. Dousay, 35 111., 
424; Sturges v. Fourth Nat. Bk., 75 111., 395; Hall v. First Nat. 
Bk. A promise to accept a bill not yet drawn may operate as an 
acceptance if the bill is drawn within a reasonable time, and this 
is true not only as to the drawer, but as to every party who takes 
the bill on the faith of such promise. Plumer v. Lyman, 49 Me., 
229; Stevman v. Harrison, 42 Pa. St., 49; Riggs v. Linsay, 7 
Cranch, 500; McEvers v. Mason, 10 Johns., 207. It has beenheld 
that an authority to draw a bill of exchange if the same is partic- 
ularly described, implies a promise to accept. This authority 
must be strictly complied with, however, and be acted upon with- 
in a reasonable time. Ulster Bank v. McFarlan, 3 Den. (N. Y.), 
553 > Naglee v. Lyman, 14 Cal., 450; Beech v. State Bank, 2 Ind., 
488; Gates v. Parker, 43 Me., 544; Burns v. Rowland, 40 Barb., 
368; Spalding v. Andrews, 48 Pa. St., 41c. Upon the question 
whether there may be a parol acceptance of a future bill, there is 
some conflict of authority. Kennedy v. Geddes, 8 Port (Ala. ), 
263; Mercantile Bank v. Cox, 38 Me., 500; Plumer v. Lyman, 49 
Me., 229; Spalding v. Andrews, 48 Pa. St., 411. 

(c. ) May be by Telegram. — An acceptance may also be by 
telegraph. In re Armstrong, 41 Fed. Rep., 381; North Atchison 
Bank v. Garreston, 51 Fed. Rep., 168; Spalding v. Andrews, 48 
Pa. St., 411. 

(d.) May be Implied from the Detention or Destruc- 
tion of a Bill. — An acceptance of a bill of exchange may be im- 
plied from acts, such as the detention for a long time, contrary to 
the usage of the parties under such circumstances as to give credit 
to the bill. Dunavan v. Flynn, 118 Mass., 537; Storer v. Logan, 
9 Mass., 55, 60; Rousch v. Duff, 35 Mo., 312. Whether a deten- 
tion of the bill will amount to an acceptance or not, must depend 
upon the circumstances of the case. A mere detention of the bill 
by the drawee will not amount to an acceptance. Mason v. Barff, 
2 B. & Aid., 26. If the bill is detained Jby the drawee for more 
than twenty-four hours, or for a period long enough to enable the 
drawee to ascertain the state of the account between he and the 
drawer, the better doctrine is that such detention should be treated 



184 SWOPE V. ROSS ET AL. [CHAP. 6, 

honor; and that until acceptance they are strangers to the 
bill, and may acquire rights to it, and stand in the same con- 
dition as any other holder. It was said that there is no legal 
presumption if th«* drawee comes into possession of the bill 

as a non acceptance of the bill and should be protested, when 
necessary. When the holder leaves a bill with the drawee for ac- 
ceptance, and it is his duty to call for it within a reasonable time, 
for the purpose of ascertaining whether it has been accepted or not, 
the detention, of course, will not amount to an acceptance. Jeune 
v. Ward, 2 Starkie, 326. If the drawee, however, retains the bill 
and does not notify the holder of his intention to accept it or not, 
and subsequently destroys it, he will be liable as an acceptor. 
Jeune v. Ward, supra; Matteson v. Moulton, 11 Hun., 268. Mr. 
Daniel, in his valuable work on Negotiable Instruments, says, 
"Asa general rule, the mere detention for an unreasonable time 
is not considered as amounting to an acceptance. " Daniel on Ne- 
gotiable Instruments, Sec. 499a. This, of course, must depend 
upon the circumstances in the particular case or upon the custom 
of the parties. The better doctrine seems to be, in the absence of 
any understanding, that if the drawee detains the bill for more 
than 24 hours, without indicating his intention to accept, he should 
be treated as having refused acceptance and due notice should be 
given to the drawer. Bank v. Bank, 8 Barb., 396; 7 N. Y*. t 459; 
Daniel on Negotiable Instruments, Sec. 492. 

(e.) A Promise to Pay Amounts to an Acceptance. — 

It has been held that a promise to pay a bill at maturity 
amounts to an acceptance. Spaulding v. Andrews, 12 Wright, 41 1. 
So also has, the authority " to draw i% a bill of exchange with a 
promise to pay the same, been held to be an implied acceptance. 

(/. ) May be Upon the Bill or Upon a Separate Paper. — 
The acceptance may be written upon the bill itself, either upon its 
back or upon its face, or it may be upon a separate piece of paper. 
If upon a separate piece of paper, the language indicating the 
acceptance must be clear and unequivocal and should clearly 
point out the particular instrument accepted. 

(g. ) Need Not be Dated. The acceptance need not be 

dated. It may be before it has been signed by the drawer or 
afterward. It may be before or after maturity. It may also be 
before or after dishonor. The drawee may accept it after he has 
once refused to accept or pay the same. 

(/i.) Need Not be Accepted When Drawer and Drawee 
are the Same Person, Corporation, or Partnership. — No 
formal acceptance of a bill of exchange drawn, by a person or cor- 
poration upon himself or itself, is necessary, the act of drawing 
being deemed an acceptance. Hasey v. White Pigeon Co., 1 
Doug. (Mich.), 193. So also will the act of drawing a bill by 
one partner, in his own name, on the firm of which he is a mem- 



SEC. 25.] SWOPE V. ROSS ET AL. 185 

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 



ber, for the use of the partnership, in law amount to an accept- 
ance by the drawer in behalf of the firm. Dougal v. Chowles, 5 
Day (Conn.), 511. 

(/'. ) Some States Require the Acceptance to be in 
Writing. — At common law the acceptance might be either by 
parol or in writing, but many of the states have by statute provid- 
ed that no acceptance shall be good unless the same shall be 
reduced to writing. It has been held that an acceptance may be 
made by telegram and that this form of acceptance is sufficient to 
comply with the statutes requiring the acceptance to be in writing; 
a telegram standing upon the same footing as a letter. Central 
Savings Bank v. Richards, 109 Mass., 414; Nevada Bank v. Luce, 
139 Mass., 488; Coffman v. Campbell, 87 111., 98; Lindley v. 
First Nat. Bk., 76 Iowa, 630; Brinkman v. Hunter, 73 Mo., 172; 
First Nat. Bank v. Clark, 61 Md., 401; Molson's Bank v. How- 
ard, 40 N. Y. Sup. Ct, 15. 

(/. ) The General Method of Acceptance. — The usual 
mode of making an acceptance is by writing the word "accepted" 
upon the face of the bill and subscribing the drawee's signature. 
If it is payable after sight, the date of the acceptance should be 
given also. It has been held that the drawee's name alone, written 
upon the face or any part of the bill, would be a sufficient accept- 
ance; so also has the word " accepted," "presented," "seen," 
"honored," or a direction to a third person to pay, or the day of 
the month, or "I will pay this bill," have all been held to be a 
good acceptance even though such statement was not signed. 
Powell v. Monnier, 1 Atk., 611; Dufaur v. Oxenden, 1 M. & R., 
90; Spear v. Pratt, 2 Hill, 582; Ward v. Allen, 2 Mete. (Mass. ), 53; 
Cook v. Baldwin, 120 Mass., 317, where the signed statement "I 
take notice of the above," was held to be an acceptance; Brannin 
v. Henderson, 12 B. Mon. (Ky.), 61, where "I will see the with- 
in paid eventually," was held to be a good acceptance. Any 
statement or the use of any form of words, from which an inten- 
tion to accept can be inferred, will amount to an acceptance. 

What Bills Must be Presented for Acceptance. — 
All bills of exchange need not be presented for acceptance. None 
need be presented for acceptance unless they are payable after 
sight or a certain number of days after demand. All bills of ex- 
change may be presented for acceptance unless they are payable at 
sight. The holder can not look to the drawer for reimbursement 
until after the bill has been presented for acceptance or payment 
to the drawee unless such presentment has been excused. 

The Liability of the Drawer. — The drawer's liability is a 
conditional one, depending: 



\/ 



1 86 SWOPE V. ROSS ET AL. [CHAP. 6, 

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, 

i st. Upon presentment for acceptance or demand of pay- 
ment, and 

2d. Upon receiving due notice of a failure to accept, or to 
pay the bill at maturity. 

The drawee by accepting the bill, assumes the same liability as 
that of a maker of a promissory note — being the principal debtor. 
Wallace v. McConnell, 13 Pet, 136. 

If, however, the bill is payable at a particular time after date, 
presentment for acceptance is unnecessary. Commercial Bank v. 
Perry, 10 Rob. (La.), 61. 

It is always sufficient to present a bill for payment at maturity. 

Varieties of Acceptances — Defined. — There are but two 
general kinds of acceptances: (1) Absolute or general, and (2) 
Conditional or qualified. The various authors upon negotiable 
instruments have given other kinds of acceptances depending 
largely upon the method of acceptance. They mention express, 
implied, verbal, partial, local, virtual, and written. 

(a.) Absolute Acceptance — Defined. — An absolute ac- 
ceptance is one by which the drawee promises to pay the bill 
according to its tenor. 

(b.) Conditional Acceptance — Defined. — A conditional 
acceptance is one where the drawee promises to pay the bill 
according to some condition imposed. 

Effect of a Conditional Acceptance.— If the holder 
accepts a conditional acceptance, he thereby releases all prior 
parties from liability unless they assent to such conditional accept- 
ance in some way. 

An express acceptance may be either absolute or unconditional. 
It is usually indicated by writing the words " Accepted," or 
"Seen," "Honored," or "I will pay the bill," or "A direction to 
some third person to pay the bill," or any statement either ver- 
bally or in writing by which the drawee indicates his intention to 
accept and pay the bill. Phillips v. Frost, 19 Me., 77; Spear v. 
Pratt, 2 Hill, 582; Cook v. Baldwin, 120 Mass., 317. 

But in Iowa it was held that the statement " Kiss my foot," 
signed by the drawee, was a rejection of the bill. Norton v. 
Knapp, 64 la., 112. 

It has been repeatedly held that any word or statement by the 
drawee which does not in itself negative the request to accept, 
may be treated as a valid acceptance. Dufaur v. Oxenden, 1 
Moody & R., 90. 

Implied Acceptance — Defined. — An implied acceptance is 
any act on the part of the drawee which clearly indicates an inten- 
tion on his part to comply with the request of the drawer. This 



SEC. 25.] SWOPE V. ROSS ET AL. 187 

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. 

act may be either in words or conduct in the absence of statutory 
regulations. Anderson v. First National Bank, 2 Fed. Rep., 125; 
McCutchen v. Rice, 56 Miss., 455. 

The implied acceptance may arise from a detention or a 
destruction of the bill or from some other unwarranted use of it. 
If the drawee, however, destroys a bill after he has notified the 
drawer or holder that he would not accept it, such destruction 
will not amount to an acceptance. Hall v. Steel, 68 111., 231; 
Dunavan v. Flynn, 118 Mass., 537. 

It has been held that a part payment of the bill would not 
amount to an acceptance in writing. Cook v. Baldwin, 120 Mass., 
317; Bank of Rutland v. Woodruff, 34 Vt., 89. 

A detention of the bill may or may not amount to an implied 
acceptance, depending upon: 1st — What is said at the time the 
bill is left with the drawee, and 2nd, the custom between the 
parties. Chitty on Bills, 334. 

Local Acceptance — Defined. — A local acceptance, may be 
either absolute or conditional, but is made payable at some par- 
ticular place. Troy City Bank v. Lauman, 19 N. Y., 477. 

Partial Acceptance — Defined. — A. partial acceptance is one 
where the drawee undertakes to pay but a part of the amount of 
the bill. Petit v. Benson, Comberbach (1697), 452. 

Virtual Acceptance — Defined. — A virtual acceptance is a 
mere promise to accept. 

Acceptance — When Excused. — The presentment for ac- 
ceptance of a bill of exchange will be excused under the following 
circumstances: — 

a. Where the drawee is dead; or 

b. Where the drawee is a fictitious person; or 

c. Where the drawee has absconded; or 

</. Where after due diligence the drawee cannot be found. 
An irregular presentment will be held good where the drawee 
refuses to accept upon other ground. 



l88 PETIT V. BENSON. [CHAP. 6, 



SECTION 26. 

AN ACCEPTANCE SHOULD BE ABSOLUTE AND IDENTICAL 
WITH THE TENOR OF THE BILL. A PARTIAL, CONDI- 
TIONAL OR QUALIFIED ACCEPTANCE WILL RENDER 
THE PARTIES TO SUCH AN ACCEPTANCE LIABLE AC- 
CORDING TO THE TERMS OF THEIR ACCEPTANCE. 

PETIT v. BENSON. 1 

Trinity Term, 1697. 

[Reported in Combcrbach, 452. ] 

A bill was drawn upon the defendant, who accepted it by 
indorsement, in this manner: U I do accept this bill to be 
paid, half in money and half in bills." And the question was, 
whether there could be a qualification of an acceptance; for it 
was alleged that this writing upon the bill was sufficient to 

1 This case is cited in Daniel on Negotiable Instruments, Sec. 
508, 516; Story on Bills of Exchange, 239; Ames on Bills and 
Notes, 146. Benjamin's Chalmers on Bills, Notes and Checks, 
5 1 ; Norton on B. and N. , 84. 

In the case of Wegerfloffe v. Keene, (1 Strange, 214), Strange 
attorney for defendant said: " This was an action upon the case 
upon the custom of merchants brought by the person to whom a 
foreign bill of exchange is made payable, against the acceptor. 
The declaration set forth, that one James Collet, being a merchant 
residing in Christiana in Norway, according to the custom of mer- 
chants drew his first bill of exchange upon the defendant, request- 
ing him to pay the plaintiff such first bill (his second not being 
paid) of 127/. i8j. 4//. which bill was afterwards, viz., December 
9th, 17 1 7, shown to the defendant, who accepted to pay 100/, upon 
the 8th day of February following, by virtue whereof he became 
chargeable, et in consider at ione inde eisdem die et anno ultimo su- 
pradictis super se assumpsit, to pay the same on the said 8th day 
of February tunc prox* sequent cm, which he has not done accord- 
ing to his undertaking. There is likewise a count for monies had 
and received, and an insimul computassent. The defendant as to 
those two counts pleads non assumpsit, and as to the count upon 
the bill, he pleads, that the said James Collet drew another bill for 
100/ only, wherein he countermands the payment of the odd 27/. 
1 8 s. 4d. by virtue whereof the defendant paid the 100/ in satisfac- 
tion of the first bill, and the plaintiff accordingly received it in 
satisfaction. The plaintiff protestando that the defendant did not 
pay it in satisfaction; for plea saith, that he never received it in 
satisfaction. And to this replication the defendant demurs. 

Strange pro defendente, I shall not trouble the court with an 



SEC. 26.] PETIT V. BENSON. 189 

charge him with the whole sum. But it was proved by divers 

exception which has formerly been taken to these replications, that 
the payment in satisfaction has been admitted, the traverse of the 
acceptance is immaterial; for I am sensible, it has been adjudged 
to be well enough in the case of Young v. Ruddle, Salk., 627, and 
of Hawshaw v. Rawlings, in this court, upon the ground, that 
there can be no payment in satisfaction, without an acceptance in 
satisfaction; and therefore a traverse of the acceptance is an argu- 
mentative denial of the payment; for if the plaintiff did not accept 
it in satisfaction, the consequence of that is, that it was not paid 
in satisfaction. 

Laying therefore the plea and replication aside, I shall take 
up the case as it stands upon the declaration, and upon that, offer 
some things distinctly, both as to the matter, and as to the manner 
of it. 

As to the matter of it, the case is no more than this; the per- 
son to whom a foreign bill of exchange is made payable, brings his 
action against the drawee, upon a partial acceptance for so much 
of it as he undertook to pay, and counts upon the custom of mer- 
chants. 

The single point which will arise upon this case is, whether a 
partial acceptance be good or not within the custom of merchants. 
And I shall endeavor to prove, that this acceptance is a void ac- 
ceptance, and consequently the plaintiff has no cause of action. 

That I may not be misunderstood when I call this a void ac- 
ceptance, I would premise, that I do not mean, it is so absolutely 
void as to exclude any remedy against the acceptor, for I must ad- 
mit, that this acceptance will create a contract between the parties, 
upon which an action upon the case would have laid. But what I 
shall insist upon is, that this is a void acceptance within the cus- 
tom of merchants, upon which the plaintiff has founded his case; 
and if it be void within the custom of merchants, then, whatever 
effect it would have as a private contract between the parties, will 
be a matter foreign to the present question, in as much as the plain- 
tiff has not relied on it as such, but has brought his action upon 
the custom. 

I have inquired into the practice of merchants in this case, 
but have not been able to get any certain account of this matter. 
The true reason of which I apprehend to be, that it is a case 
which seldom or never happens amongst merchants, for they 
honor one another's bills, though there are no effects of the 
drawer in their hands; and they would esteem it the greatest 
blemish that could be cast upon them, if their correspondent should 
once refuse to answer their bills any further than they had effects 
in his hands. 

What account I have received, I shall submit to the court. 
Some are of opinion, that an acceptance for part is an acceptance 
for the whole, in as much as it deprives the party of the benefit ) i 



I90 PETIT V. BENSON. [CHAP. 6, 

merchants that the custom among them was quite otherwise, 

protesting, and so resorting back to the drawer. But I apprehend 
there is no reason at all for this. To say that because commonly 
a man does honor another's bill beyond what effects he has in his 
hands, that therefore he must do it, is a strange conclusion. For 
suppose he has but 20/. of the drawer in his hands, and is bound 
to answer a bill for so much; it would be highly unreasonable, that 
in case the other should draw for 10,000/. this man must either pay 
the whole, or subject himself to an action for non-performance of 
the condition. 

But if this notion should prevail, that an acceptance for part 
is an acceptance for the whole; yet as on the one hand it charges 
the acceptor with the entire sum, so on the other hand it discharges 
him of this action. For then there can be no color to split the 
demand into two actions, but the plaintiff, in declaring for part 
ought to show, that the rest is satisfied. Salk., 65. 

Others are of opinion, that the party ought not to have taken 
this acceptance, but protested the bill as to the whole, and sent 
for another to the value of what the drawee would answer. This 
likewise makes for the acceptor the defendant. 

I am informed indeed, there is one gentleman who does 
attend to say, that this matter has happened in his own experience; 
but he, by what I find, is alone in that opinion, and perhaps may 
not have considered Ihe consequences of it. 

As there is this diversity of opinions upon a matter which sel- 
dom or never comes in practice, I shall take it upon the reason of 
the thing, with a view likewise to the many inconveniences which 
will follow as a consequence of establishing this partial acceptance. 

The better to come at this, it may not be improper to state 
the method of transacting these affairs. When the party to whom 
a bill of exchange is made payable receives it, he immediately ap- 
plies to the drawee to get his Acceptance: if he accepts it, nothing 
further is done till the day of payment, and then if it be paid the 
matter is at an end. But if the drawee will not accept it, then the 
party is to protest the bill, and send back the protest by the next 
post. When the time of payment comes, he tenders the bill again, and 
then the drawee may either pay it or refuse it: if he refuses it, then 
there is a second protest for non-payment, and the bill itself is re- 
turned. And so it is if he accepts it, and afterwards refuses to pay 
it. From all this I would infer, that there can be no partial pro- 
test for non-acceptance, which as I am informed is a protest not 
in the memory of any but one of the notaries public. The words 
of all protests are; / exhibited the original bill to the person to whom 
directed, and demanded his acceptance thereof. Now an accept, 
ance of part is not an acceptance thereof, no more than payment 
of part is a payment of the whole. There is a book which goes by 
the name of " Advice Concerning Bills of Exchange," and is es- 
teemed amongst those who are most conversant in these affairs. 



SEC. 26.] PETIT V. BENSON. I9I 

and that there migftt be a qualification of an acceptance: for 

And in fol 33, of that book it is said, that nothing but an accept- 
ance to pay secundum tenorem bit Ice can deprive the party of the 
benefit of a protest. And in fol. 16 of the same book he puts the 
case of a bill drawn on A. and B., who are not joint- traders, and 
an acceptance by one only: this says he goes for nothing, and the 
party must protest the bill as in case of no acceptance. These are 
the words of the book: and by putting the case of two who are not 
joint- traders, I should apprehend he means, that each being charged 
with a moiety, the acceptance of one is but an acceptance to pay a 
moiety, which is but a partial acceptance, and therefore void: and 
this is explained by the case of Pinkney v. Hall, (Salk., 126), where 
one joint trader accepted a bill, and it was held to be the accept- 
ance of both, because both were equally liable to pay the whole. 
And to this purpose likewise, is Molloy de Jure Maritirao in the 
chapter concerning bills of exchange. 

If there can be no protest for non-acceptance of part, I would 
consider how the case would stand in regard to allowing this par- 
tial acceptance: the natural and plain consequence of that will be, 
to put it in the power of the drawee, to defeat the other of the 
benefit of protesting a bill for 10,000/. by his acceptance to pay 
one penny only; for this I would submit, that if the party may take 
such an acceptance, he must take it: if it will be good, he cannot 
refuse it, for it is not at his election to charge the drawer but upon 
the other's default; the drawee is the person to whom he must first 
resort, and if he refuses, then and not till then, is there a proper 
remedy against the drawer; and therefore in the action against the 
drawer the plaintiff must show a protest, which is an endeavor to 
receive the money of the drawer. Salk., 131. 

But even admitting there may be a partial protest for non-ac- 
ceptance, yet the inconveniences which will follow of course are 
so great, that I hope it shall never be established by the judgment 
of the court. 

It would be endless to put cases where it has been held, that 
rent-charges and the like cannot be apportioned; and therefore I 
shall rely entirely upon the reason of the thing, that in this case 
the contract between the drawer and the person to whom the bill is 
payable is entire and not divisible. By this contract the drawer 
(and consequently the indorser) subjects himself to an action if 
the money be not paid at the time: but though he becomes liable to 
one action, yet there is no reason, that by transactions between the 
party to whom the bill is payable, and the drawee, to which he is 
not privy, this contract should be branched out into several actions, 
which will unavoidably be the case of every partial acceptance: for 
I do not apprehend how this can be reduced to one action by re- 
fusing this partial acceptance: and protesting for the whole; be- 
cause (as I observed before) if the party may take it, he must take 
it, and can charge the drawer no farther than there is a default in 
the drawee. 



I92 PETIT V. BENSON. [CHAP. 6, 

he that may refuse the bill totally, may accept it in part. But 

As therefore two actions are the fewest he can be charged 
with, I would beg leave to instance how he may be charged with a 
great many. The acceptor will charge him as far as his undertak- 
ing: then another for the honor of the drawer (as is usual amongst 
merchants) may undertake for another part, and by the same rea- 
son 3. third, and a fourth, and no body can say where it shall stop: 
so many different persons may accept for so many different 
pence, and every one of these has his distinct remedy against the 
drawer. 

This is too great an inconvenience to be got over; and it is 
such an inconvenience (I mean the multiplicity of suits) as the 
common law has always endeavored to meet with. In the case of 
Hawkins v. Cardee, Salk., 65, it was held, that the indorsee of part 
could have no action, because says Ld. C. J. Holt, the drawer hav- 
ing only subjected himself to one action, it cannot be divided so 
as to subject him to two. If the grantee of a rent charge levies a 
fine of part, the conusee cannot compel an attornment, for that 
would be to give two actions against the tenant. So if a feoffment 
were made to a man and his heirs with warranty, and he makes a 
feoffment to two, the warranty is gone. If two take lands jointly 
with warranty, and one makes a feoffment: the warranty is gone to 
him, but remains as to his companion, so as he may vouch for a 
moiety; and at common law if they had made partition, the war- 
ranty was lost. Co. Litt., 187a. And all this goes upon that 
ground, that it being res inter alios acta, it shall not turn to the 
prejudice of a third person. But this partial acceptance is a matter 
transacted between mere strangers; and therefore shall not hurt the 
drawer, who was no party to it. No act of theirs, which would be 
prejudicial to him, shall bind him. But the subjecting him to sev- 
eral actions will be a prejudice; therefore he shall not be subjected 
to several actions. 

The great benefit arising to the public from these bills is, their 
being negotiable and passing about as money; for everybody is 
sensible, that without the assistance of these bills our trade could 
never be carried on for want of sufficient specie; not to mention 
the trouble and danger in returning money, which is avoided by 
this expedient. It is this benefit which the public receives from 
these bills, that has entitled them to all the favor they have re- 
ceived, of which innumerable instances might be given For this 
reason it has been held, that the bare drawing or accepting a bill, 
Makes a merchant for that purpose. 1 Salk., 125; Show., 125; 2 
Vent., 295. Now if what is contended for on the other side should 
prevail, the public will be deprived of this great benefit; for no 
man will take this bill as so much money in the way of trade, when 
he is to resort to one man for one part, and perhaps send out of 
the kingdom for the other to a place where he has no correspond- 
ent. In the case of Jocelyn v. Laserre, which was in this court, 



SEC. 26.] PETIT Z>. BENSON. I93 

he to whom the bill is due may refuse such acceptance, and 

(Hil., 11 Ann. rot., 214), where the bill was to pay out of my 
growing subsistence, it was held, that in this regard, his growing 
subsistence might never amount to the sum drawn for, therefore 
this was not a bill of exchange within the custom of merchants, 
for nobody would take it upon such a contingency. And the cases 
of promissory notes since the statute have gone upon the same 
reason. Smith v. Bqheme (Mich., 1 Geo. in B. R.), which was 
to pay money or surrender a man to prison. And the case of 
Appleby v. Biddle (B. R. Hil., 3 Geo.), which was to pay so 
much to A. if I do not pay so much to B., and both these were 
held not to be within the statute, upon that only reason that they 
were not negotiable. 

Another inconvenience which naturally occurs upon this occa- 
sion is, that the drawee will insist to have the whole bill delivered 
up, when he pays but a part only. For according to the authors 
who treat of this subject, he can never charge the drawer, when 
they come to make up their accounts, with more than he has 
vouchers for under the hand of the drawer. In Lex Mercatoria, 
274, it is said, that if the bill be lost, the drawee cannot justify 
the payment, though he has a letter of advice. And this refutes 
all the expedients of indorsing part, or giving a special receipt for 
so much, because in neither of those cases will the drawee have 
any authority to produce under the hand of the drawer. If the 
drawer then refuses to allow what the other has paid, his only 
remedy will be to bring his action; and how he will be able to 
maintain it upon the custom of merchants, I must confess myself 
at a loss to find out, for he will want the necessary evidence to 
maintain such an action, which is the bill itself that was drawn 
upon him. 

If this then will be the case, where he pays the money without 
taking up the bill; I must contend that by all the rules of prudence 
and justice he may insist to have the whole bill delivered up to 
him, when he only pays part of it according to his acceptance. 

Supposing him then in possession of the whole bill, I would 
consider in what a condition we have left the party to whom it was 
made payable. He must be supposed to have advanced a con- 
sideration adequate to the whole sum, and consequently is in jus- 
tice entitled to his whole money of somebody or other. It will be 
said, that he may get what he can of the drawee, and then go 
back to the drawer for residue. It is true he may do so, and the 
drawer may be a man of so much honor as to pay him every 
farthing. But what must he do when he finds he is mistaken in 
his man; when the drawer (instead of ordering him the money as 
he expected) shall tell him, "No, you have nothing to produce 
under my hand, and if you have been so foolish as to deliver up 
the bill, you must take it for your pains." I know of no remedy 
in this case but what would be worse than the disease, and there- 



194 PETIT V. BENSON. [CHAP. 6, 

protest it so as to charge the first drawer; and though there be 

fore the most prudent thing he can do will be to sit down by the 
loss. 

And this will be so far from being a trick in the drawer, that 
it will be no more than what every prudent man will do. For if 
upon the report of what has been done he should advance the 
residue of the money, yet still there is a bill standing out against 
him for the whole, upon which bill it cannot appear he has paid 
the money which the drawee had left unpaid. And whether in that 
case he would not afterwards be answerable for the whole, may be 
proper to be considered. 

I have now done with what I had to offer in maintenance of 
the negative of the question I proposed to speak to, and shall 
therefore proceed to take notice of what was hinted at upon the 
former argument in behalf of the plaintiff in this case. 

It was said that the drawee may (and very often does) accept 
to pay the money at a different time from what is appointed in the 
bill. I must admit he may do so, but surely that case can bear 
no proportion to this case. It is not liable to any of the incon- 
veniences I mentioned; it is the same as if the bill had at first 
given him a longer time, and it is well known that after acceptance 
a month or two will break no squares where the man is good; with 
this further, that amongst merchants such an acceptance is es- 
teemed a general acceptance to pay the money according to the 
tenor of the bill. Besides, Molloy says, that in such a case the 
bill must be protested, which cannot be done in our case. 

It was further urged to be highly reasonable, that the drawee 
should honor the bill as far as he had effects. I admit this to be 
reasonable, and perhaps it would not have been impossible for the 
plaintiff to have declared in such a manner, as to have charged the 
defendant to the amount of his acceptance; but we are here upon 
the custom of merchants, and whatever might be reasonable in 
case of private property, will cease to be so, when it appears to be 
pregnant of so many inconveniences to the public as I have men- 
tioned. And if the plaintiff has it in his power to frame a case 
wherein he may do himself justice, that makes the argument 
stronger against suffering him to break in upon the public conven- 
ience for his private benefit. The policy of the law is, rather to 
let one man suffer, than to introduce a general inconvenience: but 
here, we are to be led into the greatest inconveniences, even in a 
case where there is no danger of the party's suffering in the least; 
for he has a remedy, which stands clear of all these inconvenien- 
ces, and there will be no harm in leaving him to that. 

It was said, that if the drawer (who is supposed to know what 
effects he has in the other's hands) by drawing for more, subjects 
himself to several actions, it is his own fault. The answer to this 
is, that the very drawing for more, destroys the presumption that 
he knew how accounts stood. But amongst merchants, as I ob- 



SEC. 26.] PETIT V. BENSON. 195 

an acceptance, yet after that he hath the same liberty of 
charging the first drawer as he before had. 

served before, that is not the case, for they often honor one an- 
other's bill, where there are no effects at all. 

But even admitting that, the drawer does not stand altogether 
clear of this objection, yet still this may be the case of one who 
cannot be supposed to know how the accounts stood between the 
drawer and the drawee: for it may happen this bill may be in- 
dorsed, and then the indorser is to be charged in the same manner 
as the drawer. The indorser will be liable to several actions, 
though he is in no ways privy to any of the transactions between 
the indorsee and the drawee. 

Upon breaking the case upon the former argument a difference 
was taken between the case of the acceptor and that of any other 
person: that he should not come and discharge himself against his 
own acceptance, whatever the other might have done as to refusing 
this partial acceptance. If this was his case only, it might be rea- 
sonable to extend this acceptance as far as it will go; but the hard- 
ship is, that what is law in his case, must likewise be law in the 
case of the drawer and indorser; so that here are two innocent 
persons who are to be involved in the same common fate; and that 
is never to be suffered, especially when the drawee may be charged 
in another name, which will not aftect the drawer or indorser. 

But if this partial acceptance should be thought good within 
the custom of merchants: yet the plaintiff can never recover in 
this action, in regard to the manner in which he has declared. 

The Payee or Holder May Refuse a Partial or Condi- 
tional Acceptance. — The payee or holder is entitled to an abso- 
lute acceptance of the bill. If the drawee refuses to give such an 
acceptance, the holder may protest the bill for non-acceptance and 
look to the drawer for payment. Wintermute v. Post, 24 N. J. L., 
420; Gibson v. Smith, 75 Ga., $y, Stevens v. Water Co., 62 Me., 
498; Wallace v. Douglas, 116 N. C, 659; 1 Daniel on Neg. Inst., 
sec. 509; Boehm v. Garcias, 1 Camp., 425; Shaver v. Western 
Union Tel. Co., 57 N. Y., 459; Green v. Raymond, 9 Neb., 298. 

Antecedent Parties are Discharged by a Qualified or 
Conditional Acceptance. — When the payee or holder of a bill 
of exchange accepts a qualified or conditional acceptance, he 
thereby releases all prior parties unless he can secure their assent 
to such an acceptance. Rowe v. Young, 2 B. & B., 165; Walker v. 
Atwood, 11 Mod., 190; Russell v. Phillips, 14 Q. B., 900; Ed- 
wards on Bills, 429; Story on Bills, 272; Daniel on Neg. Inst., 

5io> 5"- 



196 DAVIS V. CLARKE. [CHAP. 6, 

SECTION 27. 

AN ACCEPTANCE MUST BE BY THE DRAWEE. A STRANGER 

DOES NOT BECOME AN ACCEPTOR BY THE 

ACCEPTANCE OF A BILL OF EXCHANGE. 

DAVIS v. CLARKE. 1 
In Court of Queen's Bench, 1843. 

[Reported in 6 Adolphus 6° Ellis, N. S., 16; 6 Queen* s Bench, 16; 

51 Eng., C. Z., /j*.] 

The Form of Action. — Assumpsit. The first count stated 
that 14 one John Hart," on the 8th day of March, 1838, 
44 made his bill of exchange in writing and directed the same 
to the defendant, and thereby required the defendant to pay 
to him or his order 100/.," value received, at twelve months 
after date, which had elapsed before the commencement, etc. ; 
* 4 and the defendant then accepted the said bill, and the said 
John Hart then indorsed the same to 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 the defendant by the 
Insolvent Debtor's Court. 

The replication joined issue on the first two pleas, and 
traversed the discharge alleged in the third; on which traverse 
issue was joined. 

On the trial, before Parke, B. , at the Essex Summer as- 
sizes, 1843, a written paper, in the following terms, was given 
in evidence on behalf of the plaintiff. 



1 This case is cited in Story on Bills of Exchange, 35, 58, 121, 
254; Daniel on Negotiable Instruments, 97, 98, 362, 485, 486; 
Wood's Byles on Bills and Notes, 158, 300; Tiedeman on Com- 
mercial Paper, 15, 219, 228; Bigelow on Bills and Notes, 37; Big- 
elow's Cases on Bills and Notes, 45; Paige's Illustrative Cases on 
Commercial Paper, 43; Benjamin's Chalmers, Bills, Notes and 
Checks, 48. 



SEC. 27.] DAVIS V. CLARKE. I97 

4 • £100. 4 ' London, 8th March, 1838. 

4 4 Twelve months after date pay to me or my order one 
hundred pounds, value received, 
44 To Mr. John Hart. John Hart." 

Across the face of this instrument was written the follow- 
ing: 

1 4 Accepted. 

44 H. J. Clarke. 

4 4 payable at 3 1 9 Strand. " 

This writing across the face was proved to be the defend- 
ant's handwriting. 

No other evidence being produced, the learned baron di- 
rected a non-suit. In Michaelmas term, 1843, Petersdorff 
obtained a rule nisi for a new trial. 

The Claim of Defendant. — The defendant has not ac- 
cepted the dill described in the declaration: the instrument 
produced is indeed no bill of exchange. In Gray v. Mil- 
ner, 1 where the instrument was not addressed to any one, but 
had only a place of payment added, and in other respects re- 
sembled the document here proved, the acceptor was held lia- 
ble, as having admitted himself, by the acceptance, to be the 
party pointed out by the place of payment. Here the drawer 
addresses himself; and the instrument more nearly resembles 
a promissory note. It may be that the defendant might have 
been sued as a surety. 

The Claim of Plaintiff. — This principle of Gray v. Mil- 
ner, 2 applies. The defendant, by his acceptance, estops him- 
self from disputing his own character and the nature of the 
instrument. In Polhill v. Walter, 8 indeed, it was said that no- 
one could be liable as acceptor, unless he were the person to* 
whom the bill was addressed, or an acceptor for honor. But 
the question of acceptance in this form was not then distinctly 
before the court. Here it may be contended that the defend- 
ant identifies himself as the person addressed under the name 
of John Hart. The judge at nisi prius was requested, but re- 
fused, to allow an amendment, by calling the instrument ai 

1 8 Taunt., 739. 

2 8 Taunt, 739. 

•3 B. & Ad., 114. 
12 



I98 DAVIS V. CLARKE. [CHAP. 6, 

promissory note made by the defendant; the writing the name 
was a new making, according to the principle of Penny v. In- 
nes. 1 

The Decision. — There is no authority, either in the En- 
glish 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, 2 
and Jackson v. Hudson 8 are authorities showing that the de- 
fendant here cannot be sued as acceptor. In Jackson v. Hud- 
son, Lord Ellenborough treated an acceptance by a party not 
addressed as 4 ' contrary to the usage and custom of mer- 
chants. " 

No previous case seems to be exactly like this. In 
Jackson v. Hudson,* there was one acceptance by the party to 
whom the bill was addressed, prior to the acceptance by the 
defendant. In Gray v. Milner, no 6 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 himself to be the 
party addressed. But here another person, the drawer him- 
self, 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. 

The only question is, whether the defendant is such an 
acceptor as is described in the declaration; 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 

1 1 C. M. & R., 439; S. C, 5 Tyrwh., 107; he referred also to 
Jackson v. Hudson, 2 Camp., 447. 

3 3 B. & Ad., 114. 

8 2 Camp., 447. 

4 2 Camp., 447. 

6 8 Taunt., 739. 



SEC. 27.] DAVIS V. CLARKE. I99 

the defendant at all. This is therefore not an acceptance 
within the custom of merchants. 

The safe course is to adhere to the mercantile 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 can 
not 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 instrument is a promissory note and 
not a bill of exchange. 

Rule. Discharged. 1 

1 May v. Kelly, 27 Ala., 497; Keenan v. Nash., 8 Minn., 409; 
Smith v. Lockridge, 8 Bush., 425. 

If the Name of the Drawee is Left Blank the Ac- 
ceptance May be by a Stranger. — It has been held, in cases 
where the name of the drawee is left blank, that a stranger to the 
bill may fill the blank with his own name and accept the bill. 
Gray v. Milner, 8 Taunton, 739; Wheeler v. Webster, 1 E. D. 
Smith, 1; 1 Parson's B. & N., 289. 

An Acceptance by a Member of a Partnership Binds 
the Firm. — An acceptance by a member of a partnership of a 
bill drawn upon the firm will bind all. Mason v. Rumsey, 1 
Camp., 384; Tolman v. Hannahan, 44 Wis., 133. But see contra 
Herman v. Nash, 8 Minn., 407. See also Rumsey v. Briggs, 139 
N. Y., 323. 

Where a Bill is Drawn Upon Two or More Jointly 
All Should Accept. — Where a bill is drawn upon two or more, 
jointly, they must all join in the acceptance. If any of the joint 
parties refuse to accept the bill should be protested for non-accept- 
ance. If any of the joint parties do accept they will be bound. 
Smith v. Milton, 133 Mass., 369; Chitty on Bills, 73, 321. 

Acceptance May be by an Agent. — Of course an ac- 
ceptance may be by an agent if he has proper authority to act for 
his principal. Daniel Neg. Inst., 487; Byles on Bills and Notes, 
113; Richards v. Barton, 1 Esp., 269; Sternan v. Harrison, 42 
Pa. St., 49; Moeise v. Knapp, 30 Ga., 942; Goodrich v. DeFor- 
rest, 15 Johnson, 6. 



200 COX ET AL. V. TROY. [CHAP. 6, 



SECTION 28. 

AN ACCEPTANCE IS INCOMPLETE UNTIL DELIVERY, 
EITHER ACTUAL OR CONSTRUCTIVE, AND MAY BE 

REVOKED* 

COX ET AL. v. TROY. 1 

In the King's Bench, Hilary Term, 1822. 
[Reported in 5 Barnwell 6* Alderson, 474; 7 Eng, C. L. f 260. ] 

The Form of Action. — Assumpsit upon a bill of ex- 
change, for 938/., dated the 20th day of May, 1820, drawn by 
Stephen and James Roch, upon the defendant and W. T. 
Robarts, since deceased, by the names and firm of Messrs. 
W. T. Robarts & Co., London, payable 61 days after sight 
to Michael Murphy, and indorsed by him to the plaintiffs, and 
alleged to have been accepted by the defendant and W. 
Tierney Robarts, payable at Messrs. Robarts, Curtis & Co. 
The first count stated these facts, and a presentment for pay- 
ment when due, and refusal to pay at Messrs. Robarts, Cur- 
tis & Co. The second count was on a general acceptance; 
and the third was special, stating that the bill was delivered 
to the defendant and W. T. Robarts, to determine within a 
reasonable time, whether or not they would accept the same: 
and that they promised to take due care of the same, and 
return the same without defacing or spoiling it, which they 
did not do, but returned the same bill in a defaced and in- 
jured state. The declaration also contained the usual money 
counts. Plea, general issue. The cause was tried at the 
sittings after Trinity term, 1821, before Abbott, C. J., when 
a verdict was found for the plaintiffs, subject to the following 
case: — 

♦Dunavan v. Flynn, 118 Mass., 537; Trent Tile Co. v. Fort 
Dearborn, 54 N. J. L., 33; Fort Dearborn v. Carter, 152 Mass., 
34; Jeune v. Ward, 2 Stark, 326; Lindsay v. Price, 33 Tex., 280. 

^his case is cited in Daniel on Negotiable Instruments, 6$, 
490, 493; Wood's Byles on Bills and Notes, 253, 314; Story on 
Bills of Exchange, 252; Benjamin's Chalmers on Bills, Notes and 
Checks, 61; Chitty on Bills, 308, 243, 296; Tiedeman on Com- 
mercial Paper, 34, 221, 250; Ames on Bills and Notes, 209; Nor- 
ton on Bills and Notes, 70, 90, 95; Randolph on Commercial 
Paper, 88, 334. 



SEC. 28.] COX ET AL. V. TROY. 201 

It was admitted on the trial, that the bill of exchange 
mentioned in the declaration was drawn by Messrs. T. & J. 
Roch on the defendant and W. T. Robarts, since deceased, 
as stated in the declaration, and that the same was duly 
indorsed to the plaintiffs by the payee. The plaintiffs in Lon- 
don received the bill from Cork, on the 24th of May, 1820; 
and on the same day their clerk, by their directions, left it 
for acceptance at the defendant's counting-house in Old Broad 
street, London, in the usual way. He did not call for it until 
Saturday, the 27th of May, upon which day one of the de- 
fendant's clerks delivered back the bill of exchange to him 
without any observations being made at the time. The words 
"24th May, 1820, at Messrs. Robarts, Curtis & Co." (signed) 
'* W. T. Robarts & Co." were written upon the bill by the 
defendant, or some one authorized by him, whilst the same 
was in his custody: and the jury found by their verdict that 
the defendant and the said W. T. Robarts did accept the bill 
of exchange: but at the time the clerk re-delivered the bill of 
exchange to the clerk of the plaintiffs, the words " 24th May, 
1820, at Messrs. Robarts, Curtis & Co., W. T. Robarts & 
Co. , " were inked and written over, so as with great difficulty 
to be deciphered. The defendant did not offer any evidence 
to account for the obliteration of the acceptance. The bill 
itself was not obliterated, or any part of it rendered illegible. 

The Claim of Plaintiff. — In this case the acceptance, 
when once made, could not be revoked by the defendant. It 
is so laid down in Marius, 1 although that is only a loose 
dictum. But in Molloy 2 it is said, that when a party has once 
subscribed, he can not afterwards blot out his name. And 
the Hamburg ordinance lays it down in general terms, that an 
acceptance once made can not be revoked. Trimmer v. 
Oddy, cited in Bentinck v. Dorrien,* is an authority in point. 
There Ld. Kenyon was of opinion, that if a drawee deface 
the bill, that makes him liable as acceptor; and in Thornton 
v. Dick, 4 this point was expressly ruled by Ld. Ellenborough. 

1 P. 83. 

3 Book 2, c. 10, s. 28. 

8 6 East, 200; Chitty on Bills, 160, S. C. 

4 4 Esp., 270. 



202 COX ET AL. V. TROY. [CHAP. 6, 

It seems also to have been considered as the law in Bentinck 
v. Dorrien, and in Fernandey v. Glynn. 1 And it is treated as 
the law of France at the present day by Pardessus, a modern 
writer. 2 In Adams v. Lindsell, 8 the defendant was held to 
be bound by the plaintiff's acceptance of the contract, although 
not communicated to him. Here the jury have found that 
there was once an acceptance by the defendants, and that 
being so, they had no right afterwards to revoke it. 

Decision. — I am of opinion, that, in this case, the de- 
fendant is entitled to judgment. It is true, that the jury have 
found that he did accept the bill; but connecting that finding 
with the other facts of the case, it does not seem to me that 
it means more than that, at one period, the defendant, or 
some one in his behalf, did write an acceptance on it, and at 
that time was minded to accept it. The question will then 
be, whether having that intention at the time, and having 
written his acceptance, he was at liberty, on an alteration of 
circumstances, to erase those words before he delivered out 
the bill to the holder. Upon that question, there appears, in 
the books, to be some difference of opinion. In Bentinck v. 
Dorrien, Lawrence, J., says, "When the general question 
shall arise, it will be worth considering how that which is not 
communicated to the holder can be considered as an accep- 
tance, while it is yet in the hands of the drawee, and where 

1 1 Camp., 426, n. 

2 The passage referred to is in the Cours de Droit Commercial, 
by J. M. Pardessus, Paris, 1814, part 2, tit. 4, chap. 4, sect. 4, s. 1, 
p. 400. This writer, speaking of the effect of an acceptance, says: 
"Elle est irrevocable, et celui qui la don£e ne serait pas libre de la 
rayer, meme du conseutement de celui sur la presentation duquel 
la lettre auroit 6t£ accept^e, parce que Tacceptation n'oblige pas 
simplement l'accepteur envers le porteur; qu'elle forme 6galement 
un contrat entre le tireur et l'accepteur. " In the next paragraph, 
the same learned writer says: " Cependant comme le bonne foi doit 
§tre avant tout consider^, et que la seule crainte de la fraude no 
doit pas emp6cher des operations legitimes, le tir6 qui auroit trop 
pr£cipitamment accept^, et voudroit revoquer son acceptation 
avant que la lettre qui en est revetue circuit, pourroit la rayer et 
assurer la date et l'existence de ce changment par un protet, ou par 
tout autre acte semblable, qui ne permettroit pas de croire que 
jamais la lettre ait circuit revetue de Tacceptation non ray6e." 

3 2 B. & A., 681. 



SEC. 28.] COX ET AL. V. TROY. 203 

he obliterates it before any communication is made to the 
holder." That expression was used after the decision, in the 
cases of Thornton v. Dick and Trimmer v. Oddy. And at a 
later period, in Raper v. Birkbeck, 1 Ld. Ellenborough said, 
4 • I remember Pothier, in his treatise on bills of exchange, 
speaking of an acceptor who has put his signature to a bill, 
but has not parted with it, says, that before he does part with 
it, l il peut changer de volonte, et rayer son acceptation'; a 
fortiori, then a third person who cancels an acceptance by 
mistake, shall not be held thereby to make void the bill, but 
shall be at liberty to correct that mistake, in furtherance of 
the rights of the parties to the bill." The manner in which 
Ld. Ellenborough quotes the treatise of Pothier, seems to 
indicate that, at that time, he did not retain the opinion which 
he had delivered in the case of Thornton v. Dick. In a case 
like the present, which depends on the law-merchant, the 
opinions of learned lawyers and the practice of foreign and 
commercial nations, though they can not, strictly speaking, 
be quoted as authorities here, yet are entitled to very great 
weight and attention. When I find, therefore, that it is laid 
down in Pothier's treatise, that a party who has given an ac- 
ceptance may erase it before the bill goes out of his hand, it 
affords a strong argument in support of the view which I take 
of the question. I think the rule there laid down is far better 
than the one contended for by the plaintiff. I cannot per- 
ceive how the holder of a bill, or any antecedent party, is 
prejudiced by it; for it is to him the same thing, whether 
when the drawees give it back, they deliver it to him unac- 
cepted, or whether he finds that the drawees have withdrawn 
their acceptance, having at one time intended to accept it, 
but having subsequently changed their mind. Thinking, as I 
do, that no prejudice can arise to the holder, or any other 
parties to the bill, and that they are placed in precisely the 
same situation as if no acceptance was given, it seems to me, 
that it was competent for the acceptors to erase their accept- 
ance before they delivered out the bill, and therefore that the 
defendant is entitled to our judgment. 

1 15 East, 20. 



204 COX ET AL. V, TROY. [CHAP. 6, 

By the bill the drawer requires the drawee to come under 
an engagement to pay it when due. The question is, when 
the drawee comes under an engagement, whether by the act 
of writing something on the bill, or by the act of communica- 
ting what has been written to the holder, and I have no diffi- 
culty in saying, from principles of common sense, that it is not 
the mere act of writing on the bill, but the making a commu- 
nication of what is so written, that binds the acceptor; for the 
making the communication is a pledge by him to the party, 
and enables the holder to act upon it. But while it remains 
in the drawee's hands, it seems to me, the acceptance is not 
fully binding on the person who signed it, and he is at liberty 
to say, before he parts with it, "I have not yet entered into 
an engagement to accept." 

I think, that in this case the party was at liberty to can- 
cel his acceptance prior to the time when it was delivered 
back. In the old books there are dicta which import that an 
acceptance once made cannot be revoked. In some of them 
it is said, anything which amounts to an assent. to pay the bill, 
whether in writing or otherwise, is in point of law an accept- 
ance; and I suppose it has been on that principle that the case 
of Thornton v. Dick was determined; but the two subsequent 
cases seem to show that Ld. Ellenborough had doubts as to 
his former opinion. In Fernandey v. Glynn, the cancelling 
of the check was with a view and under the idea that it would 
actually be paid, and in that case it was probably contended, 
either that the crossing or cancelling the bill amounted to ac- 
tual payment, so that an action for money had and received 
would lie for the amount against the bankers, or that if not, 
yet it was to be considered in the nature of an acceptance. 
Now that case seems to me to apply strongly to the present; 
for there according to the usage, if a check was intended to be 
paid, but if not, nothing was done, but it was returned to the 
parties from whom it was received. And when the check in 
that case was cancelled, it was done with the intention of pay- 
ment, and not really by mistake. In consequence, however, 
of the large payments made in the course of the day on ac- 
count of the drawer, the bankers changed their intention; yet 
there the check was delivered back, and the original drawer 



SEC. 28.] COX ET AL. V. TROY. 205 

only was considered bound to pay it. The opinion of Pothier, 
stated in Raper v. Birkbeck, is precise on this subject, and is 
far better authority than the passages cited from Marius. 
Where a man accepts a bill, and delivers it out accepted, he 
must remain irrevocably bound by it. In contracts made be- 
tween parties at a distance, if a man writes his acceptance, 
and sends it out of his hands, he can not revoke it afterwards. 
I am satisfied, however, that this is not a binding acceptance 
on the party, having been cancelled anterior to the time when 
the bill was delivered back. 

This is a question of the law-merchant, and it is desirable 
that that la n should be the same in this as in every other 
commercial country. We ought to act according to the judg- 
ments of the courts in our own country, but in the absence of 
these authorities, we may with great advantage take into our 
consideration the opinions of learned writers on this point. 
There seems to be no authority in the English law, except the 
case of Thornton v. Dick. I agree with Ld. C. J., that Ld. 
Ellenborough seems to have changed the opinion which he is 
reported to have delivered in that case. The passage in Mol- 
loy is probably applicable to the case where the bill has been 
•delivered out, for it does not speak of cancellation, but revo- 
cation. But the authority of Pothier is expressly in point. 
That is as high as can be had, next to the decision of a court 
of justice in this country. It is extremely well known that he 
is a writer of acknowledged character; his writings have been 
constantly referred to by the courts, and he is spoken of with 
great praise by Sir William Jones, in his Law of Bailments, 
and his writings are considered by that author equal in point 
of luminous method, apposite examples, and a clear manly 
style, to the works of Littleton on the laws of this country. 
We can not, therefore, have a better guide than Pothier on 
this subject. As to the opinion of Pardessus, I should under- 
stand him as rather speaking of bills delivered out, accepted 
and not erased. That seems to me perfectly clear from the 
next passage, where he says that, though a man does accept a 
bill, still if he cancels that acceptance before he delivers it out, 
that is sufficient. But considering this as a question merely 
of common sense, and judging from analogy, is it not clear 



206 COX ET AL. V. TROY. [CHAP. 6, 

that the party is not bound in such a case as this ? It maybe 
said, that the defendants here ought to have shown that this 
was done by mistake. How is it possible to do that ? The 
thing looks like a mistake. He may have written an accept- 
ance, and afterwards find when he has written it, that it is on 
the wrong paper; and not meaning to accept that bill, he does 
that which shows that it was his intention not to enter into 
such a contract. Nobody can be injured by it. When the 
bill goes back it is in as good a state as it came. The party 
is still placed in the same situation. It appears to me, there- 
fore, not only on authority, but on the principles of common 
sense, that the defendant was not bound by this as an accept- 
ance, and that our judgment ought to be in his favor. 
Judgment for the defendant. 1 

1 See Wilde v. Sheridan, 21 L. J. Rep., 260, which Ames in 
his valuable work on Bills and Notes cites for a contrary doctrine; 
1 Ames on Bills & Notes, 214-218. 

The Early Rule. — It was earlier held that an acceptance 
without a delivery was irrevocable. Ld. Ellenborough, in the case 
of Thornton v. Dick (4 Esp., 270), (1803) said, " But the accept- 
ance having been proved to have taken place, he had no hesitation 
in saying that the act of acceptance was irrevocable; and that, if a 
party once accepted a bill of exchange, he had done the act, and 
could not retract. The moment the bill was accepted, he was 
bound, and the bill began to run; and the holder had a right to 
hold him to that liability which he had undertaken, and from which 
he, by his own act, could not discharge himself." 

In the case of Bentinck v. Dorrien (6 East, 199) (1805), where 
after acceptance and before delivery the acceptance was cancelled, 
Ld Ellenborough said, "I was struck at first with consideration 
how far this might affect the right of third persons; but on further 
consideration, if this be an acceptance in law, notwithstanding the 
obliteration before delivery to the holder, it will still remain so as 
to such third persons." 

After Acceptance and Delivery it is Irrevocable. — When 
a bill of exchange is once accepted and delivered to the holder it 
then becomes a binding obligation according to its terms and is ir- 
revocable. It has been said that it cannot be revoked even with 
the consent of the holder, for the reason that the drawer and all 
prior parties have a vested interest in the contract. Chitty on 
Bills, 308; Thornton v. Dick, 4 Esp., 270; Tiedeman on Commer- 
cial Paper, 221. 



SEC. 29.] JOHNSON ET AL. V. COLLINS. 207 

SECTION 29. 

AN ACCEPTANCE MAY BE EITHER BY PAROL (UNLESS 
OTHERWISE PROVIDED BY STATUTE) OR IN WRITING; 
BEFORE OR AFTER THE BILL IS DRAWN AND BEFORE 
OR AFTER MATURITY. 

JOHNSON ET AL. v. COLLINS. 1 

In King's Bench, Nov. 25TH, 1800. 

{Reported in i East> p8.~\ 

The Form of Action. — The plaintiffs declared in the first 
count against the defendant as the acceptor of a bill of ex- 
change drawn by one Ruff, dated the 25th of October, 1799; 
and directed to the defendant, whereby he was required two 
months after date to pay to the order of the drawer 23/. 10s. 
6d. y value received, which bill was afterwards indorsed by 
Ruff to one Jane Ruff, and by her to the plaintiffs. There 
were other general counts for money had and received, money 
paid, and upon an account stated. To which there was a 
plea of the general issue. 

At the trial before Le Blanc, J., at the last Worcester as- 
sizes, it appeared in evidence that Ruff, having furnished 
goods to the defendant to the amount of the bill, applied to 
him for payment, when the defendant excused himself at that 
time, but said that if Ruff would draw on him a bill at two 
months from the 2 5th of October for the amount he should 
then have money and would pay it. Ruff afterwards drew the 
bill in question, dated 25th of October at two months, but it 
never was in fact presented to the defendant for his accept- 
ance; nor did he ever in fact accept it, otherwise than as is 

1 This case is cited in Wood's Byles on Bills and Notes, 302, 
303; Norton on Bills and Notes, 93, 95, 98, 101; Ames on Bills 
and Notes, 171; Tiedeman on Commercial Paper, 5b, 220, 226; 
Benjamin's Chalmer's on Bills, Notes and Checks, 44; Daniel on 
Negotiable Instruments, 555, 558, 559. 

Note. — This case (Sec. 29) of Johnson v. Collings (1 East, 
98) (Eng. ), must be studied in connection with the case (Sec. 
29a), of Coolidge v. Payson (2 Whea., 66); which latter case con- 
tains or lays down the present rule, where it has not been modi- 
fied by statute. 



208 JOHNSON ET AL. V. COLLINS. [CHAP. 6, 

stated above in his promise to accept. It was said at the 
trial to be the practice at Bristol, where the defendant lived, 
not to accept bills or to have them presented for acceptance. 
Ruff, to whose own order it was made payable, having indor- 
sed the bill, afterwards passed it to the plaintiffs in discharge 
of an old debt; but no communication took place at the time 
between the plaintiffs and the defendant. After this and be- 
fore the bill became due Ruff became a bankrupt; and when 
the bill was due the plaintiffs presented it to the defendant for 
payment, who then declined it on account of Ruff's bankruptcy 
without an indemnity, admitting however that he owed the 
money either to Ruff or to Ruff's assignees. The learned 
judge was of opinion that a mere promise, such as this, to ac- 
cept a bill when it should be drawn, at least unless made to a 
third person, or accompanied at least with circumstances 
which might induce a third person to take the bill, (which was 
not the case here), did not amount to an acceptance, and 
therefore the plaintiffs were not entitled to recover on the first 
count. And that as there has been no communication be- 
tween these parties at the time, nor any consideration having 
passed as between them, there was no evidence to warrant a 
finding for the plaintiffs on either of the money counts: where- 
upon he directed a non-suit to be entered, with liberty to the 
plaintiffs to move to set aside and enter a verdict for the 
amount of their demand, if the court should be of opinion 
that they were entitled to recover on either of the counts. 

A rule nisi was accordingly obtained for this purpose on 
a former day. 

In support of the rule it was argued: — ist. A promise to 
accept a bill when drawn amounts in law to an acceptance. 
In Pillans and Rose v. Van Mierop and Hopkins (1765) 1 the 
plaintiffs having advanced money to one White upon the 
faith of a written assurance by letter from the defendants 
' ' that they would accept such bills as the plaintiffs should in 
a month's time draw upon them for 800/. upon the credit of 
White," the court after much deliberation held that whether 
it were an actual acceptance or a loan to White upon the 
credit of the defendants, it would equally bind the latter. 

l 3 Burr., 1663 (1765). 



SEC. 29.] JOHNSON ET AL. V. COLLINS. 209. 

But Ld. Mansfield there said, 1 "This amounts to the same 
thing as an acceptance. / will give the bill due honor is in 
effect accepting it. If a man agree that he will do the formal 
part, the law looks upon it, in the case of an acceptance of a 
bill, as if actually done." "An agreement to accept a bill to- 
be drawn in future would, as it seems to me, by connection 
and relation bind on account of the antecedent relation. And 
I see no difference between its being before or after the bill 
was drawn." 2 "This agreement to honor the bill was a virt- 
ual acceptance of it." 8 Again, "A promise to accept is the 
same as an actual acceptance." "The defendants have under- 
taken to honor the plaintiff's draft, therefore they are bound 
to pay it." The same doctrine was admitted in Mason v. 
Hunt (1779); 4 but that was a conditional acceptance, and. 
the condition was afterwards broken. In Powell v. Monnier 
(1737)* there was an assurance by letter that the bill should 
be accepted, which was holden sufficient to bind the drawee: 
but that was after the bill was drawn. 

2dly. — Supposing this not to amount in law to an accept- 
ance, yet there is sufficient consideration to sustain a verdict 
for the plaintiffs on the money counts. The defendant owed 
Ruff this money; and his promise to honor the bill when 
drawn was an agreement to take as his creditor any person to- 
whom Ruff should appoint the money to be paid. He then 
having by his indorsement appointed the money to be paid to 
the plaintiffs, it raises an assumpsit in law by the defendant 
to pay them so much. And the authority having been given, 
by Ruff before his bankruptcy that event cannot vary the 
case. It was holden in Fenner v. Mears 6 that general indebi- 
tatus assumpsit would lie by the assignee of a respondentia 
bond against the obligor, who had before engaged by an in- 
dorsement on the bond to pay the same to any assignee:. 

l Ib., 1669. 

3 lb., 1673. 

*Ib., 1674. 

4 Dougl., 297 (1779)- 

5 1 Atk., 611 (1737). 

6 2 Blak. Rep., 1269. Vide also Innes v. Dunlop, 8 Term 
Rep., 595, where the assignment of a Scotch bond was deemed a. 
good consideration to support an assumpsit here. 



2IO JOHNSON ET AL. V. COLLINS. [CHAP. 6, 

though it was agreed that no action could have been main- 
tained on the bond itself by the assignee in his own name. 
It was there also admitted that if the obligor had paid the 
assignee, the former might have pleaded payment to an action 
on the bond brought by the obligee. And it was there consid- 
ered that the agreement amounted to a particular promise to 
the assignee whenever any such should be. 

It was said, that the contract was devised to operate upon 
subsequent assignments, and amounted to a declaration that 
upon such assignment the money borrowed should no longer 
be the money of A. but of B. his substitute. So here the 
agreement to accept amounts to a particular promise to the 
holder of the bill to whom it is negotiated to pay him the 
amount: it is money had and received to his use. Thus in 
Tatlock v. Harris 1 a bill was accepted by the defendant paya- 
ble to the order of a fictitious person whose supposed indorse- 
ment was put upon it; so that being incapable of proof, no 
action could be maintained as upon the bill. But the court 
held that a bona fide indorsee for a valuable consideration 
might recover against the acceptor upon an implied assumpsit 
for money paid and money had and received. Ld. Kenyon 
in giving judgment said, • * it was an appropriation of so much 
money to be paid to the person who should become the holder 
of the bill." Again, in Israel v. Douglas 2 A. being indebted to 
B. for brokerage, and B. to C. for money lent, B. gave an 
order to A. to pay C. the money due from A. to B. , which 
order A. having accepted, a majority of the court held that C. 
might maintain an action against A. for money had and re- 
ceived. And Gould, ]., expressly likened it to the case of a 
man having money due to another in his hands, which that 
other orders him to pay to a third person: and that there was 
no substantial difference, whether one in fact pays money to 
another for a third person, or whether he gives the other an 
order to pay over so much money, to which he assents: that 
in reason and sound law it was money had and received to 
the use of such third person. Wilson, J., who differed on 



x 3 Term Rep., 174. 
2 1 H. Blac, 239. 



SEC. 29.] JOHNSON ET AL. V. COLLINS. 211 

that point, yet agreed that the action was maintainable on the 
count for the insimal computassent. 

There is this further reason for holding the defendant 
liable, because his conduct was calculated to deceive third 
persons and put them off their guard: for if there had been 
no such promise to pay, the plaintiffs would have resorted to 
Ruff at once, and not have deferred their application till after 
the bankruptcy when it was too late. Besides, there was a 
subsequent promise by the defendant to pay the bill to the 
plaintiffs if they would indemnify him against Ruff's assignees; 
and as the law will indemnify him that is the same thing. 

An Acceptance May be by Parole. — This is a question 
of great moment. It is much to be lamented that anything 
has been deemed to be an acceptance of a bill of exchange 
besides an express acceptance in writing; but I admit that the 
cases have gone beyond that line, and have determined that 
there may be a parole acceptance: that perhaps was going too 
far; but at any rate, the determinations have gone no further; 
and I am not disposed to carry them to the length now con- 
tended for, and to say that a promise to accept a bill before 
it is drawn is equally binding as if made afterwards. 

It is not generally true, that a promise to do a thing is 
the same thing in law as the actually doing it; it certainly is 
not so as applied to this case. This was a promise to accept 
a non-existing bill, which varies this case from all those which 
have been decided upon the same subject; and I know not by 
what law I can say that such a promise is binding as an ac- 
ceptance. The consequence is, that the plaintiffs cannot 
recover upon the count as upon an acceptance of a bill of 
exchange. As to the other ground, if we were to suffer the 
plaintiffs to recover on the general counts, we must say that 
a chose in action is assignable, 1 a doctrine to which I will 
never subscribe. I cannot, as at present advised, and upon 
the general view of it, agree with the case of Fenner v. Mears 
in Blak. Rep. The result of it, however, seems to be this, 
that the determination having been made according to equity 
and good conscience, the court would not disturb the verdict; 

1 Vide Forth v. Stanton, i Saund. Rep., 210, 211, and n. 2 by 
Serjt. Williams. 



212 JOHNSON ET AL. V. COLLINS. [CHAP. 6, 

and I doubt whether the decision can be sustained on any 
other ground. The undertaking there indeed was in writing; 
but I am not prepared to say that that makes any difference: 
though a distinction of that kind was much dwelt upon in 
another case as supplying a want of consideration: 1 but that 
has never been adopted since, and was afterwards expressly 
over-ruled in the case of Rann v. Hughes in the House of 
Lords. 3 However, no question of that sort can arise here; 
and I am clearly satisfied that there is no evidence to support 
the promises laid in any of the counts. 

Grose, J., said, "It would be of most dangerous conse- 
quence to relax the rule of law to the extent here contended 
for. By the general rule a chose in action is not assignable, 
except by the custom of merchants. The assignment of a 
chose in action by a bill of exchange is founded on that law, 
and cannot be carried further than that will warrant it; and 
no authority has been cited to show that by the law merchant 
a mere promise to accept a bill to be drawn in future amounts 
to an actual acceptance of the bill when drawn. Then we 
have no authority to extend the rules which have been hitherto 
established. As to the general counts, if we were to permit 
the plaintiffs to recover on this evidence, it would be making 
all choses in action assignable, which cannot be contended 
for, and would throw the whole system into confusion." 

Le Blanc, J., said: In the case of Pierson v. Dunlop,* 
Ld. Mansfield limited, and truly limited, the doctrine which 
had been before laid down in Pilans v. Van Mierop. He 
there says * ' It has been truly said as a general rule, that the 
mere answer of a merchant to the drawer of a bill, saying, 
He will duly honor it, is no acceptance; unless accompanied 
with circumstances which may induce a third person to take 
the bill by indorsement: but if there are any such circum- 
stances, it may amount to an acceptance, though the answer 
be contained in a letter to the drawer." Therefore, he ex- 

1 Vide the opinion of Wilmot, J., delivered in Pillans v. Van. 
Mierop, 3 Burr., 1670, 1. 

2 7 Term Rep., 350 n. [S. C, 4 Bro. Pari. Ca., 27, TomL 
edit.] 

'Cowp., 573. 



SEC. 29.] JOHNSON ET AL. V. COLLINS. 213 

plains and limits his own rule which he had before delivered 
concerning such an acceptance, confining it to the case where 
credit is given by a third person upon the faith of such an 
assurance, on which he acts, and by which he is induced to 
take the bill. 

Ld. Kenyon, C. J. , added, that he thought that the ad- 
mitting a promise to accept before the existence of the bill to 
operate as an actual acceptance of it afterwards, even with 
the qualification last mentioned, was carrying the doctrine of 
implied acceptances to the utmost verge of the law; and he 
doubted whether it did not even go beyond the proper bound- 
ary: though this case was not helped even by that opinion. 

Rule discharged (*). 

1 Vide Clark v. Cook, 4 East, 57; Wynne et al. v. Raikes et 
al., 5 East, 514; McEvers v. Mason et al., 10 Johns. Rep., 207; 
Wilson v. Clements, 3 Mass. Rep., 9, etc. seq. : McKim v. Smith 
& Steene, 1 Hall's Amer. Law Journ., 486; Havens v. Griffin, 
Chip., 42. 

In Beawes' Lex Merc, 454, pi. 16, it is said, "If the pos- 
sessor (/. e. of a bill of exchange) hath neglected to demand 
acceptance before the drawer's failure, and the person to whom it 
is directed has advice thereof, he cannot be compelled to accept 
the draft, though previous to the knowledge of the drawer's mis- 
fortunes he had acquainted him with his intention to honor his bill, 
and even afterwards confesses that he should have done it, had it 
been presented and the acceptance demanded before the advice of 
the drawer's failure had reached him." And again, p. 466, pi. 
112, "He that verbally or by letter has promised to accept any 
bills drawn on him for a third person's account, and he to whom 
the promise was made does in consequence thereof give the third person 
credit, relying on a punctual compliance; in this case, he that has 
engaged his word is obliged to fulfill it, or be answerable for all 
damages that shall proceed from a breach thereof, etc." 



13 



214 C00L1DGE ET AL. V. PAYSON ET AL. [CHAP. 6, 

SECTION 29a— Continued. 

COOLIDGE ET AT. v. PAYSON ET AL. 1 

In the Supreme Court U. S., Feb., 1817. 

[Reported in 2 WhcatorCs Rep., 66; Condensed Reports U. S., vol. 

4, P- 33-] 

Decision. — (Mr. C. J. Marshall delivered the opinion of 
the court.) 

This suit was instituted by Payson & Co. , as indorsers of 
a bill of exchange drawn by Cornthwaite & Cary, payable to 
the order of John Randall, against Coolidge & Co. as the 
acceptors. 

At the trial the holders of the bill on which the name of 
John Randall was indorsed, offered, for the purpose of prov- 
ing the indorsement, an affidavit made by one of the defend- 
ants in the cause, in order to obtain a continuance, in which 
he referred to the bill in terms which, they supposed, implied 
a knowledge on his part that the plaintiffs were the rightful 
owners. The defendants objected to the bill's going to the 
jury without further proof of the indorsement; but the court 
determined that it should go with the affidavit to the jury, 
who might be at liberty to infer from thence that the indorse- 
ment was made by Randall. To this opinion the counsel for 
the defendants in the Circuit Court excepted, and this court 
is divided on the question whether the exception ought to be 
sustained. 

On the trial it appeared that Coolidge & Co. held the 
proceeds of part of the cargo of the Hiram, claimed by 
Cornthwaite & Cary, which had been captured and libelled as 

^his case is cited in Benjamin's Chalmers Bills, Notes and 
Checks; Norton on Bills and Notes, 97; Wood's Byles on Bills 
and Notes, 304, 308; Paige's Illustrative Cases on Commercial 
Paper, 60; Chitty on Bills, 284, 286; Daniel on Negotiable Instru- 
ments, 551, 560, 1799; Story on Bills of Exchange, 249, 462; 
Tiedeman on Commercial Paper, 220, 226, 500. See also the fol- 
lowing well discussed cases, Bank of Michigan v. Ely, 17 Wend. 
(N. Y.), 508 (1837); Exchange Bank v. Hubbard, 62 Fed. Rep., 
112; Bank v. Recknagel, 109 N. Y., 482; Lindley v. First Nat. 
Bk., 76 la., 629; Exchange Bank v. Rice, 98 Mass., 288; Frank- 
lin Bk. v. Lynch, 52 Md., 270. 



SEC. 290.] COOLIDGE ET AL. V. PAYSON ET AL. 215 

lawful prize. The cargo had been acquitted in the District 
and Circuit Courts, but, from the sentence of acquittal, the 
captors had appealed to this court. Pending the appeal 
Cornthwaite & Cary transmitted to Coolidge & Co. a bond of 
indemnity, executed at Baltimore with scrolls in the place of 
seals, and drew on them for two thousand seven hundred dol- 
lars. This bill was also payable to the order of Randall, and 
indorsed by him to Payson & Co. It was presented to Cool- 
idge & Co., and protested for non-acceptance. After its 
protest Coolidge & Co. wrote to Cornthwaite & Cary a letter, 
in which, after acknowledging the receipt of a letter from them, 
with the bond of indemnity, they say, • ' This bond, conform- 
ably to our laws, is not executed as it ought to be; but it may 
be otherwise in your state. It will therefore be necessary to 
satisfy us that the scroll is usual and legal with you instead of 
a seal. We notice no seal to any of the signatures. " • • We 
shall write our friend Williams by this mail, and will state to 
him our ideas respecting the bond, which he will probably de- 
termine. If Mr. W. feels satisfied on this point, he will in- 
form you, and in that case your draft for two thousand dollars 
will be honored." 

On the same day Coolidge & Co. addressed a letter to 
Mr. Williams, in which, after referring to him the question 
respecting the legal obligation of the scroll, they say, "You 
know the object of the bond, and, of course, see the propriety 
of otfr having one, not only legal, but signed «by sureties of 
unquestionable responsibility, respecting which we shall wholly 
rely on your judgment. You mention the last surety as being 
responsible; what think you of the others?" 

In his answer to this letter, Williams says, ' ' I am assured 
that the bond transmitted in my last isisufficientjfor the pur- 
pose for which it was given, provided [the partiesn possess the 
means; and of the last signer, I have no hesitation in express- 
ing my firm belief of his being able to meet the whole amount 
himself. Of the principals I cannot speak with so much con- 
fidence, not being well acquainted with their resources. Un- 
der all circumstances, I should not feel [inclined to withhold 
from them any portion of the funds for which the bond was 
given. " 



2l6 COOLIDGE ET AL. V, PAYSON ET AL. [CHAP. 6, 

On the day on which this letter was written, Cornth- 
waite & Cary called on Williams, to inquire whether he had 
satisfied Coolidge & Co. respecting the bond. Williams 
stated the substance of the letter he had written, and read to 
him a part of it. One of the firm of Payson & Co. also 
called on him to make the same inquiry, to whom he gave the 
same information, and also read from his letter book the let- 
ter he had written. 

Two days after this, the bill in the declaration mentioned 
was drawn by Cornthwaite & Cary, and paid to Payson & Co. 
in part of the protested bill of two thousand seven hundred 
dollars, by whom it was presented to Coolidge & Co. , who re- 
fused to accept it, on which it was protested, and "this action 
brought by the holders. 

On this testimony, the counsel for the defendants insisted 
that the plaintiffs were not entitled to a verdict. 

The court, instructed the jury, that if they were satisfied 
that Williams, on the application of the plaintiffs, made after 
seeing the letter from Coolidge & Co. to Cornthwaite & Cary, 
did declare that he was satisfied with the bond referred to in 
that letter, as well with respect to its execution, as to the 
sufficiency of the obligors to pay the same; and that the plain- 
tiffs, upon the faith and credit of the said declaration, and 
also of the letter to Cornthwaite & Cary, and without having 
seen or known the contents of the letter from Coolidge & Co. 
to Williams, did receive and take the bill in the declaration 
mentioned, they were entitled to recover in the present action: 
and that it was no legal objection to such recovery that the 
promise to accept the present bill was made to the drawers 
thereof, previous to the existence of such bill, or that the bill 
had been taken in part payment of a pre-existing debt, or that 
the said Williams, in making the declarations aforesaid, did 
exceed the private instructions given to him by Coolidge & 
Co. in their letter to him. 

To this charge the defendants excepted. A verdict was 
given for the plaintiffs, and judgment rendered thereon, which 
judgment is now before this court on a writ of error. 

The letter from Coolidge & Co. to Cornthwaite & Carey 
contains no reference to their letter to Williams which might 



SEC. 29a.] COOLIDGE ET AL. V. PAYSON ET AL. 217 

suggest the necessity of seeing that letter, or of obtaining in- 
formation respecting its contents. They refer Cornthwaite & 
Cary to Williams, not for the instructions they had given him, 
but for his judgment and decision on the bond of indemnity. 
Under such circumstances, neither the drawers nor the hold- 
ers of the bill could be required to know, or could be affected 
by, the private instructions given to Williams. It was enough 
for them, after seeing the letter from Coolidge & Co. to 
Cornthwaite & Cary, to know that Williams was satisfied 
with the execution of the bond and the sufficiency of the ob- 
ligors, and had informed Coolidge & Co. that he was so satis- 
fied. 

This difficulty being removed, the question of law which 
arises from the charge given by the court to the jury is this: 
Does a promise to accept a bill amount to an acceptance to a 
person who has taken it on the credit of that promise^ al- 
though the promise was made before the existence of the bill, 
and although it is drawn in favor of a person who takes it 
for a pre-existing debt? 

In the case of Pillans & Rose v. Van Mierop & Hopkins 
(1765), 1 the credit on which the bill was drawn was given be- 
fore the promise to accept was made, and the promise was 
made previous to the existence of the bill. Yet in that case, 
after two arguments, and much consideration, the Court of 
King's Bench (all the judges being present and concurring in 
opinion) considered the promise to accept as an acceptance. 

Between this case and that under consideration of the 
court, no essential distinction is perceived. But, it is con- 
tended, that the authority of the case of Pillans & Rose v. 
Van Mierop & Hopkins is impaired by subsequent decisions. 

In the case of Pierson v. Dunlop et al.,*the bill was 
drawn and presented before the conditional promise was made 
on which the suit was instituted. Although, in that case, the 
holder of the bill recovered as on an acceptance, it is supposed 
that the principles laid down by Ld. Mansfield, in delivering 
his opinion, contradict those laid down in Pillans & Rose v. 
Van Mierop & Hopkins. His lordship observes, "it has been 

1 3 Burr., 1663 (1765). 
'Cowp., 571. 



2l8 COOLIDGE ET AL. V. PAYSON ET AL. [CHAP. 6, 

truly said, as a general rule, that the mere answer of a mer- 
chant to the drawer of a bill, saying, 'he will duly honor it,' 
is no acceptance, unless accompanied with circumstances 
which may induce a third person to take the bill by indorse- 
ment; but if there are any such circumstances, it may amount 
to an acceptance, though the answer be contained in a letter 
to the drawer." 

If the case of Pillans & Rose v. Van Mierop & Hopkins 
had been understood to lay down the broad principle that a 
naked promise to accept, amounts to an acceptance, the case 
of Pierson v. Dunlop, certainly narrows that principle so far 
as to require additional circumstances proving that the person 
on whom the bill was drawn, was bound by his promise, either 
because he had funds of the drawer in his hands, or because 
his letter had given credit to the bill, and induced a third 
person to take it. 

It has been argued, that those circumstances to which 
Ld. Mansfield alludes, must be apparent on the face of the 
letter. But the court can perceive no reason for this opinion. 
It is neither warranted by the words of Ld. Mansfield, nor by 
the circumstances of the case in which he used them. • * The 
mere answer of a merchant to the drawer of a bill, saying he 
will duly honor it, is no acceptance unless accompanied with 
circumstances," etc. The answer must be "accompanied with 
circumstances;" but it is not said that the answer must contain 
those circumstances. In the case of Pierson v. Dunlop, the 
answer did not contain such circumstances. They were not 
found in the letter, but were entirely extrinsic. Nor can the 
court perceive any reason for distinguishing between circum- 
stances which appear in the letter containing the promise, and 
those which are derived from other sources. The great 
motive for construing a promise to accept, as an acceptance, 
is, that it gives credit to the bill, and may induce a third 
person to take it. If the letter be not shown, its contents, 
whatever they may be, can give no credit to the bill; and if 
it be shown, an absolute promise to accept will give all the 
credit to the bill which a full confidence that it will be ac- 
cepted can give it. A conditional promise becomes absolute 
when the condition is performed. 



SEC. 29a.] COOLIDGE ET AL. V. PAYSON ET AL. 219 

In the case of Mason v. Hunt (1779) 1 , Ld. Mansfield 
said, "there is no doubt but an agreement to accept may 
amount to an acceptance; and it may be couched in such 
words as to put a third person in a better condition than the 
drawee. If one man, to give credit to another, makes an 
absolute promise to accept his bill, the drawer, or any other 
person, may show such promise upon the exchange to get 
credit; and a third person, who should advance his money 
upon it, would have nothing to do with the equitable circum- 
stances which might subsist between the drawer and acceptor. '' 

What is it that * • the drawer, or any other person, may 
show upon the exchange?" It is the promise to accept — the 
naked promise. The motive to this promise need not, and 
cannot be examined. The promise itself, when shown, gives 
the credit; and the merchant who makes it is bound by it. 

The cases cited from Cowper 2 and Douglass are, it is 
admitted, cases in which the bill is not taken for a pre-existing 
debt, but is purchased on the credit of the promise to accept. 
But in the case of Pillans v. Van Mierop, the credit was 
given before the promise was received or the bill drawn; and 
in all cases the person who receives such a bill in payment of 
a debt, will be prevented thereby from taking other means to 
obtain the money due to him. Any ingredient of fraud 
would, unquestionably, affect the whole transaction; but the 
mere circumstance, that the bill was taken for a pre-existing 
debt had not been thought sufficient to do away with the effect 
of a promise to accept. 

In the case of Johnson and another v. Collings (1800),* 
Ld. Kenyon shows much dissatisfaction with the previous 
decisions on this subject; but it is not believed, that the judg- 
ment given in that case would, even in England, change the 
law as previously established. 

In the case of Johnson v. Collings, the promise to accept 
was in a letter to the drawer, and is not stated to have been 
shown to the indorser. Consequently, the bill does not ap- 
pear to have been taken on the credit of that promise. It 

1 1 Doug., 296 (1779). 

'Cowper, 571. 

3 1 East, 98 (1800). See Sec. 29 of this text. 



2 20 COOLIDGE ET AL. V. PAYSON ET AL. [CHAP. 6, 

was a mere naked promise, unaccompanied with circumstan- 
ces which might give credit to the bill. The counsel con- 
tended, that this naked promise amounted to an acceptance; 
but the court determined otherwise. In giving his opinion, 
Le Blanc, J., lays down the rule in the words used by Ld. 
Mansfield, in the case of Pierson v. Dunlop. 

Ld. Kenyon said, in that case, that ' ' this was carrying 
the doctrine of implied 'acceptances to the utmost verge of 
the law; and he doubted whether it did not even go beynd it. 
In Clarke and others v. Cock, 8 the judges again express their 
dissatisfaction with the law as established, and their regret 
that any other act than a written acceptance on the bill had 
ever been deemed an acceptance. Yet they do not under- 
take to overrule the decisions which they disapprove. On 
the contrary, in that case (Clarke v. Cock), they unanimously 
declared a letter to the drawer promising to accept the bill, 
which was shown to the person «who held it, and took it on 
the credit of that letter, to be a virtual acceptance. It is 
true, in the case of Clarke v. Cock, the bill was made before 
the promise was given, and the judges, in their opinions, use 
some expressions which indicate a distinction between bills 
drawn before and after the date of the promise; but no case 
has been decided on this distinction; and in Pillans & Rose v. 
Van Minerop & Hopkins, the letter was written before the 
bill was drawn. 

The court can perceive no substantial reason for this dis- 
tinction. The prevailing inducement for considering a promise 
to accept, as an acceptance, is that credit is thereby given to 
the bill. Now, this credit is given as entirely by a letter 
written before the date of the bill as by one written after- 
wards. 

It is of much importance to merchants that this question 
should be at rest. Upon a review of the cases which are re- 
ported, this court is of opinion, that a letter written within 
a reasonable time before or after the date of a bill of ex- 
change, describing it in terms not to be mistaken, and prom- 
ising to accept it, is, if shown to the person who afterwards 

l 4 East, 57. 



SEC. 29a.] COOLIDGE ET AL. V. PAYSON ET AL. 2 2 1 

takes the bill on the credit of the letter \ a verbal acceptance 
binding the person who makes the promise. This is such a 
case. There is, therefore, no error in the judgment of the 
circuit court, and it is affirmed with costs. 
Judgment affirmed. 1 

^ee the case of Boyce v. Edwards, 4 Peters, 121; Parsons v. 
Armor & Oakey, 3 Peters, 426; Townsley v. Sumrall, 2 Peters, 
182. In order that a promise to accept a bill not yet drawn shall 
be binding upon the promissor the bill must be taken: 

1 st, by the holder upon the faith of the promise; 

2d, the bill when drawn must follow the terms of the promise; 

3rd, the promise should describe the bill to be drawn; 

4th, the bill must be drawn within a reasonable time; 

5 th, the promise must be unconditional; and, 

6th, the promise should be in writing. (In some jurisdic- 
tions it must be in writing. ) 



222 HOARE ET AL. V. CAZENOVE ET AL. [CHAP. 6, 

SECTION 30. 

A BILL OF EXCHANGE WHEN DISHONORED MAY BE 
ACCEPTED FOR HONOR OR SUPRA PROTEST. SUCH 
ACCEPTOR IS NOT LIABLE THEREON UNTIL THE BILL 
HAS BEEN PRESENTED TO THE ORIGINAL DRAWEE 
FOR PAYMENT AT MATURITY AND AGAIN PROTESTED. 

HOARE ET AL. v. CAZENOVE ET AL.» 

In the Court op King's Bench, Nov. 27TH, 1812. 

[Reported in 16 East's Rep., 391.] 

The Form of Action. — In an action by the indorsees 
of the bill of exchange hereinafter set forth against the 
acceptors, the declaration contained the usual averments, 
(the 1st count averring that the bill was presented for pay- 
ment to the drawees and refused, the 2d count omitting that 
averment,) and charged that the bill having been refused 
acceptance by the drawees, and being thereupon duly pro- 
tested for non-acceptance, the defendants, having notice 
thereof, accepted the bill for the honor of the first indorsers. 
The defendants pleaded the general issue; and at the trial 
before Ld. Ellenborcugh, Ch. J. (181 1), a verdict was found 
for the plaintiffs for 816/., subject to the opinion of the court 
on the following case. 

The bill of exchange stated in the declaration was drawn 
by S. Hanbury at Hamburgh, on the 23d of July, 18 10, upon 
Penn and Hanbury of London, in favor of Quevremont 
Balleydier & Co. , for 800/. sterling, at 1 30 days after date. 
It was specially indorsed by Quevremont Balleydier & Co. , to 
Perier Freres; by them to F. Farmbacher, all of whom re- 
side abroad; by F. Farmbacher to Greffuhle, Freres & Co., 
who reside here; and by the latter to the plaintiffs, who are 
bankers in London. The first of the set of bills was trans- 

2 This case is cited in Chitty on Bills, 347, 344, 345 > 349> 35° > 
Daniel on Negotiable Instruments, 521, 1527; Wood's Byles on 
Bills and Notes, 402, 404; Benjamin's Chalmers on Bills, Notes 
and Checks, 53, 181, 229; Story on Bills of Exchange, 121, 123, 
125, 254, 256, 261, 344, 363, 396, 423; Norton on Bills and Notes, 
149, 152; Tiedeman on Commercial Paper, 228, 310, 313; Ames 
on Bills and Notes (Vol. 2), 790. 



SEC. 30.] HOARE ET AL. V. CAZENOVE ET AL. 223 

mitted, with the first special indorsement only, to the de- 
fendants, to procure acceptance: and they accordingly 
presented it for acceptance to Penn & Hanbury, who refused; 
whereupon the defendants caused a protest to be duly made 
for non-acceptance. The second of the set of bills was after- 
wards transmitted, indorsed so as to pass the property of 
Greffuhle, Freres & Co. , with a reference upon the face of the 
bill to the defendants in the case of need. Greffuhle, Freres 
& Co., applied to the defendants for the first bill, and to 
know if it had been accepted: upon which the defendants 
delivered the first bill to them with the following acceptance 
by themselves: 4< accepted under protest for the honor of the 
first indorsers." The bill became due on the 3d of December, 
1 810, but was not presented to the drawees, Penn & Hanbury, 
for payment; nor was it proved to have been protested for 
non-payment. The defendants refused to pay the bill, in con- 
sequence of orders from the first indorsers. If the plaintiffs 
were entitled to recover, the verdict was to stand; if not, a 
non-suit was to be entered. This case was argued in 181 1, 
and the court reserved it for further consideration. 

Decision.— Ld. Ellenborough, Ch. J., delivered the 
judgment. 

This was an action founded upon a set of bills of 
exchange for 800/., accepted by the defendants for the 
honor of the first indorsers. The set was drawn by Samuel 
Hanbury at Hamburgh, 23d July, 18 10, upon Penn & Hanbury 
of London, and was payable to Quevremont Balleydier & Co. , 
at 1 30 days after date. The first of the set was transmitted 
to the defendants, that they might procure acceptance, but 
Penn & Hanbury refused to accept, and the defendants 
caused it to be protested for non-acceptance. The second of 
the set was indorsed to Greffuhle, Freres & Co. ; they applied it 
to the defendants for the first, and the defendants delivered to 
them the first, accepted by themselves, for the honor of the first 
indorsers, that is to say, Quevremont Balleydier & Co. The 
bill became due the 3d of December, 18 10, but was not pre- 
sented to Penn & Hanbury, the drawees, for payment at 
maturity, nor protested for non-payment. In the first count 
it was stated, contrary to the fact, that it was presented to 



224 HOARE ET AL. V. CAZENOVE ET AL. [CHAP. 6, 

the drawees for payment, and refused: in the second count 
this averment was wholly omitted. The defendants, (in con- 
sequence of orders from the first indorsers,) refused to pay it. 

The Nature of the Liability of an Acceptor for 
Honor. — The question, in this case, is, whether a presentment 
to the drawees, Penn & Hanbury, for payment at maturity, 
and a protest for non-payment by them, is, or is not essential 
as a previous requisite to the maintaining an action against 
these defendants, the acceptors for the honor of the first 
indorsers; and this depends upon the nature and obligation of 
an acceptance for the honor of the drawer or indorser. If an 
acceptance in these terms be an engagement by the person 
giving it, that he will pay the bill when it becomes due, and 
entitles the holder to look to him in the first instance, without 
a previous resort to any person, the plaintiffs are in that case 
entitled to recover upon their second count: but if such an 
acceptance be in its nature qualified, and amount to a col- 
lateral engagement only, *. e. , an undertaking to pay if the 
original drawee, upon a presentment to him for payment, 
should persist in dishonoring this bill, and such dishonor by 
him should be notified, by protest, to the person who has 
accepted, for the honor of the indorser, then the necessary 
steps have not been taken upon this bill, and the plaintiffs 
cannot recover. And such, after much consideration, we are 
of opinion is the case. 

It is remarkable that no directly adjudged case upon this 
question is to be found; although the custom of merchants 
relative to this subject, is stated in the case of Brunetti v. 
Lewin, 1 in K. B., affirmed in error in the Exchequer Chamber, 
in favor of the original plaintiff, Brunetti. Lutwytch, in his 
report, says that he could not discover that any exception was 
taken to the validity of the custom, which he states as shortly 
this, 4 ' that if any merchant (for the honor of him to whom 
a foreign bill of exchange was first payable, and who had first 
indorsed the bill to another) shall pay the said bill to the last 
indorsee of it, the bill being before then protested for non- 
payment, then the merchant to whom the bill was first pay- 



1 i Lutw., 896 (1781). 



SEC. 30.] HOARE ET AL. V. CAZENOVE ET AL. 225 

able, and who first indorsed the bill, shall have an action 
against the merchant who first took upon himself the obliga- 
tion to pay the bill for the honor of the drawer (the bill 
having been first protested likewise for non-acceptance \ for 
value of the bill and all charges)." 

Thus two protests, i . e. , for non-payment as well as non- 
acceptance were in this case held necessary by the custom of 
merchants. The immediate point argued in error appears to 
have been whether it was sufficienly shown, agreeably to the 
custom alleged, that payment was, in that case, in fact made 
to the last indorsee, so as to found the claim of the first 
indorser, to payment to be made by the acceptor for honor, 
with the terms of the custom; but it certainly was also open 
to the plaintiff in error, to have insisted upon the validity of 
any part of the custom alleged; of which custom the protest 
for non-payment previously to the payment to the indorsee, 
and the subsequent claim upon the acceptor for honor, was 
a material part. In that case the undertaking for the honor 
of the drawer was not in the form of an acceptance upon the 
bill, but of "a note in writing for the honor of the drawer to 
pay the bill upon return;" but this, "according to Pothier on 
Bills of Exchange," 1 is a mode substituted by " recent usage 
in the place of a signature by the person giving the caution 
on the bill itself;" and though the mode be different, the effect 
is for all substantial purposes the same. 

Malyne, p. 273, in his 5th observation, says (speaking 
of the acceptor for the honor of the bill, whom he had just 
mentioned in his foregoing observation), "if this man at the 
time doth pay the said bill, because the party upon whom it 
was directed doth not, yet he is to first make, before he doth 
pay the same, a protest, with a declaration that he hath paid 
the same for the honor of the bill of exchange, whereby to re- 
ceive the money again of him that hath made the bill of ex- 
change. But it may be said that according to this position in 
Malyne, though a protest may be necessary to be made 
against the drawee by the acceptor for honor, to entitle him to 
recover against the party for whose honor he has accepted, 
yet that such protest for non-payment is not equally necessary 

1 4 Des Avals. 



226 HOAKE ET AL. V. CAZENOVE ET AL. [CHAP. 6, 

to be made against the drawee, to enable any other holder to 
recover against the acceptor for honor himself. 

But the next observation, in same page of Malyne, lays 
down the obligation more generally, and as attaching upon 
every holder of a bill (whether accepted, or not accepted, in 
whose hands it remains unpaid, up to the time of the ap- 
pointed payment), the duty of making a protest for the non- 
payment of it. His words are these: " If a bill of exchange 
be accepted, and nevertheless not paid, and that it be not ac- 
cepted as aforesaid, and remaineth unpaid, then must you 
cause the notary to make a second protest (assuming that the 
bill had been already protested for non-acceptance) for the 
non payment of it. " 

Pothier said: •' When after a protest made for want of 
acceptance on the part of him upon whom the bill is drawn, 
a third person has intervened, and has accepted the bill for 
the honor of the drawer, or some indorser, all agree that at 
the expiration of the time of grace, the protest ought to be 
made not only to him upon whom the bill is drawn, and who 
has refused to accept it, but to the third person, who has ac- 
cepted it for honor. " I am aware that Beawes in his Lex 
Mercatoria, p. 421 s. 43, says, " He that accepts a bill upon 
protest, puts himself absolutely in the stead of the first ac- 
ceptant, and is obliged to make the payment without any ex- 
ception, and the possessor (i. e. the holder) hath the same 
right and law against such an acceptor as he would have had 
against the first intended one, if he had accepted." The lit- 
eral sense of these words certainly seems to place this writer 
at variance with the authorities above cited; and if that were 
necessarily the case, one would not be disposed very readily 
to surrender the custom of merchants, as alleged on record, 
and not questioned in error in the case of Brunetti v. Lewin, 1 
and the positions which are to be found in Malyne and Poth- 
ier (the latter, a most learned and eminent writer upon every 
subject connected with the law of contracts, and intimately 
acquainted with the law merchant in particular). 

The use and convenience, and, indeed, the necessity of a 
protest upon foreign bills of exchange, in order to prove, in 

1 1 Lutw., 896. 



SEC. 30.] HOARE ET AL. V. CAZENOVE ET AL. 2 27 

many cases, the regularity of the proceedings thereupon, is 
too obvious to warrant us in dispensing with such an instru- 
ment in any case where the custom of merchants, as reported 
in the authorities of law, appears to have required it. And, in- 
deed, the reason of the thing, as well as the strict law of the 
case, seems to render a second resort to the drawee proper, 
when the unaccepted bill still remains with the holder; for ef- 
fects often reach the drawee, who has refused acceptance in 
the first instance, out of which the bill may and would be sat- 
isfied, if presented to him again when the period of payment 
had arrived. And the drawer is entitled to the chance of 
benefit to arise from such second demand, or at any rate to 
the benefit of that evidence which the protest affords, that 
the demand has been made duly without effect, as far as such 
evidence may be available to him for purposes of ulterior re- 
sort. Upon the whole, therefore, we are of opinion that the 
postea must be delivered to the defendants.* 

*The Contract of an Acceptor Supra Protest. — When a 
person accepts a bill for honor he thereby agrees that he will, on 
due presentment for payment at maturity, pay the bill according 
to the terms of his acceptance, provided it shall not have been 
paid by the drawee and provided further that it shall have been 
protested for non-payment and notice of dishonor duly given him. 
Schofield v. Bayard et. al., 3 Wend., 488; Baring v. Clark, 19 
Pick., 220. 

Acceptance for Honor. — For Whom Made. — Unless the 
acceptance for honor expressly states for whom it is made it is to 
be presumed to have been made for the honor of the drawer. 

Acceptor for Honor — To Whom Liable. — An acceptor 
for honor is liable to the holder and to all parties to the bill sub- 
sequent to the party for whose honor he has accepted it. Hoare 
v. Cazenove, 16 East, 391. 



2 28 PRICE V. NEAL. [CHAP. 6, 

SECTION 31. 

THE DRAWEE, BY ACCEPTING A BILL, THEREBY ADMITS 

THE GENUINENESS OF THE DRAWER'S SIGNATURE 

AND IS THEREAFTER ESTOPPED FROM DENYING THE 

SAME.* 

PRICE v. NEAL. 1 

In the King's Bench, Nov. i6th, 1762. 

[Reported in J Burrows, 1354."} 

The Form of Action. — This was an action upon the 
case brought by Price against Neal; wherein Price declares 
that the defendant Edward Neal was indebted to him in 80/. 
for money had and received to his the plaintiff's use; and 
damages were laid to 100/. The general issue was pleaded; 
and issue joined thereon. 

The Facts. — It was proved at the trial, that a bill was 
drawn as follows: "Leicester, 22 November, 1760. Six 
weeks after date pay Mr. Rogers Ruding or order forty pounds, 
value received for Mr. Thomas Ploughfor; as advised by, Sir, 
your humble servant Benjamin Sutton. To Mr. John Price 
in Bush-lane, Cannon-street, London; indorsed *R. Ruding, 
Antony Topham, Hammond and Laroche. Received the 
contents, James Watson and Son: witness Edward Neal. > " 

♦This question arose for the first time in 1733, in the case of 
Jenys v. Fawler et al. (2 Strange, 946). This was an action by 
an indorsee against the acceptor. The defendant (acceptor) 
offered to prove that the bill was forged, by calling persons who 
were acquainted with the handwriting of the drawer, and who 
would swear that they did not believe it to be his hand. But the 
Chief Justice held that such evidence was not admissible, from the 
danger to negotiable contracts, and because a man might with de- 
sign write contrary to his usual method. He strongly intimated 
that even actual proof of forgery would not excuse the defendant 
against their own acceptance, which had given the bill credit to 
the indorsee (plaintiff). 

1 This case is also cited in Daniel on Negotiable Instruments, 
533, 1225; Norton on Bills and Notes, 58, 143, 144, 313; Wood's 
Byles on Bills and Notes, 319, 493; Benjamin's Chalmers on Bills, 
Notes and Checks, 242; Story on Bills, 113, 262, 263, 411; Chitty 
on Bills of Exchange, 307, 261, 291, 361, 431, 504, 638; Tiede- 
man on Commercial Paper, 230. 



SEC. 31.] PRICE V. NEAL. 229 

That this bill was indorsed to the defendant for a valu- 
able consideration; and notice of the bill left at the plaintiff's 
house, on the day it became due. Whereupon the plaintiff sent 
his servant to call on the defendant, to pay him the said sum 
of 40/. and take up the said bill: which was done accordingly. 

That another bill was drawn as follows: "Leicester, ist 
February, 1761. Sir, six weeks after date pay Mr. Rogers 
Ruding or order forty pounds, value received for Mr. Thomas 
Ploughfor; as advised by, Sir, your humble servant Benjamin 
Sutton. To Mr. John Price in Bush-lane, Cannon-street, 
London." That this bill was indorsed, "R. Ruding, Thomas 
Watson and Son. Witness for Smith, Right & Co/' That 
the plaintiff accepted this bill, by writing on it, "accepted, 
John Price;" and that the plaintiff wrote on the back of it, 
"Messieurs Freame & Barclay, pray pay forty pounds for 
John Price." 

That this bill so accepted was indorsed to the defendant 
for a valuable consideration, and left at his bankers for pay- 
ment: and was paid by order of the plaintiff, and taken up. 

Both these bills were forged by one Lee, who has been 
since hanged for forgery. 

The defendant Neal acted innocently and bona fide y 
without the least privity or suspicion of the said forgeries 
or of either of them; and paid the whole value of those bills. 

The jury found a verdict for the plaintiff, and assessed 
damages 80/. and costs 40$. subject to the opinion of the 
court upon this question: — 

"Whether the plaintiff, under the circumstances of this 
case, can recover back, from the defendant, the money he 
paid on the said bills, or either of them." 

Claim of the Plaintiff. — The plaintiff argued that he 
ought to recover back the money, in this action; as it was 
paid by him by mistake only, upon the supposition "That 
these were true genuine bills;" and as he could never recover 
it against the drawer, because in fact no drawer exists; nor 
against the forger, because he is hanged. 

He owned that in a case at Guildhall, of Jenys v. Faw- 

14 



f 



230 PRICE V. NEAL. [CHAP. 6, 

ler et al. 1 (an action by an indorsee of a bill of exchange 
brought against the acceptor), Ld. Raymond would not admit 
the defendants to prove it a forged bill, by calling persons 
acquainted with the hand of the drawer, to swear "That 
they believed it not to be so;" and he even strongly inclined, 
"That actual proof of forgery would not excuse the defend- 
ants against their own acceptance, which had given the bill a 
credit to the indorsee." 

But he urged, that in the case now before the court, the 
forgery of the bill does not rest in belief and opinion only; 
but has been actually proved, and the forger executed for it. 

Thus it stands even upon the accepted bill. But the 
plaintiff's case is much stronger upon the other bill which was 
not accepted. It is not stated, * * That that bill was accepted 
before it was negotiated? on the contrary, the consideration 
for it was paid by the defendant, before the plaintiff had seen 
it. So that the defendant took it upon the credit of the in- 
dorsers, not upon the credit of the plaintiff; and therefore the 
reason, upon which Ld. Raymond grounds his inclination to 
be of opinion • * That actual proof of forgery would be no ex- 
cuse," will not hold here. 

Claim of Defendant. — The defendant argued that the 

plaintiff was not entitled to recover back this money from the 
defendant. 

He denied it to be a payment by mistake; and insisted 
that it was rather owing to the negligence of the plaintiff; who 
should have inquired and satisfied himself • * Whether the bill 
was really drawn upon him by Sutton, or not." Here is no 
fraud in the defendant; who is stated " to have acted inno- 
cently and bona fide, without the least privity or suspicion of 
the forgery; and to have paid the whole value for the bills." 

(Ld. Mansfield stopped him from going on; saying that 
this was one of those cases that could never be made plainer 
by argument.) 

Decision. — It is an action upon the case, for money had 
and received to the plaintiffs use. In which action, the plain- 
tiff can not recover the money, unless it be against conscience 

1 2 Strange, 946. See other cases upon same point: White v. 
Continental Bk., 64 N. Y., 316; Ellis v. Ohio Ins. Co., 4 Ohio 
., 628; Bank of U. S. v. Bank of Georgia, 10 Wheat, 333; Peo- 
R. R. Co. v. Neill, 66 111., 269. 



SEC. 31.] PRICE V. NEAL. 23 1 

in the defendant, to retain it: and great liberality is always 
allowed, in this sort of action. 

But it can never be thought unconscientious in the de- 
fendant, to retain this money, when he has once received it 
upon a bill of exchange indorsed to him for a fair and valuable 
consideration, which he has bona fide paid, without the least 
privy or suspicion of any forgery. 

Here was no fraud; no wrong. It was incumbent upon 
the plaintiff, to be satisfied, "That the bill drawn upon him 
was the drawer s hand" before he accepted or paid it: but it 
was not incumbent upon the defendant, to inquire into it. 
Here was notice given by the defendant to the plaintiff of a 
bill drawn upon him: and he sends his servant to pay it and 
take it up. The other bill, he actually accepts: after which 
acceptance, the defendant innocently and bona fide discounts 
it. The plaintiff lies by, for a considerable time after he has 
paid these bills; and then found out "That they were forged;" 
and the forger comes to be hanged. He made no objection 
to them, at the time of paying them. Whatever neglect 
there was, was on his side. The defendant had actual en- 
couragement from the plaintiff himself, for negotiating the 
second bill, from the plaintiff's having without any scruple or 
hesitation paid the first: and he paid the whole value, bona 
fide. It is a misfortune which has happened without the de- 
fendant's fault or neglect. If there was no neglect in the 
plaintiff, yet there is no reason to throw off the loss from one 

The Drawee of a Bill or Check Must Know the Hand- 
writing of the Drawer. — The rule is well settled that the drawee 
of a check is bound, at his peril, to know the handwriting of the 
drawer; and if he pays a check to which the signature of the 
drawer was forged, he must suffer the loss, as between himself and 
the drawer, or an innocent holder to whom he has made payment. 
As between himself and the drawer, he undertakes that he will pay 
no checks, except such as have the genuine signature of the drawer,, 
which he assumes and is presumed to know. 

The drawee is presumed to know or to be acquainted with the 
signature of the drawer and will not be permitted to recover the 
money back from an innocent holder who is not presumed to know 
or to have such knowledge. 

Drawee not Presumed to be Acquainted with the 
Handwriting in the Body of a Bill or Check. — While the 
drawee is presumed to be acquainted with the handwriting of the 



I 



232 PRICE V. NEAL. [CHAP. 6, 

innocent man upon another innocent man: but, in this case, 
if there was any fault or negligence in any one, it certainly 
was in the plaintiff, and not in the defendant. 

Rule. — That the postea be delivered to the defendant. 

drawer, there is no presumption that he is acquainted with the 
handwriting in the body of the bill or check, in as much as these 
contracts are often filled up in the handwriting of persons other 
than the drawer. If the rule were otherwise, the drawee could 
never safely pay a check filled up in a handwriting that was new to 
him, until he had first satisfied himself by inquiry from the drawer, 
whether the contract had been properly filled up. Such a rule 
would greatly interfere and delay commercial transactions and 
would to a very large extent defeat the very purpose for which these 
contracts were created. The rule is, therefore, well settled, that 
if the drawee, in good faith, and without negligence, pay even to 
an innocent holder a bill or check, which has been fraudulently al- 
tered in its body, — in amount — after it left the hands of the drawer, 
he will, ordinarily, be entitled to recover back, from the persons to 
whom it was paid, the excess over the true amount of the check. 
In the Bank of Commerce v. Union Bank, 3 Const., 234, Ruggle, J., 
in discussing this specific question says: 'f The payment of a bill 
of exchange by the drawee is ordinarily an admission of the draw- 
er's signature, which he is not, afterwards, at liberty to dispute. 
The 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 (drawee), from his im- 
puted negligence, must bear the loss." To support this statement 
Ruggles, J., cites Price v. Neal, supra, and Wilkinson v. Suteridge, 
1 Strange, 648. See for a general discussion of these questions, U. 
S. Bank v. Bank of Georgia, 10 Wheaton, 333, 353; Canal Bank v. 
Albany Bank, 1 Hill, 287, 295; Redington v. Woods, 45 Cal., 406, 
418; Holt v. Ross, 54 N. Y., 472, 475; Peoria Ry. Co. v. Neill, 16 
111., 269, 270; McKleroy v. Southern Bank, 14 La. An., 458;Jenys 
v. Fawler, 2 Strange, 946 (1732); Ellis v. Ohio Life etc., Co., 4 
Ohio St., 628; Goetz v. Bank, 119 U. S., 556. 

What the Drawet Warrants or Admits by Accepting a 
Bill — The General Rule. — It may be stated as a general rule 
that the drawee by his acceptances admits and is therefore estop- 
ped from denying: 

1. The signature of the drawer. 

2 . That he has funds, in his hands, of the drawer with which 
to pay the bill. 

3. That the drawer has capacity to draw, j. *., that the 
drawer is not an infant, a bankrupt, or a fictitious person; and 

4. That the payee named in the bill has full capacity to in- 
dorse the bill. Hortsman v. Henshaw, n How., 177; Braith- 
waite v. Gardnier, 8 Q. B., 473; Taylor v. Croker, 4 Esp., 189; 
Drayton v. Dale, 2 Barn. & C, 293. 



SEC. 32.] BANK OF COMMERCE V. UNION BANK. 233 

SECTION 32. 

THE DRAWEE, BY ACCEPTING A BILL, IS NOT THEREBY 
ESTOPPED FROM SHOWING, SUBSEQUENTLY, THAT 
THE BODY OF THE BILL HAS BEEN ALTERED. 

BANK OF COMMERCE v. UNION BANK. 1 

In the Court of Appeals of New York, April, 1850. 

[Reported in 3 Comstock, 230; 3 N. K, 230.] 

The Form of Action. — The Bank of Commerce brought 
assumpsit in the Superior Court of the city of New York, 
against the Union Bank, to recover money paid by mistake. 
On the trial before Sanford, J., the case was this: 

On the 1 8th of December, 1847, the New Orleans Canal 
and Banking Company drew a draft on the Bank of Commerce 
in New York, payable to the order of "J. Durand," for one 
hundred and five dollars. After the draft was issued it was 
fraudulently altered in several respects, and among others, by 
the substitution of the word " thousand" for "hundred," and 
the name * 4 Bonnett " instead of "Durand," so that it ap- 
peared to be a draft for one thousand and five (instead of one 
hundred and five) dollars, and payable to the order of J. 
Bonnet (instead of J. Durand). In this altered condition the 
Union Bank in New York received the draft from the State 
Bank of Charleston for collection, and credited the amount to 
that bank. The Bank of Commerce, on the draft being pre- 
sented by the Union Bank, paid it to the latter. Two days 
afterwards the Bank of Commerce received advices from the 
New Orleans Canal and Banking Company, and then ascer- 
tained the alterations in the draft. Thereupon the draft was 
returned to the Union Bank, and the money, which had been 
paid, demanded; but payment was refused. 

The evidence being closed, the court charged the jury 

1 This case is also cited in Daniel on Negotiable Instruments, 

533> 349 a > 54o, i3 6l > I 3 62 > J 3 8 4, 1654a, 165 1, 1659; Norton on 
Bills and Notes, 58, 143, 145, 148, 238; Story on Bills of Ex- 
change, 113, 264; Tiedeman on Commercial Paper, 230, 394, 399, 
451; Benjamin's Chalmers on Bills, Notes and Checks, 215; Bige- 
low on Bills and Notes, 188. 



234 BANK OF COMMERCE 0. UNION BANK. [CHAP. 6, 

that if they were satisfied the draft had been altered in the 
manner before mentioned, after it was issued by the drawers, 
and that the plaintiffs paid the amount of it, as altered, by 
mistake, and without knowledge of or reason to suspect the 
alterations, they were entitled to recover the amount of money 
so paid. Also that the rule requiring a banker to know the 
handwriting of his customer, as to the signature to a check or 
draft, did not extend to the filling up of the body thereof; 
and that paying the draft in question under the circumstances 
was not of itself evidence of any negligence or want of due 
caution on the part of the plaintiffs. There was an exception 
to the charge and to the refusal of the court to charge certain 
propositions as requested. The plaintiffs had a verdict for 
$ I i035-38, which the Superior Court refused to set aside, and 
after judgment the defendants appealed to this court. 

The Claim of Appellants. — The appellants claimed: — 
ist. That there is no rule that the banker must know the 
handwriting of his customer as to his signature, but the rule 
is "that the banker shall take care that he do not pay away 
his customer's money without sufficient authority for that pur- 
pose; and if paid on a forged order, he must bear the loss, 
and it is immaterial whether the order was forged wholly or 
in part. It is the banker's duty to see that the check is genu- 
ine in all respects. 1 The attempt to establish the principle 
that a different degree of scrutiny is required in examining the 
body of a draft by the person on whom it is drawn, from that 
required in examining the signature of the drawer, is utterly 
fallacious and ought to be discountenanced. 

2d. The second proposition laid down in the second 
division of the judge's charge, is "that paying the draft, under 
the circumstances, was not of itself evidence of any negli- 
gence or want of due caution on the part of the plaintiffs." 
This assumes that which it is the province of the jury to find. 
The jury were to judge of circumstances, and of negligence 
or no negligence. 2 

1 Hall v. Fuller, 5 Barn. & Cress., 750; Chitty on Bills, 288, 
ed. of 1839; see also Smith v. Mercer, 6 Taunt., 75. 

'Price v. Neal, 3 Burr., 1355. 



SEC. 32.] BANK OF COMMERCE V. UNION BANK. 235 

3rd. The court erred in refusing to charge the jury, as 
requested, that the drawee of a draft is bound, before accept- 
ing or paying the same, to know its genuineness, and it is 
negligence in him not to inform himself whether the draft is 
genuine or not; and if he accepts or pays it (unless upon mis- 
representation), that is, an admission of its genuineness, 
which concludes him. 1 

4th. Even if there was no negligence on the part of the 
plaintiff — still, if there were none (and no fraud) on the part 
of the defendants, there is no reason why one innocent party 
should suffer rather than the other, and the law therefore 
leaves the parties in the same condition in which it found 
them. 2 If, when the defendants presented the draft in ques- 
tion for payment, they held it in good fath, and for a valuable 
consideration; or if the party from whom they received it so 
held it, when he passed it to them, and if upon such presenta- 
tion the plaintiff's bank paid the amount of it to them, with- 
out being induced to do so by any fraud, deceit, or untrue 
representation of the defendants, this action could not be 
maintained. 

5th. The only ground upon which the respondent claims 
a right to recover in this case, is that the amount of the 
altered draft was paid by mistake. That action can only be 
maintained where it is against conscience for the defendant to 
retain the money. Here there is no pretense that the appel- 
lants can not conscientiously retain the money, for they have 
paid out in good faith, and without fault, all that they claim 
of respondents. 8 

The Claim of Respondents. — The respondents claimed: 

1 Price v. Neal, 3 Burr., 1355; Markle v. Hatfield, 2 John., 
462, last paragraph in opinion of Kent, C. J. ; Bass v. Kline, 4 
Maule & Selwyn (opinion of Dampier, J.,), p. 15; Smith v. Mer- 
cer, 6 Taunt., 75; Story on Bills, § 113; U. S. Bank v. Bank of 
Georgia, 10 Wheat., 333. 

2 Cases before cited, and Bank of Gloucester v. Salem Bank, 
17 Mass., 33. 

1 See rule laid down by Ld. Mansfield in Price v. Neal, before 
cited; Brisbane v. Dacres, 5 Taunt., 142; Moses v. Macfarlan, 2 
Burr., 1012. 



236 BANK OF COMMERCE V. UNION BANK. [CHAP. 6, 

1st. That where money is paid under mistake of facts 
it may be recovered back. 1 

2d. The Bank of Commerce paid the money through 
mistake of facts. The forged alterations in the amount of 
the draft being without their knowledge at the time they paid 
it, they are entitled to recover back the sum paid. The rule 
requiring a banker to know the signature of his customer to 
a check or draft, does not extend to the filling up of the body 
of the instrument. % So where a party has procured payment 
of forged or altered paper without indorsing his name on it, 
yet he must pay back the money, although he may have paid 
it over to the party of whom he was the agent. 8 

3rd. The party paying has a right to recover his money 
as well where the forgery is that of the indorsees name, as 
where it is an alteration of the amount for which the bill was 
drawn. In this case the draft was assignable only by the in- 
dorsement of Durand, in whose favor it was drawn. It lacks 
that indorsement, and no title therefore ever passed either to 
the Charleston Bank or to the Union Bank. 4 

4th. There is an implied warranty in the transfer of 
every negotiable instrument that it is not forged — and the 
actual indorsement of this draft by the Union Bank, was an 
express averment, and a guaranty to the Bank of Commerce 
that it was not forged or altered. It was an assurance of its 

1 Chit, on Cont ., Am. ed. of 1844, p. 626, and cases cited in 
notes; Chitty on Bills, Am. ed. of 1849, P- 4 2 5> 2 Smith's Lead. 
Cas., p. 237, Law Lib., vol. 28, new series, p. 269, and notes; 
Potter v. Everett, 2 Hall, 252; Mowatt v. Wright, 1 Wend., 355; 
Burr v. Veeder, 3 id. 412; Waite v. Leggett, 8 Co wen, 195; Union 
Bank v. U. S, Branch Bank, 3 Mass., 74; Garland v. Salem Bank, 
9 id. 389; Lazell v. Miller, 15 id., 207. 

2 Chitty on Bills, ed. of 1849, p. 245, and cases cited; Jones 
v. Ryde, 5 Taunt., 488; Bruce v. Bruce, id. 495; Merchants' 
Bank of New York v. Exchange Bank of New Orleans, 16 Louis 

Rep., 457- 

'Fuller v. Smith, 1 C. & P., 197; S. C. Ryan & Moody, 49; 
Chitty on Bills, ed. of 1849, P- 2 45- 

* Chitty on Bills, ed. of 1849, p. 260, and cases cited; Smith 
v. Chester, 1 Term. Rep., 654; Dick et al. v. Leverich, 11 Louis. 
Rep., 573; Canal Bank v. Bank of Albany, 1 Hill, 287; Talbot v. 
Bank of Rochester, 1 id. 295; Coggill v. Am. Ex. Bank, I 
Comst., 11. 



SEC. 32.] BANK OF COMMERCE V. UNION BANK. 237 

genuineness in every respect, save the signature of the 
drawer. 1 

Decision. — 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 controversy 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 can not compel the holder to whom he 
paid the bill, to restore the money, unless the holder be in 
some way implicated in the fraud. 2 This rule is founded on 
the supposed negligence of the drawee in failing by an exam- 
ination of the signature, when the bill is presented, to detect 
the forgery and refuse payment. The drawee is supposed to 
know the handwriting of the drawer, #ho is usually his cus- 
tomer or correspondent. As between him, therefore, and an 
innocent holder, the payer, from this imputed negligence, 
must bear the loss. In Price v. Neal, the plaintiff had paid 
to Neal, the holder, two bills of exchange, purporting to be 
drawn on him by Sutton, whose name was forged. On dis- 
covery of the forgery, Price brought his action against Neal, 
to recover back the money as paid by mistake. Ld. Mans- 
field in delivering the opinion of the court in favor of the de- 
fendant, 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 imcumbent 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. Lutwidgej* Ld. C. J. Pratt was of opin- 
ion that 44 acceptance was a sufficient 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 

'Chitty on Bills, ed. of 1849, p. 245; Jones v. Ryde, 5 Taunt, 
488; Wilkinson v. Johnson, 3 Barn & Cress., 428; Herrick v. 
Whitney, 15 John., 240; Harris v. Bradley, 7 Yerg., 310; Story 
on Bills of Exch., §§ no, 235. 

2 Pricev. Neal, 3 Bur., 1354. 

8 1 Strange, 148. 



238 BANK OF COMMERCE V. UNION BANK. [CHAP. 6, 

supra protest, after sight of the bill, 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. ! 

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 altering the 
body of the bill. There is no ground for presuming the body 
of the bill to be in the drawer's handwritings or in any hand- 
writing 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 hannwriting of the cash- 
ier. 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 genuine, 
is reasonable. In most cases it is in conformity with the fact. 
But to require the drawee to know the handwriting 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 unjust. The drawee would un- 
doubtedly 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 evi- 
dence, the bill having passed through the defendant's bank 
and the Charleston 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, be- 
cause they might have relied on the drawee's better knowledge 

1 Story on Bills, § 262. 



SEC. 32.] BANK OF COMMERCE V. UNION BANK. 239 

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 chargeable 
on the party who received the bill from the perpetrator of the 
forgery. So far as respects the genuineness of the bill each 
indorsee receives it on the credit of the previous indorsers; 
and it was the interest and the duty, in the present case, of 
the Bank of Charleston to satisfy itselt that the bill was gen- 
uine, or that its immediate indorser was able to respond in 
case the bill should prove to be spurious. The party who 
fraudulently passed the bill can not avoid his liability to re- 
fund 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. * 

In Smith v. Mercer, 2 in Cocks v. Masterman," and in 
Price v. Neal,* 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 in- 
dorsers. But the plaintiffs 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 an- 
other through mutual mistake of facts in respect to which both 
are equally bound to inquire, may be recovered back. The 
defendants here as in that case have obtained the money of 

1 Canal Bank v. The Bank of Albany, i Hill, 287, 292, 3. 

8 6 Taunt, 76 (1814). 

•9 Barn. & Cres., 902 (1827). 

4 3 Burr., 1354 (1762). 



240 MEAD V. YOUNG. [CHAP. 6, 

the plaintiffs 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 defendants 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 wrongdoer 
is finally made to pay. If that party should be irresponsible, 
or if he can not be found, the loss ought to fall on the party, 
who, without 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 ex- 
cused, provided notice of the forgery be given as soon as it is 
discovered. 

Judgment affirmed. 



SECTION 33. 

THE DRAWEE, BY ACCEPTING A BILL, THEREBY ADMITS 
OR WARRANTS THAT THE PAYEE HAS CAPACITY TO 
INDORSE, BUT DOES NOT ADMIT HIS INDORSEMENT.* 

MEAD v. YOUNG. 1 

In the King's Bench, Nov. i8th, 1790. 

[Reported in 4 Term. Rep.> 28."} 



* In an action by the indorsee against the acceptor of a bill 
of exchange, drawn payable to "A. or order," it is competent to 
the defendant to give evidence that the person, who indorsed to 
the plaintiff, was not the real payee, though he be of the same 
name, and though there be no addition to the name of the payee 
on the bill. If a bill of exchange, payable to A. or order, get 
into the hands of another person of the same name as the payee, 
and such person, knowing that he was not the real person in whose 
favor it was drawn, indorse it, he is guilty of a forgery. 

^his case is cited in Daniel on Negotiable Instruments, 692, 
1345; Benjamin's Chalmers, Bills, Notes and Checks, 90; Wood's 
Byles on Bills and Notes, 148, 270; Chitty on Bills, 198, 156, 261, 
391, 395, 641, 780, 784; Norton on Bills and Notes, 115, 243; 
Tiedeman on Commercial Paper, 266; Randolph on Commercial 
Paper, 251, 252. See also, Masters v. Miller, 4 Term Rep., 320;, 
First Bank v. Burkham, 32 Mich., 328; Chambers v. Union Bank, 
78 Pa. St., 205; McKleroy v. Southern Bank, 14 La. An., 458. 



SEC. 33.] MEAD V. YOUNG. 24I 

The Form of Action.— This was an action brought by 
the indorsee of a bill of exchange for go/, against the ac- 
ceptor. The bill was drawn at Dunkirk by Christian on the 
defendant in London, payable "to Henry Davis, or order;'' 
and, having been put into the foreign mail inclosed in a letter 
from Christian, it got into the hands of another Henry Davis 
than the one in whose favor it was drawn. The defendant 
accepted the bill; and when Davis desired the plaintiff to dis- 
count it, the latter made application to the defendant to know 
whether or not it was his acceptance ? and, on receiving an 
answer in the affirmative, coupled with an assurance that it 
was a good bill, he discounted it, not knowing the H. Davis 
from whom he took it. There was no ground to impute any 
fraud to the plaintiff. On the trial before Ld. Kenyon, after 
the plaintiff had proved the defendant's handwriting, and the 
indorsement by Davis, the defendant offered evidence to show 
that the H. Davis, who indorsed to the plaintiff, was not the 
real H. Davis in whose favor the bill was drawn: but Ld. 
Kenyon being of opinion that such evidence was inadmissible, 
the plaintiff recovered a verdict. A rule having been obtained 
to show cause why a new trial should not be granted on this 
misdirection. 

The Claim of the Plaintiff.— Ld. Erskine for the plain- 
tiff argued that, if there had been any particular description 
of the payee on the bill, the plaintiff must have taken care 
that the person from whom he received it answered the whole 
of the description; but there was no description of, or addi- 
tion to, the H. Davis; there was nothing on the bill to lead 
either the acceptor or any third person to suspect that the H. 
Davis, who was in possession of the bill, was not the real 
payee. And, so far from the plaintiff's having incurred any 
charge of neglect, he seems to have taken more than ordinary 
caution in making inquiries of the acceptor before he dis- 
counted the bill. There is no pretense to impute either fraud 
or neglect to the plaintiff; he stands in the situation of an 
innocent purchaser for a valuable consideration. This case 
therefore falls within the common rule, that, where one of 
two innocent persons must suffer by the fraud of another, the 
loss must be borne by him who enabled the party to commit 



242 MEAD V. YOUNG. [CHAP. 6, 

the fraud; and in this case that person is Christian, who 
ought to have described the payee more particularly. 

The Claim of Defendant. — In support of the rule it was 
argued that, a party, purchasing a bill of exchange, is, like 
the purchaser of any other species of property, bound to in- 
quire into the title of him from whom he buys. No person 
can derive title to this bill but he who claims under the real 
H. Davis: and it is indifferent whether the person indorsing 
the bill be or be not of the same name with the real payee; 
in neither case can any property be transferred but by him 
who has the title. If he bear the same name, prima facie 
indeed he may be presumed to be the same person, till the 
contrary be shown: but here the question was, whether evi- 
dence should not have been received to prove the contrary ? 
If such evidence be not admissible, it will follow that pay- 
ment to a person of the same name with a legatee would dis- 
charge the executor, or a payment by a debtor to any person 
who had the same name as his creditor: but that cannot be 
pretended. This bill was drawn in order to satisfy a debt due 
from Christian to the real H. Davis; and yet payment of this 
bill to the plaintiff can never be considered as a discharge of 
that debt, without the indorsement of that H. Davis. In all 
cases where a bill is drawn payable to A. B. or order, it is 
indispensably necessary to prove the handwriting of the payee, 
which was not in fact done in this instance. The necessity of 
this proof is apparent from the form of the declaration: 
which after alleging that the bill was drawn in favor of H. 
Davis, avers that the said H. Davis afterwards indorsed to the 
plaintiff. If the negligence of either of the parties be resorted 
to as a ground for the determination of this case, the plaintiff 
seems to have been guilty of the greatest negligence in taking 
a bill from a person whom he did not know, whereas the 
transaction, as far as Christian was concerned, was carried on 
in the ordinary course of business. There is also another ob- 
jection to the plaintiff's recovering, because he claims through 
a forgery: For the H. Davis, who received the bill inclosed 
in a letter from Christian, must have known that it was not 
intended for him ; and the circumstance of his bearing the 
same name with the payee would be no defence to him on a 



SEC. 33.] MEAD Z>. YOUNG. 243 

prosecution for forgery, since he put a false signature to an 
instrument with intent to defraud. 

Decision. — The question here is, Whether the name of 
H. Davis, to whom the bill on the face of it was payable, 
shall or shall not convey a title to this plaintiff who gave a 
valuable consideration for it, and who discounted it with the 
name of H. Davis upon it, and with an assurance from the 
defendant that it was accepted by him? If any fraud, or even 
neglect, could be imputed to the plaintiff, that would vary the 
case; but, circumstanced as these parties were, I think that, 
if the plaintiff cannot recover, it will put an insuperable clog 
on this species of property. I cannot distinguish this case on 
principle from that of Miller v. Race, 1 where the innocent 
holder of a note, which had been taken when the mail was 
robbed, was held entitled to recover; that indeed was a note 
payable to bearer, but still the same principle must govern 
both cases. In this case the fault originated with the drawer 
of the bill, in not describing more particularly the person to 
whom he intended it should be paid. The plaintiff was not 
bound to send to Dunkirk to know whether the person, who 
had possession of the bill, was or was not the real H. Davis. 
There may indeed be some inconvenience the other way; but 
setting the inconvenience on the one side against that on the 
other, in my apprehension it would throw too great a burden 
on persons taking bills of exchange to require proof of an 
indorsee that the person from whom he received the bill was 
the real payee. Such proof has never yet been required of 
an indorsee in such an action: and therefore I think that, as 
there was no fraud, or want of due diligence on the part of 
the plaintiff, he is entitled to recover; however, I give this 
opinion with some diffidence, as my brothers have intimated 
that they are of a different opinion. 

Ashhurst, J., said, "This is a case of considerable import- 
ance; and I think that we ought to grant a new trial, that the 
parties may have an opportunity of putting the question on 
the record. The present inclination of my opinion is with 
the defendant." In order to derive a legal title to a bill of 
exchange, it is necessary to prove the hand-writing of the 

1 1 Burr., 452 (1758). 



244 MEAD V. YOUNG. [CHAP. ,6, 

payee; and therefore though the bill may come by mistake 
into the hands of another person, though of the same name 
with the payee, yet his indorsement will not confer a title. 
Such an indorsement, if made with the knowledge that he is 
not the person to whom the bill was made payable, is in my 
opinion a forgery; and no title can be derived through the 
medium of a fraud or forgery. This is distinguishable from 
the case of Miller v. Race; for there the note was payable to 
bearer. In such cases the bearer, who purchases for a valu- 
able consideration, and without notice of any fraud, is entitled 
to receive the contents of the bill; and payment to him is a 
discharge to the drawer. But in this case the bill was drawn 
payable to H. Davis, or order; and though the name of H. 
Davis was indorsed on the bill, yet it was incumbent on the 
plaintiff, who claims through the payee, to be satisfied that 
that was the indorsement of the real payee." 

Buller, J., said, "As the bill in this case is of great value, 
the parties may put this question in a mode to be decided by 
the dernier resort. As at present advised, I entertain the 
same opinion as my Brother Ashhurst. If we were to inquire 
whether any laches were to be imputed to the plaintiff or the 
drawer, I rather think the plaintiff is more in fault than any 
other person, in advancing his money to H. Davis, who was 
a total stranger to him. But, without going into any such 
inquiry, I am of opinion that it is incumbent on a plaintiff, 
who sues on a bill of exchange, to prove the indorsement of 
the person to whom it is really payable. The general form of 
the declaration shows that it is so; for that is that, 'the said 
A. B. to whom, or to whose order, the payment of the said 
sum of money mentioned in the said bill was to be made, 
afterwards, etc., indorsed the said bill, his own proper hand- 
writing being thereto subscribed/ Now here it is clear that 
the indorsement was not made by the same H. Davis to whom 
the bill was made payable; and no indorsement by any other 
person will give any title whatever. Then, is there any thing 
in this case that estops the defendant from saying that the 
person who indorsed to him (plaintiff) was not the real payee? 
Now the act of that person who indorsed, and who in so 



SEC. 33.] MEAD V. YOUNG. 245 

doing was guilty of a forgery, cannot prevent an innocent 
person from showing the truth. 

' * Then it was argued that Christian was guilty of negli- 
gence, in not describing more particularly the payee; but I 
know of no authority which requires that to be done. This 
bill was drawn in the common form, payable 'to H. Davis 
or order; ' and the drawer could not foresee that it would get 
into the possession of any other H. Davis. If any other 
stranger had received this bill, and indorsed it over to the 
plaintiff, it is not pretended that such indorsement would have 
conveyed any title to the bill, and it cannot make any differ- 
ence whether such stranger bear the same name with the real 
payee or not; for no person can give title to a bill but he to 
whom it is made payable. Independently of these reasons, I 
think that convenience requires that the determination should 
be in favor of the defendant. I have no difficulty in saying 
this H. Davis, knowing that the bill was not intended for him, 
was guilty of a forgery; for the circumstance of his bearing the 
same name with the payee cannot vary this case, since he was 
not the same person. Then if the plaintiff cannot recover on 
this bill, he will be induced to prosecute the forger; and that 
would be the case even if it had passed through several hands, 
because each indorser would trace it up to the person from 
whom he received it, and at last it would come to him who 
had been guilty of the forgery: whereas if the plaintiff succeed 
in this action, he will have no inducement to prosecute for the 
forgery: the drawer, on whom the loss would in that case fall, 
might have no means of discovering the person who commit- 
ted the forgery, and thus he would probably escape punish- 
ment. As far, therefore, as convenience can have any effect, 
it weighs strongly with me to receive the evidence. But at 
all events the plaintiff cannot recover, since he derives his 
title under a forgery." 

Grose, J., said, "I am of opinion that it was competent 
to the defendant to show in evidence that the person, who 
indorsed to the plaintiff, was not the person named as the 
payee in this bill of exchange; and I form that opinion as well 
on the substance of the transaction as on the form of pleading 
in such cases. A bill of exchange is only a transfer of a chose 

15 



246 MEAD V. YOUNG. [CHAP. 6, 

in action according to the custom of merchants; it is an 
authority to one person to pay to another the sum which is 
due to the first, and it is generally directed to be paid to the 
payee or his order. When the person, on whom it is drawn, 
accepts, he only engages by the terms of his acceptance to 
pay the contents of the bill to the person named in it, or to 
his order. The general form of the declaration, which is to 
be found in some of the old entries, also agrees with this doc- 
trine, and points out what the law is. 

"I observe indeed that this declaration is not drawn in 
the usual form, for the words 'to whom or to whose order' 
are omitted; but still it is that the said H. Davis, that is the 
same H. Davis who is mentioned in the former part of the 
declaration as the payee, indorsed to the plaintiff. It clearly, 
therefore, appears that as no person can demand payment of 
a bill of exchange but the payee, or the person authorized by 
him, the acceptor only undertakes to pay to them, and cannot 
be compelled to pay to any other person. If he pay the 
amount of the bill to any other person, he pays it in his own 
wrong, and such payment does not discharge his debt to the 
drawer. If this decision will prove a clog on the circulation 
of bills of exchange, I think it will be less detrimental to the 
public, than permitting persons to recover through the medium 
of a forgery. And that this was a forgery cannot be doubted, 
if we consider the definition of it; which is, the false making 
of any instrument \ indorsement, etc., with intent to defrauds 
It makes no difference whether the person making this false 
indorsement was or was not of the same name with the 
payee, since he added the signature of H. Davis, with a view 
to defraud, and knowing that he was not the person for whom 
the bill was intended. I agree also with my Brother Buller, 
that this decision will be more convenient to the public; 
because then the plaintiff will prosecute the person, who in- 
dorsed to him, for the forgery. For these reasons I am of 
opinion that, as this bill of exchange was only payable to the 
payee or his order, it was competent to the defendant, the 

'Vid. 2 Geo. 2 c, 25, S. 1. 



SEC. 33.] MEAD V. YOUNG. 247 

acceptor, to inquire whether the person under whom the 
plaintiff claims, was or was not the payee." 1 
Rule absolute. 

1 See the following cases for a further discussion of this general 
proposition: Robarts v. Tucker, 16 Q. B. (Ex. Ch. ), 560; Law- 
rence v. Russell, 77 Pa. St., 4.60; Graves v. American Bank, 17 
N. Y., 205; Welsh v. Bank, 73 N. Y., 424; Gale v. Miller, 54 
N. Y., 536; Arnold v. Check Bank, 1 L. R. C. P., 578; National 
Park Bank v. Ninth National Bank, 46 N. Y., 77; Braithwaite v. 
Gardiner, 8 Q. B., 473; Marine National Bk. v. National City 
Bk., 59 N. Y., 67; White v. Continental Bk., 64 N. Y., 316; Red- 
dington v. Woods, 45 Cal., 406; Henertematte v. Morrie, 28 
Hurr., 77. 



CHAPTER VII. 
Methods of Transferring Commercial Contracts. 



SECTION 34. 

General Methods of Transfer. — It may be said that there 
are but two general methods of transferring commercial con- 
tracts; — -first, by the act of the parties; and, second, by opera- 
tion of law. Under the first method might be mentioned three 
others, which constitute the most general methods: 

a. By assignment; 

b. By indorsement; and 

c. By delivery simply. 



SECTION 35. 

Assignment Defined. — An assignment in the sense we 
have used it here means the act by which one person transfers 
to another his right, interest and property in bills of exchange, 
promissory notes, bonds and other commercial contracts. By 
an assignment of a commercial contract, the assignee gets the 
interest which the assignor hath. An assignment differs from 
an indorsement in this, that the assignee takes the rights of 
the assignor, whilethe indorsee (if he is a bona fide holder) 
gets all the rights represented by the terms of the contract. 
The assignee may not receive any rights whatever, depending 
altogether upon the right of the assignor; while the indorsee 
secures the rights represented by the terms of the contract 
without reference lo the rights of the indorser. Negotiable 
contracts are transferred by indorsement. 

At common law the transfer of a chose in action or right 
to a thing not in possession was forbidden, as violating the 
rules against champerty and maintenance, and because the 
man could not sell a thing which he did not have. Such an 



SEC. 36.] METHODS OF TRANSFERRING. 249 

assignment or transfer was considered as passing to another a 
mere right to recover in a suit at law, and as the ancient law 
abhorred litigation, it prevented the sale of possibilities or 
rights in action, and refused to recognize the title of the as- 
signee when he sought to recover in a suit at law. Coke. Lit., 
266a. 



SECTION 36. 

Common Law Rule Abrogated. — The stringent rule, 
of the common law courts, has long since been disregarded by 
the courts of equity and now in that court, assignments of 
choses in action, will be protected and enforced. In courts of 
equity the assignee is regarded as the true owner of the thing 
assigned (the chose in action) and is entitled to use it for his 
own purposes subject to equities, of course, if there are any. 
Experience has taught that the grave apprehension of the 
common law courts, that actions would be multiplied; that the 
rules against champerty and maintenance would be violated 
and that justice would be tcodden under foot, if property in 
action should be transferred, has never been realized and the 
supposed difficulties are no longer entertained. 

Experience has not only taught the courts that no evil 
results from the assignment of things in action, negotiable 
contracts, etc. , but upon the contrary the permission to trans- 
fer these contracts (property in action), as well as property in 
possession has resulted in great public good and private con- 
venience. Thalheimer v. Brinckerhoff, 20 Johnson (N. Y.), 
380; Bacon v. Bouham, 33 N. J., eq., 614; Wright v. Wright, 
1 Ves. R., 411. 



SECTION 37. 

Interest Received by an Assignee. — An assignment, as 
applied to the transfer of negotiable contracts or negotiable 
paper, is the transfer of the interest or equities which the 
holder hath therein; while an indorsement, as will be explained 
later, is a transfer of the title in a negotiable contract by writ- 



250 METHODS OF TRANSFERRING. [CHAP. 7, 

ing, on the back thereof. No particular or precise form of 
words are necessary to constitute an indorsement or an assign- 
ment. Row v. Dawson, i Vesey, 331. 

Any words which show an intention to transfer the title 
or interest will be sufficient. An assignment may be either by 
parol or in writing. McWilliams v. Webb, 32 Iowa, 577; 
Jordon v. Gillen, 44 U. S. St., 424; Noyes v. Brown, 33 Vt, 

43i- 
r*< An indorsement must always be in writing. The same 

act may be either an assignment or an indorsement depending 
upon the nature of the contract transferred. For instance, if 
the particular contract is a negotiable one, then the writing of 
the name, merely, of the payee across the back of it, or across 
the face will be an indorsement; while the same act, upon a 
non-negotiable contract, one not containing the indicia of ne- 
gotiability, will amount to an assignment and will transfer the 
holder's interest therein only, and not the right represented by 
the terms of the contract. In all cases, however, whenever it 
appears upon the contract transferred, that it was the inten- 
tion of the parties to the agreement that the transaction was 
to have been an assignment, the courts will give their act that 
effect and protect the interest of the parties accordingly. 
Pass v. McCrea, 36 Miss., 143. 

Non- Negotiable Contracts Transferred by Assignment 
Only. — The only method of transferring non-negotiable con- 
tracts is by assignment; but negotiable contracts may be trans- 
ferred by assignment or by indorsement if the parties so intend. 
The transfer of a negotiable contract payable to the order of 
the payee, without indorsement in the first instance, by the 
original payee or holder, would be an assignment of that con- 
tract, and passes the equitable title only, and the person to 
whom it is thus transferred may be subjected to all the equities 
that attached to it in the hands of the transferer. Quigley 
v. Mexico So. Bank, 80 Mo., 295; Faris v. Wells, 68 
Ga. , 604. 

The assignee stands in the shoes of the assignor and his 
right to recover upon the contracts assigned, is subject to the 
defenses which were available against the latter, even though 
he took the contract upon consideration and in good faith. 



SEC. 38.] METHODS OF TRANSFERRING. 25 1 

Matteson v. Morris, 40 Mich., 55; Spinning v. Sullivan, 48 
Mich., 8; Foreman v. Beckwith, 78 Ind., 575; Weber v. Or- 
ten, 91 Mo., 677; Calvin v. Sterrett, 41 Kan., 218. 



SECTION 38. 

Assignment — Action by Whom— The Rule at Com- 
mon Law — The Equity Rule. — At common law the trans- 
feree of these contracts, if he desired to sue upon them, was 
obliged to bring the action in the name of the assignor. In 
equity, however, a different rule prevailed and he was there 
permitted to sue in his own name. By statute, now, in all 
the states, the equity rule has been adopted so that the holder, 
the real party in interest, may maintain the action, upon such 
contracts, in his own name. Grand Gulf Bank v. Wood, 12 
S. & M., 482. Wheeler v. Wheeler, 9 Cow., 34. 

The Requirements in Case of an Assignment. — 
There are certain duties imposed upon the assignee which are 
not imposed upon the indorsee or one who takes a negotiable 
instrument by indorsement. He is required to give notice, to 
the debtor (if he desires to protect himself) that he has be- 
come the holder of the particular contract. This notice 
should be given as soon as convenient in order that the assignee 
may be protected against possible equities which may arise 
after the transfer. The notice will not of course, relieve him 
from the offset, — equities and other defenses, — which might 
have been raised against him at the time of the transfer, and 
before the notice. Wood v. Brush, 72 Cal., 224; Kinderly v. 
Jervis, 22 Beav., 31; Barrow v. Porter, 44 Vt., 587; Vanbus- 
kirk v. Hartford Fire Ins. Co., 14 Conn., 141. 

Upon the question of the necessity of giving notice to 
the debtor of the assignment of a chose in action there is 
much conflict in the authorities; In Clodfelter v. Cox, Mc- 
Kinney, J., says, "There is an irresistible conflict of author- 
ity upon this subject. The weight of American authority 
seems to be that the assignment of a chose in action is com- 
plete in itself, and vests a perfect title in the assignee as against 
third persons, without notice of assignment to the debtor. 
But the contrary of this is the settled doctrine of the English 



252 METHODS OF TRANSFERRING. [CHAP. 7, 

as well as some of the courts of this country at the present 
day. The latter we consider as the more reasonabe and safe 
practical rule, and have accordingly held on more than one 
occasion, that the assignment of a chose in action is not com- 
plete, so as to vest the title absolutely in the assignee, until 
notice of assignment is given to the debtor; and this not only 
as regards the debtor, but likewise as to third persons. And, 
therefore, as between subsequent purchasers or assignees of a 
chose in action, he is entitled to preference who first gives 
notice to the debtor, although his assignment be subsequent 
to that of the other. To perfect the assignment not merely 
as against the debtor, but also as against creditors and subse- 
quent bona fide purchasers notice must be given." I Sneed 
(33 Tenn.), 339; Pickerring v. Ilfracomb R. R. Co., 3 Law 
Rep. f C. P., 235; Thayer v. Daniels, 113 Mass., 131; Muir 
v. Schenck, 3 Hill, 230. 

Notice Must be Given by the Assignee or his Law- 
fully Authorized Agent. — The notice of assignment should be 
given by the assignee or his agent. Dale v. Kimpton, 46 Vt. , 76. 



SECTION 39. 

Assignee Takes Subject to Equities. — No rule is bet- 
ter settled than that the assignee of a chose in action takes it 
subject to all equities existing between the debtor and cred- 
itor. It is not necessary that the equities should exist at the 
inception of the debt or contract. It is sufficient if they 
exist prior to the assignment; for the reason that the rule is as 
applicable to one case as to the other; which is tnat the 
assignee has it in his power to protect himself against them 
by inquiring of the debtor before the assignment. Chancel- 
lor Kent, in Murray v. Sylburne, says "the assignee can al- 
ways go to the debtor and ascertain what claims he may have 
against the bond or other chose in action, which he is about 
to purchase from the obligee." 2 Johnson's Ch., 441; York 
v. McNutt, 69 Am. Dec, 607; Polk v. Gallant, 34 Am. 
Dec, 410. 



SEC. 40.] METHODS OF TRANSFERRING. 253. 

SECTION 40. 

What is Meant by "Equities Which maybe Inter- 
posed Against the Assignee." — What we mean by the phrase 
1 • equities which may be interposed against an assignee " are 
all those defenses which existed between the original parties, 
and which grew out of some defect inherent in the contract 
itself, and which renders the contract invalid in whole or in 
part between the original parties, such as fraud, illegality or 
duress or where the consideration has failed or in case of pay- 
ment or accord and satisfaction. Against these equities an 
assignee cannot be a bona fide holder. Some of these de- 
fenses (equities) may and others may not be interposed 
against a bona fide indorsee. (See Post Chap, on Defenses). 

We have said that these "equities" relate to defenses 
existing between the •• original parties." Upon the question 
whether the •' equities" which exist between the •' original 
parties" are the only ones which can be interposed, or 
whether all the equities which exist between the subsequent 
parties may be interposed as well, there is much conflict of 
authority. Theodore W. Dwight in discussing this rule said, 
"The rule is not simply that the assignee takes subject to the 
equities between the original parties though that is sound law. 
It goes farther than this, and declares that the purchaser of a 
chose in action must always abide the case of the person from 
whom he buys. The •• reason of the rule," he continues, 4t is 
that the holder of a chose in action cannot alienate anything 
but the beneficial interest he possesses. It is a question of 
power or capacity to transfer to another, and this capacity is 
to be exactly measured by his own lights. " Trustees of Union 
College v. Wheeler et. al., 61 N. Y., 88 at 105; Owen v. 
Evans, 134 N. Y., 514; Schafer v. Reilly, 60 N. Y., 61; In- 
graham v. Disborough, 47 N. Y., 421; Green v. Warnick, 64 
N. Y., 220; Davies v. Austen, 1 Vesey Jr., 247; Durton v. 
Benson, 1 P. Wm., 497; Barney v. Grover, 28 Vt, 391; 
Jeffries v. Evans, 6 B. Mon., 119; Boardman v. Hayne, 29 
la., 339; Hill v. Shields, 81 N. C, 250; Warner v. Whit- 
taker, 6 Mich., 133; Tinmes v. Shannon, 19 Iowa, 296; Robe- 
son v. Roberts, 20 Ind., 155; Summers v. Hutson, 48 Ind., 
230; Watt v. Clark, 9 Pa. St., 399; Hill v. Caillone, 1 Ves. 



354 METHODS OF TRANSFERRING. [CHAP. 7, 

Sr., 122; Norton v. Rose, 2 Wash. (Va. ), 233; Crosby v. Tan- 
ner, 40 Iowa, 136; Duke v. Clark, 58 Miss., 466; L. R., 5 
Ch. App., 358; Sutherland v. Reeve, 151 111., 384; 38 N. E. 
Rep., 130; Commercial Nat. Bank v. Burch, Receiver, and 
Burch, Receiver v. Kalamazoo Paper Co., 141 111., 519; The 
Mullanphy Sav. Bank v. Schopp et. al. v. Magloughlin, 133 
111., 33; Stephens v. Weldon, 151 Pa. St., 520; Rice v. 
Hearn, 109 N. C, 150. This doctrine is disputed, see post 
section 41. 



SECTION 41. 

What Equities may be Interposed Between Parties — 
Latent Equities.— While it is no doubt the general rule that 
the assignee takes the contract burdened with all the equities 
against it there is an imposing line of authorities, which hold 
that the assignee takes the contract freed from all equities 
except those which existed between the original parties in its 
inception. 

Chancellor Kent, however, in a dissenting opinion in the 
case of Bebee v. Bank of New York, says 4 • when it is said 
that an assignee of a chose in action takes it subject to all 
equity, it is meant only that the original debtor can make the 
same defence against the assignee that he could against the 
assignor; the rule has never received any other application. '* 

1 Johnson, 529 at 572 (or 574 star pages); Livingston v. Dean, 

2 Johns Ch., 479; Murray v. Lylburn, 2 Johns Ch., 441; Ohio 
Life Ins. Co. v. Ross; 2 Md. Ch., 25, 39; Sleeper v. Chap- 
man, 121 Mass., 404; Bloomer v. Henderson, 8 Mich., 395; 
Bush v. Lathrop, 22 N. Y., 535; Pomeroy's Equity Jurispru- 
dence, Sees. 703-715; Bispham's Principles of Equity, 171. 

The defenses or equities, which arise between the subse- 
quent parties are contra-distinguished from those existing be- 
tween the original parties only, as latent equities. 



CHAPTER VIII. 
Indorsement.* 



SECTION 42. 

AN INDORSEMENT MUST BE IN WRITING AND UPON THE 
COMMERCIAL CONTRACT INDORSED. 

FRENCH v. TURNER, i 
In the Supreme Court of Indiana, November 27th, i860. 

[Reported in ij Indiana, jp. ] 

The Form of Action. — The first count states in sub- 
stance, that on Nevember 6, 1852, one John Bodle executed 
and delivered to Abel C. Pepper, a mortgage on certain land, 
therein described, to secure the payment of $1, 100, evidenced 
by ten promissory notes of that date, each for $110; one pay- 
able in a year from date, and one maturing each year there- 

1 This case is cited in Daniel on Negotiable Instruments, 689a, 
•690, 748a; Benjamin's Chalmers on Bills, Notes and Checks, 117, 
125; Tiedeman on Commercial Paper, 247, 264, 305; Wood's 
Byles on Bills and Notes, 252; Norton on Bills and Notes, 108; 
Ames on Bills and Notes, (Vol. 1) 228. See also Ryan v. May, 
14 111., 49; Kuler v. Williams, 49 Ind., 504. 

* Indorsement — Defined. — An indorsement is the writing of 
the name of the holder upon a commercial contract with the 
intent (1) either to transfer the title thereto, or (2) to strengthen 
the security, or both, by which act he becomes conditionally 
liable for the payment of such contract. Daniel, in his valuable 
work on Negotiable Instruments, says, "Indorsing an instrument, 
in its literal sense, means writing one's name on the back thereof; 
and in its technical sense, it means writing one's name thereon 
with intent to incur the liability of a party who warrants the pay- 
ment of the instrument, provided it is duly presented to the prin- 
cipal at maturity, not paid by him, and such fact is duly notified 
to the indorser." Dan. on Negot. Inst., sec. 666; Higgins v. 
Bullock, 66 111., 37; Sigourney v. Clarke, 17 Conn., 519. 



256 FRENCH V. TURNER. [CHAP. 8, 

after until they all become due, with interest payable annually. 
That in September, 1854, Pepper assigned and transferred the 
mortgage and notes, by indorsement on the mortgage, to the 
defendant, Turner. That Turner, in January, 1858, for value 
received, transferred the mortgage and notes to the plaintiff, 
by indorsement in writing on the mortgage. The mortgage 
and notes, together with the assignment, are set out. The 

The California Code says, "One who writes his name upon a 
negotiable instrument, otherwise than as a maker or acceptor, and 
delivers it with his name thereon to any other person, is called an 
indorser, and his act is called an indorsement." Sec. 3108 of the 
Civil Code. 

The fact that a guaranty is written on the back of a note above 
the signature of the payee, does not have the effect of preventing 
the signature from operating as an indorsement. Nat. Bank v. 
Gatland, 45 Pac. Rep., 35. 

An indorsement in its technical sense applies only to negoti- 
able contracts. It is an independent contract from the con- 
tract upon which it is made and is equivalent to the drawing 
of a new bill upon the maker, drawee or acceptor as the case 
may be. It is an independent contract in the sense that its 
validity may be attacked independently from the original contract 
and in the same manner and under the same circumstances that 
any other contract may be attacked. At common law the indorser 
could not be sued in the same action with the original parties to 
the contract. This rule, however, is now changed so that the in- 
dorser and maker may be sued together. An indorsement must be 
supported also by a distinct consideration. An indorsement, or 
what would amount to an indorsement of a negotiable note, will 
be but an assignment when applied to a non- negotiable contract. 
Merchants Nat. Bank v. Gregg (Mich.). 64 N. W. Rep., 1052; 
Steere v. Trobilock et al., 66 N. Rep., 342. 

The Mode of Indorsement. — There is no required form 
for an indorsement. It is done by simply writing the indorsees 
name upon the back of the contract. It must be in writing and 
upon the instrument itself or upon a paper attached thereto. 
Folger v. Chase, 18 Pick., 63; French v. Turner, supra. 

The following statements have been held to be indorsements 
when written upon negotiable instruments: "I hereby assign all 

my right and title to Mr. ." Sears v. Lautz, 47 la., 658; "I 

assign the within note to Mrs. ." Sands v. Wood, 1 la., 263; 

"I hereby transfer my right, title and interest of the within note 
to S. A. Y." Aniba v. Yeomans, 39 Mich., 171; "For value re- 
ceived, I hereby assign all interest in and to this note to Mr. . '* 

Stevens v. Hannan, 86 Mich., 307; 48 N. W. Rep., 951; Markey 
v. Carey, 108 Mich., 184; 66 N. W. Rep., 493; "For value re- 



SEC. 42.] FRENCH V . TURNER. 257 

assignment from Turner to the plaintiff, on the mortgage, is 
as follows, viz. : 

* • For value received, I hereby assign the within mort- 
gage and notes, therein described, to John J. French. 
% * January 2, 1858. {Signed) Moses Turner'' 

It is averred that the note which became due on Novem- 
ber 6, 1858, and the interest on the other not due, remain due 

ceived I hereby assign, transfer and set over to D. B. T. all my 
right, title and interest and claim in the within note. " Hall v. 
Toby, no Pa. St., 318; Adams v. Blethen, 66 Me., 19; Hatch v. 
Barrett, 34 Kan., 230; 8 Pac. Rep., 129; Davidson v. Powell, 
114 N. C, 575. 

To Whom a Commercial Contract May be Indorsed. — 
A bill or note may be indorsed by the holder or owner to any one. 
And it does not matter whether the indorsee is laboring under any 
disabilities, such as infancy, lunacy, or coverature, or not. At 
common law, however, if a bill or note was indorsed to a married 
woman, it became the property of her husband. Story on Notes, 
sec. 126. But in case the wife should survive the husband then 
she may sue in her own name, provided the husband does not 
reduce the note to possession and secure the payment of the same. 

Negotiable contracts may also be indorsed or transferred to 
executors any administrators, trustees and agents, as such. If, 
however, the indorsement is made to the personal representatives 
it will operate as an indorsement to them personally. The same 
is true in the case of trustees. At common law the husband could 
not indorse a contract to his wife except as her agent. Dan. on 
Negot. Inst, sec. 686 ; Schmittler v. Simons, 101 N. Y., 554; 
Pinney v. Adm'rs, 8 Wend., 500; Parsons on B. & N., vol. i, p. 
161; Cornthwaite v. First Nat. Bk., 57 Ind., 268. 

If a commercial contract is indorsed to the agent of a private 
corporation as such, it will be regarded prima facie as an indorse- 
ment to the corporation. Dugan v. U. S., 3 Wheaton, 172; Fleck- 
ner v. Bank, 8 Wheat., 360. 

The Indorsement Must be of the Entire Instrument. — 
The indorsement must be an indorsement of the entire instru- 
ment. If, however, a part has been paid it may be indorsed as to 
the residue. Daniel on Negotiable Instruments, 668; Hawkins v. 
Cardy, 1 Ld. Ray., 360; Byles on Bills, 291. An indorsement 
which purports to transfer a part only of the amount payable, does 
not operate as a negotiation of the instrument. If a part of the 
note has been paid then of course the action may be an indorse- 
ment of the residue. Hughes v. Keddell, 2 Bay (S. Car. Rep.), 

324. 

Indorsement — When Necessary. — It is well settled that 

commercial contracts payable "to order" cannot be negotiated in 



258 FRENCH V. TURNER. [CHAP. 8, 

and unpaid. That, for the notes which matured before 
November 6, 1858, he foreclosed the mortgage, and the mort- 
gaged premises were sold for $600, being fifty dollars less than 
the amount of the judgment, interest and cost. That Bodle, 
at the time of the execution of the notes and mortgage, had 
no property subject to the execution except the mortgaged 
premises, nor did he have at the time of the maturity of any 

the first instance, except by the indorsement of the payee or 
holder or his legal representative so as to pass to the holder both 
the legal and equitable title. If, however, the note payable to 
order has been once indorsed in blank by the payee, it then be- 
comes payable to bearer and may be negotiated without in- 
dorsement, because it is then equivalent to a note payable to 
•'bearer." 

The Effect of the Transfer of a Bill or Note Payable 
to Order Without Indorsement. — The transfer of a commer- 
cial contract payable to order without indorsement by the payee, 
is a mere assignment of the contract and the transferee may be 
subjected to all the equities existing under such contracts. Lan- 
caster v. Baltzell, 7 G. & J., 468; Smalley v. Wight, 44 Me., 442; 
Dubuc v. Voss, 19 La., Andrew, 210. 

In all other cases of commercial contracts than those payable 
to order, and where the indorsement is special or in full, they may 
be transferred without indorsement. If, however, other negotiable 
contracts than those payable to order are indorsed, the indorser 
incurs the same liability. While an indorser may limit his liabil- 
ity by the nature of his indorsement, he cannot restrain the nego- 
tiability of a commercial contract by his indorsement. Johnson 
v. Mitchell, 50 Tex., 212. 

Indorsement, May be Explained by Parol Evidence. — 
When. — The rule of evidence which provides that parol evidence 
is inadmissable to vary or contradict the terms of a written con- 
tract applies to commercial contracts in general, and to contracts 
of indorsements where they are regular and unambiguous. There- 
fore parol evidence will not be admitted for the purpose of varying 
the contract of indorsement unless the same is irregular and ambigu- 
ous. Martin v. Cole, 104 U. S., 30; Lewis v. Dunlap, 72 Mo., 174; 
Lee v. Pile, 37 Ind., 137; Charles v. Dennis, 42 Wis., 56; Fassen 
v. Hubbard, 55 N. Y., 465; Chaddock v. Vaness, 35 N. J. L., 517. 
While this is the weight of authority in the United States, some of 
the states have held to the contrary. In Pennsylvania it was ex- 
pressly held that parol evidence was admissable to control or vary 
the effect of the contract implied by law from an indorsement in 
blank, on the broad ground that the rule excluding such evidence 
applied only to express agreements; holding that the contract of 
indorsement is one implied by the law from the blank indorse- 



SEC. 42.] FRENCH V. TURNER. 259. 

of the notes. That he is still wholly and notoriously insol- 
vent, having no property subject to execution, and that a» 
action against him would be unavailing, wherefore, etc. 

The second count alleges, that the defendant, professing 
to be the holder of the ten promissory notes (described in the 
first count), secured by the mortgage on, etc., for value re- 
ceived, sold the said ten promissory notes to the plaintiff, by 

ment. Ross v. Espy, 66 Pa. St., 481; 5 Am. R., 394; 2 Parsons 
B. & N., 519. 

The ground of these decisions is that a blank indorsement not 
filled out is not a written instrument and hence not entitled to its 
immunities, and not subjected to its restraints. And hence these 
decisions hold, that a blank indorsement may be orally proved to 
have been merely for the puspose of collection or as a renewal of 
a previous note. Harrison v. McKin, 18 Iowa, 485; Miner v. 
Robinson, 12 Am. D., 694. 

While it is the general rule that regular indorsements may not 
be varied by parol evidence, there are three apparent exceptions: 
(1) where there is a want or failure of consideration; (2) where 
the indorsee is a trustee; and (3) in the case of fraud. Daniel 
on Negot. Inst., Sec. 720; Hudson v. Wolcott, 39 Ohio St., 618; 
Abrahams v. Mitchell, 112 Pa. St., 232; Smith v. Carter, 25 Wis., 
283; Kirkham v. Boston, 67 111., 599; Lewis v. Dunlap, 72 Mo., 
178. 

In the case of Dye v. Scott, Gilmore, C. J., in speaking of 
the right to show by parol evidence a waiver of demand and notice 
of non-payment, said, "As between the indorser and indorsee we 
regard the blank indorsement as only prima facie evidence of a 
contract which the law presumes to arise therefrom if there was a 
contemporaneous agreement between the parties upon which the 
indorsement was made, both reason and justice require that as be- 
tween themselves, the actual and not the presumed contract should 
be enforced; and, as between them, oral testimony should be 
admissable to prove the contemporaneous contract. 35 Ohio St., 
194; Lewis v. Long, 102 N. C, 206/ Dan. on Negot. Inst, Sec. 
1093; Parsons on Notes and Bills, 584; Farwell v. Ensign, 66- 
Mich., 600; Kulenkamp v. Groff, 71 Mich., 675. 

A different rule, however, has been laid down in several juris- 
dictions. There are decisions which hold that parol evidence show- 
ing that the indorsement was merely made to transfer the title is 
admissable, and amounts to an indorsement without recourse, where 
the paper is held by the indorsee, and has not been put in circula- 
tion. Rodney v. Wilson, 67 Mo., 123; Light v. Kingsbury, 50. 
Mo., 331; Charles v. Denis, 42 Wis., 56; Kern v. Von Phul, 7 
Minn., 74; Campbell v. Robbins, 29 Ind., 271; Davis v. Breron, 
94 U. S., 423; Breneman v. Furness, 90 Pa. St., 186. 



260 FRENCH V. TURNER. [CHAP. 8, 

indorsement on the mortgage (as in the first count) ; and that 
before the said assignment, the defendant received full pay- 
ment and satisfaction of the first of said series of promissory 
notes, to- wit: the one payable on November 6, 1853, and all 
interest thereon, from the said Bodle, which interest at the 
time of the assignment amounted to $30, making, of principal 
^and interest on the note, at the time of the assignment, $140, 
which the defendant refuses to pay. 

The third count alleges, that "the defendant professing 
to be the holder of the ten promissory notes and mortgage, 
and that the payment of the notes was secured by the mort- 
gage, induced the plaintiff to purchase the same for a valu- 
able consideration, fully equal to the principal sum mentioned 
in the notes and interest accrued thereon; and thereupon the 
^defendant, in pursuance of said sale, by an instrument in 
writing indorsed on the said mortgage, assigned the notes and 
mortgage to the plaintiff. That at the same time the de- 
Indorsement — Presumption as to the Time Of. — Where 
an indorsement appears upon a commercial contract, without date, 
there is a presumption of law that it was indorsed on the day of 
its date, or at least before maturity. This presumption, however, 
may be rebutted by evidence showing when it was made in fact. 
Smith v. Nevlin, 89 111., 193; White v. Weaver, 41 111., 409; Mc- 
Dowell v. Goldsmith, 6 Md., 319; Rogers v. Wiley, 14 111., 65; 
Ranger v. Cary, 1 Mete, 369. 

And, if the defendant alleges that it was indorsed after it be- 
came due, the burden of proof is on him to show it. Hutchins v. 
Flintge, 2 Tex., 473; Jordon v. Downs, 9 Rob., 265. ^ 

Every indorsement is presumed to be bona fide, and the bur- 
den of proof to the contrary is on the party denying the good 
faith of the transaction. Wood worth v. Huntoon, 40 111., 131. 

If the indorsee secures the contract before maturity and with- 
out notice, he holds such contract free of any equitable defenses 
which may have existed against it in the hands of prior holders, 
and the burden is upon the defendant to show that the indorsee 
had notice of equities between the original parties to the note, or 
of such circumstances as would lead to notice at the time of the 
indorsing. The indorsee, before maturity, takes the title of the 
indorser. If he is a bona fide purchaser without notice he may even 
take a better title than the indorser, in which case he might 
be able to recover even though the indorser could not. And inas- 
much as an indorser takes the title of the indorser, he may be able 
to recover even though he has knowledge of existing equities, 
providing the indorser was able to recover against existing equities. 



SEC. 42.] FRENCH V. TURNER. 261 

fendant, by an instrument in writing, executed contemporane- 
ously with the assignment, covenanted and agreed with the 
plaintiff that the notes were secured by mortgage. And in 
consideration that the plaintiff would receive the notes with- 
out indorsement, the defendant then and there agreed by 
parol, and undertook and promised the plaintiff, that if he 
could not collect the same from Bodle, the defendant would 
pay the plaintiff the sum of money mentioned in the notes. 
The foreclosure of the mortgage; the insufficiency of the 
mortgaged premises to pay the debt; the insolvency of Bodle, 
and that the note due November 6, 1858, with the interest 
thereon, remains due and unpaid, are averred, substantially, 
as in the first count. 

Decision. — The first count is evidently based upon the 
supposition that the defendant is liable as an indorser of the 
notes. This, however, is not the case. In order to render 
him thus liable, the indorsement of the notes must have been 
made i4 thereon " (1 R. S., 1852, p. 378), or perhaps, "on 
another paper annexed thereto (called in French, Allonge), 

The reason for this rule is that when the contract once comes into 
the hands of a bona fide holder without notice it is purged of all 
equities existing against it, and they may not be interposed again 
against one having notice even. The only limitation on this rule 
is that when it reaches the hands of the original parties again, the 
equities attach and may be interposed against them. Kost v. Ben- 
der, 25 Mich., 515; Woodworth v. Huntoon, 40 111., 141, where 
Walker, C. J., said, "A note tainted with fraud or other infirmity 
passing into the hands of an innocent purchaser, not chargeable 
with notice, for a valuable consideration (and before maturity), 
he acquires it purged of the defenses, and any other person acquir- 
ing it from him succeeds to his rights in the same condition he 
held them. A defense to the instrument in the hands of an orig- 
inal holder having been thus cut off is not revived by the note 
being again transferred." Judge Cooley, in discussing this ques- 
tion in the case of Kost v. Bender, supra, says, "But I am not 
aware that this rule has ever been applied to a purchaser by the 
original payee, nor can I perceive that it is essential to the protec- 
tion of the innocent indorsee that it should be." 

Indorsement — Presumption as to the Place. — Every 
indorsement is presumed to have been made, at the place where 
the instrument is dated. This presumption is but prima facie. 
Brook, Oliphant & Co. v. Vannest, 58 N. J. L., 162; Maxwell v. 
Vansant, 56 111., 58. 

16 



262 FRENCH V. TURNER. [CHAP. 8, 

which is sometimes necessary, when there are many succes- 
sive indorsements to be made. " * 

The indorsement in question, made upon the mortgage, 
refers to the notes as being therein described, and is not upon 
the notes, or upon any paper attached to them. Such an 
assignment could not operate to transfer the legal title to 
the notes. It would convey an equitable title, authorizing 
the assignee, under our code, to sue thereon in his own name, 
but it does not place the assignor in the condition of a legal 
indcrser. By such an assignment, the assignor does not war- 
rant the solvency of the maker of the notes. It is no more 
effectual for that purpose than a parol assignment would be, 
an assignment made by the delivery of the notes. The case 
is analogous to the transfer of a bill payable to bearer, by 
delivery. * * If it is payable to the bearer, then it may be 
transferred by mere delivery. But, although it may be thus 
transferred by mere delivery, there is nothing in the law which 
prevents the payee of a bill, payable to himself or bearer, 
from transferring it, if he chooses, by indorsement. In such 
a case, he will incur the ordinary liability of an indorser, 
from which, in the case of a mere transfer by delivery, he is 
ordinarily exempt. On the transfer of a bill, payable to the 
bearer, by delivery only, without indorsement, the person 
making the transfer to be deemed a party to the bill; although 
he may in some cases incur a limited responsibility to the per- 
son to whom he immediately transfers it, founded upon par- 
ticular circumstances, as, for example, upon his express or 
implied guaranty of its genuineness, and his title thereto. 2 

The defendant not being liable upon the notes, as in- 
dorser thereof it follows, that the first count is bad, and the 
demurrer thereto was properly sustained. 

The second count we also deem defective. Admitting* 
that the defendant impliedly warranted that the note thus 
transferred had not been paid to him, which would seem to be 

1 Story on Bills, § 204. See also Rex v. Bigg, 1 Strange, 18; 
Arnot v. Symonds, 85 Pa. St., 99; Moxon v. Pulling, 4 Camp., 
50; Young v. Glover, 3 Jurist. (N. S.), 637; Badgley v. Votrain, 
68 111., 25. 

2 Story on Bills, § 200. 



SEC. 42.] FRENCH V. TURNER. 263 

the case, still he is not liable on the contract of assignment. 
The plaintiff could only sue to recover what he paid for the as- 
signment of the note, as for money paid upon a consideration 
that had failed. If property was given for the assignment, 
then he could only sue for the property, as for property sold 
and delivered; and if the assignment was for a prior debt, then 
the prior debt only could be sued for. 1 

Here, the consideration paid for the assignment^ and to 
be recovered, if any thing, is not set out. Nothing more is 
averred in this respect than that the assignment was made 
41 for value received." In what the value was received, 
whether in money, and if so, how much, or property, or by 
way of satisfaction of a precedent debt, does not appear. 
There is, evidently, not enough stated to show what the plain- 
tiff paid, and, therefore not enough to show what he was en- 
titled to recover. 

The instrument in writing therein mentioned, executed 
contemporaneously with the assignment, by which, as is 
alleged, the defendant agreed that the notes were secured by 
mortgage, is not set out, and therefore the case stands as if 
the allegations in that respect were stricken out. The parol 
agreement made, as is alleged, contemporaneously with the 
written assignment, can not be admitted to vary or extend the 
effect of the assignment as written. The doctrine in this res- 
pect is stated in the case of McClure v. Jeffrey, 3 as follows: 
"The rule is, that all oral negotiations or stipulations between 
the parties, which preceded or accompanied the execution of 
the instrument, are to be regarded as merged in it, and the 
latter is to be treated as the exclusive medium of ascertaining 
the agreement to which the contractors bound themselves. " 

The demurrers, we think, were correctly sustained, and 
the judgment must be affirmed. 

The judgment is affirmed, with costs.* 



1 Story on Prom. Notes, §§ 117, 118 and notes. 

8 8 Ind., 79. 

8 Upon the question, as to what constitutes an indorsement, 
the following authorities will be found to throw some light; 2 Bl. 
Com., 468, 469; Story on Notes, § 121; 1 Stranges R., 18, 19; 
Rex v. Bigg, 3 Peere William's R., 419; 11 Grattan's R., 830. 



UNION BANK V. WILLIS. [CHAP. 8, 

SECTION 48. 

AN INDORSEMENT CAN ONLY BE MADE BY THE PAYEE OR 
SUBSEQUENT HOLDER. AN INDORSEMENT BY A 
STRANGER TO THE BILL OR NOTE IS IRREGULAR OR 
ANOMALOUS. 

UNION BANK v. WILLIS. 1 
In the Supreme Court of Massachusetts, October, 1844. 

[Reported in 8 Met calf, 504.] 

The Form of Action. — Assumpsit by the indorsees 
against the indorser of a promissory note of the following 
tenor: 

"August 8 th, 184.3. 
"For value received, I promise Tilley Willis, to pay to 
him, or order, $350, in four months from date, 

T. D. Thompson." 

On the back was the name of lt B. L. Mirick & Co.," and un- 
der that name was the name of the defendant, both indorse- 
ments being in blank. 

At the trial before the chief justice, the plaintiff's cashier 
testified that they discounted the note for Thompson, and that 
when it was discounted, the names stood on the note as they 
now do. There was no evidence that the note was presented 
to Mirick & Co. for payment; but there was evidence tending 
show that notice of dishonor was given to them, as indorsers, 
as well as to the defendant. 

The defendant contended that Mirick & Co. were to be 
considered as joint, or joint and several, promisors, and that 
the defendant was not responsible as indorser, without proof 
of presentment to them for payment. But it was ruled that 
they were not to be so considered as promisors, as that pre- 

lr rhis case is cited in Daniel on Negotiable Instruments, 455, 
594, 713, 713a, 999a, 1757; Benjamin's Chalmers on Bills, Notes 
and Checks, 169, 221; Bigelow on Bills and Notes, 34, 104, 105; 
Bigelow's Cases on Bills and Notes, 38; Norton on Bills and 
Notes, 137; Tiedeman on Commercial Paper, 157, 212, 270, 313, 

33 6 - 



SEC. 43.] UNION BANK V. WILLIS. 265 

sentment of the note to them, and demand of payment of 
them, were necessary to charge the defendant. A verdict was 
returned for the plaintiffs, which is to be set aside, and a new 
trial granted, if the ruling was incorrect. 

Decision. — It is admitted that the note was not pre- 
sented for payment to Mirick & Co. ; and the question is, 
whether the omission to do it discharges the indorser. 

If the subject now brought before us were a new one, we 
shough hesitate in giving countenance to such an irregularity, 
as to hold that any person whose name is written on the back 
of a note should be chargeable as a promisor. We should 
say, that a name written on the paper, which name was not 
that of the payee, nor following his name on his having in- 
dorsed it, was either of no validity to bind such individual, 
because the contract intended to be entered into, if any, was 
incomplete or within the statute of frauds; or that he should 
be treated, by third parties, simply as a second indorser; leav- 
ing the payee and himself to settle their respective liabilities, 
according to their own agreement. 

But the validity of such contracts has been so long estab- 
lished, and the course of decisions, on the whole, so uniform, 
that we have now only to apply the law, as it has been pre- 
viously settled, in order to decide the present suit. 

The first case of this description, of which any mention is 
made in the reports, is that of Sumner v. Parsons, tried before 
this court in Lincoln county, July term, 1801. The facts were 
these: "Parsons wrote his name on a paper and gave it to 
John Brown, but there was no evidence of the intent, or of 
any connection in business between them. Brown made a 
note on the other side, payable to Jesse Sumner or order, on 
demand, with interest, and signed it, and thirty days after 
made a partial payment on it. Sumner then got a writing in 
these words over the name of Parsons: * In consideration of 
the subsisting connection between me and my son-in-law, John 
Brown, I promise and engage to guaranty the payment of the 
contents of the within note, on demand.' And he sued Par- 
sons, declaring on the promise, specially stating it, and the 
note, but did not aver any demand on John Brown, or notice 
to Parsons. In two trials in the supreme judicial court, it 



266 UNION BANK V. WILLIS. [CHAP. 8, 

was held that Parsons was liable, and that Sumner had a 
right to fill the indorsement so as to make Parsons a common 
indorser of the note, with the rights and obligations of such, 
or a guarantor, warrantor or surety, liable in the first instance, 
and in all events, as a joint and several promisor would be." 1 
Mr. Dane, who cites it in his Abridgment, 2 remarks, that 
1 1 this case was carried as far as any case had gone, and on 
the review the court was not unanimous; and it has since been 
questioned"; and we have no doubt with good reason; for the 
holder of the paper, having himself set out the contract by the 
words written over the name of the defendant, should have 
been held by its terms, and the legal effect should have been 
given to the material word " guaranty." And in that view of 
the contract, the promise of Parsons was only to pay after a 
demand upon Brown for payment, and a refusal by him, and 
of which Parsons should have had notice. But the court must 
have construed the writing as constituting him an original 
promisor, and so bound, absolutely, without notice. And in 
our apprehension, the writing of the guaranty over the name 
of Parsons ought not to have been as an act obligatory on 
him; but he should have been treated, if held at all, as an in- 
dorser of the note, and, as such, subject to the liabilities, and 
entitled to the notice, of an indorser. 8 

The next case which came before the court was that of 
Josselyn v. Ames.* By the report, it appears that John Ames 
was indebted on a note to the plaintiff, who demanded secur- 
ity, and John offered his brother Oliver as surety, who was 
accepted. John then made a note to Oliver, not negotiable, 
and Oliver put his name on the back in blank. The plaintiff 
received it and gave up his former note, and afterwards wrote 
over the defendant's name the same words as in Sumner v. 
Parsons, with this additional clause, ( ' and in consideration of 
receiving from Elisha Josselyn a note of the said John of the 

! Amer. Prec. Declarations, 113. 
a Vol. I, 416, 417. 

8 See Beckwith v. Angell, 6 Conn., 325, opinion of Hosmer, 
C. J. 

*3 Mass., 274. 



SEC. 43.] UNION BANK V. WILLIS. 267 

same amount." The court held that the plaintiff could not 
recover in that action, but might cancel the words written, 
and substitute, 4 ' for value received, I undertake to pay the 
money within mentioned to Elisha Josselyn," and upon such 
an indorsement, might maintain an action upon the facts 
reported. 

In what light the court held the defendant, does not dis- 
tinctly appear; but we presume as an original promisor, from 
the manner in which the case of Sumner v. Parsons is spoken 
of. * ' The guarantor in that case, " they say, • ' was not the 
promisee, but a stranger, who warranted the payment to him. 
He cannot himself warrant to a third person payment of a 
note made payable to himself and not negotiable." 

The next reported case is that of Hunt v. Adams, 1 which 
was assumpsit on a note given by Chaplin to Bennet, under 
which the defendant wrote, 

4 ' / acknowledge myself holden as surety for the payment 
of the demand of the above note. Witness my hand. 

Barnabas Adams." 

This cause was much considered, and the court ruled that the 
defendant, Adams, was to be charged as a promisor, and that 
his holding himself as surety did not abridge or affect the 
plaintiff's rights, but only was evidence, as between the prom- 
isor and himself, that he had signed for his accommodation. 
Other cases between the same parties, on similar notes, after- 
wards arose, and were decided in the same manner. 2 

Immediately after, occurred the case of Carver v. War- 
ren. 8 That was on a note made by one Cobb to the plaintiff, 
and on the back of which the defendant wrote his name; and 
the plaintiff filled the indorsement, and declared upon it as his 
promise. The defendant demurred to the declaration, on the 
ground that this was but a promise to pay the debt of an- 
other, and was void for want of consideration. But the court 
held that, by the pleadings, each promised to pay the same 



1 5 Mass., 358. 

2 6 Mass., 519. 

8 5 Mass., 545. 



268 UNION BANK V. WILLIS. [CHAP. 8, 

sum, and that the defendant's promise did not import any 
guaranty or collateral stipulation; and that if the defendant 
had indorsed as guarantor, and the present indorsement was 
filled up without his consent, or any authority from him, he 
should have pleaded the general issue, and on the trial he 
might have availed himself of this evidence. And so the 
plaintiff had judgment on the demurrer. 

The case of Hemmenway v. Stone, followed. There the 
note ran, 4t I promise to pay F. M. Stone or order," and was 
signed B. Chad wick; and below was signed by the defendant. 
The court held that it was a joint and several note, like the 
case of March v. Ward. 2 

The next case was White v. Howland, 8 which was on a 
note payable by one Taber to the plaintiff, and on the back 
of it was written, 

•• For value recewed, we jointly and severally undertake 

to pay the money, within mentioned, to the said William 

White. 

L Coggeshall, Jr. 

J no. H. Howland." 

The court held that this undertaking was within the principle 
settled in Hunt v. Adams, and was the same as if the party 
had signed his name on the face of it; and that he was well 
charged as a several original promisor. 

The case of Moies v. Bird, 4 which succeeded, is substan- 
tially like the present. A note was made to the plaintiff, and 
signed by Benjamin Bird, and the defendant signed his name 
in blank on the back of the note. The court say, the defend- 
ant " leaves it to the holder of the note to write anything over 
his name which might be considered not to be inconsistent 
with the nature of the transaction. The holder chooses to 
consider him as a surety, binding himself originally with the 
principal; and we think he has a right so to do. If he was a 
surety, then he may be sued as an original promisor." 

1 7 Mass., 58. 

'Peaks's Cas., 130; see also Bayley on Bills (2d Amer. ed.), 44. 

*9 Mass., 314. 

4 11 Mass., 436. 



SEC. 43.] UNION BANK V. WILLIS. 269 

In the case of Baker v. Briggs, 1 which was an action to 
recover the amount of a promissory note made by one Ryan 
to the plaintiff, the name of the defendant, Briggs, was writ- 
ten on the back of it, and the court say that, according to sev- 
eral decisions, it was right to declare against him as promisor, 
though he stood in the relation of surety to Ryan, who signed 
the note on the face of it. 

The case of Chaffee v. Jones 3 was assumpsit on a note 
signed by Israel A. Jones, as principal, and Eber Jones and 
E. Owen & Sens, as sureties, by which they jointly and sev- 
erally promised to pay the president, etc. , of the Housatonic 
Bank, or their order; and the plaintiff put his name on the 
back of the note in blank. The plaintiff was called upon, af- 
ter the neglect of the makers, and he paid it to the bank. 
The court held that where one, not a promisor, nor indorser, 
puts his name on a note, meaning to make himself liable with 
the promisor, he is to be regarded as a joint promisor and 
surety. He is not liable as indorser, for the note is not ne- 
gotiated, nor a title made to it, through his indorsement; nor 
as guarantor, there being no distinct consideration; but he 
means to give security and validity to the note by his credit 
and promise, and it is immaterial, for this purpose, on what 
part of the note he places his name. So in Austin v. Boyd,* 
where the defendant's name was, in like manner, on the note, 
it was held that the party, by thus putting his name on the 
back, makes himself an original promisor. He intends by it 
to give credit to the note. 

The case of Samson v. Thornton 4 was assumpsit on a 
note made by Benjamin Russell to the plaintiff, and was in- 
dorsed by the defendant, Thornton; and the declaration 
charged him as an 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 and joint promisor 
and surety. 



1 8 Pick., 130. 
2 19 Pick., 260. 
8 24 Pick., 64. 
*3 Met., 275. 



2 7° UNION BANK V. WILLIS. [CHAP. 8, 

The case of Richardson v. Lincoln l is of the same type. 
There the court held that the defendant, not being payee, but 
having put his name, in blank, on the note, must be consid- 
ered as an original promisor and surety, if he put it on simul- 
taneously with the promisor, as an original contractor. 2 

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. 3 But that the 
promise was made at the same time with the note, is a fact 
which is to be presumed when the note is in the hands of a 
bofia 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, unquestionably, a 
distinction between these several undertakings; and always so 
in regard to a mere guarantor. But as to the subsisting rela- 
tions 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 prom- 
ise is, I, A. B. , as principal, and I, C. D. , as surety, promise 

*5 Met., 201. 

8 See also Sumner v. Gay, 4 Pick., 311. 

"Carvor v. Warren, 5 Mass., 545; Tenney v. Prince, 4 Pick., 
385; Baker v. Briggs, 8 Pick., 130; Oxford Bank v. Haynes, 8 
Pick., 423; Story on Notes, §§ 473, 474; Beckwith v. Angell, 6 
Conn., 315. 



SEC. 43.] UNION BANK V. WILLIS. 27 1 

to pay; or where the party signs, and adds to his name the 
word surety. This does not make him less a promisor. It 
only defines the relation between him and his co-promisor; 
and as promisor, the necessity of a presentment to him is not 
dispensed with, if the intention of the holder of the note is to 
charge the indorser. It is not for the holder of the note to 
choose in what character he will consider the party who has 
put his name on the note; but he must treat him as sustaining 
that legal relation which the facts establish. If he put his 
name on the note at the time it was made, like the case at 
bar, he is a promisor; if after the making of the paper, he is 
a surety or guarantor, according 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 protec- 
tion of holders, and for guarding the rights of indorsers, whose 
liability is conditional. If it were held otherwise, I do not 
well see how such contracts could be supported against the 
objection of being void 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 engrafted 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. 

The demand, in this case, was made on Thompson, the 
signer of the note, and notice was given to Mirick & Co. and 
to Willis, as indorsers; and it is now contended, by the plain- 
tiffs, that if it should be held that Mirick & Co. are joint and 
several promisors with Thompson, and not indorsers, then the 
demand on Thompson is, in law, a demand on them also; and 
such demand being proved, that the indorser, on due notice, 
will be bound. 

The precise question here presented, we believe, has not 
been decided in any reported case. If the joint and several 
promisors are to be considered in the light of partners, then 
a notice to one must be esteemed a notice to all, as partners 
are but one person in legal contemplation; each partner, 



2 72 UNION BANK V. WILLIS. [CHAP. S y 

acting in such capacity, being not only capable of performing 
what the whole can do, and of receiving that which belongs ta 
all, but by such acts necessarily binding all the partners. It 
follows, therefore, as an incident to such joint relations, that 
all the partners are affected by the knowledge of one. But in 
respect to mere joint and several promisors on a note, there is 
not such absolute community of interest between them, nor 
such necessary connection with each other, as to constitute 
them partners. The relationship is confined to the present 
specific liability of a joint and several promise, and which can 
not be extended by the act of one, so that his conduct shall 
necessarily bind the other. As between themselves, one 
promisor may be a mere surety, and the other the debtor; one 
surety may have received security for lending his name, the 
other not. Or, if there are three joint and several promisors, 
two may be sureties, and the other the principal debtor, 
although the fact may not appear on the note. 

As the incidents, then, of a partnership do not attach ta 
such a limited joint liability, there being neither a community 
of interests, nor joint participation of profit and loss, the i'act 
of knowledge on the part of the whole, from the actual 
knowledge of one, does not follow as a presumption of law;, 
and a demand upon one is not, therefore, in law, a demand 
upon the whole. If, then, the bringing home of knowledge 
to each, or proof of a demand upon each, is a fact necessary 
to be proved, in order to bind third persons, then such knowl- 
edge or such demand on each, must be proved as any other 
fact. 

A case arose in Connecticut, upon a note payable to two* 
jointly, and by them indorsed in their individual names. One 
ground of defense was want of notice of non-payment; and 
notice was proved to have been given to one only. The 
court held, after a careful consideration of the case, that a 
notice to one laid no foundation for an action against both, as 
each payee must indorse it, in order to transfer the title. 1 This 
case, we think, involves and settles a principle similar to the 
one arising in the case at bar. And the Supreme Court of 
the state of New York strongly incline to a like view of the 

1 Shepard v. Hawley, i Conn., 367. 



SEC. 43.] UNION BANK V. WILLIS. 273 

law, in a case ! where it was not necessary to decide the point. 
And Judge Story, who carefully considers the subject, in his 
work on notes, is of the same opinion. 2 

To apply the law to the tacts as proved in the case before 
us: Thompson and Mirick & Co. stand in the relation of joint 

*5 Hill, 234. 

2 Story on Notes, §§ 230, 255. 

Indorsement by Joint Payees. — If a commercial contract 
be made payable to several persons, not partners, or in case it be 
indorsed to several persons jointly, it can only be transferred, by 
indorsement, by a joint indorsement of them all. If, however, the 
joint payees are partners, then it may be transferred by any one of 
them. One of the joint payees may be authorized by the others 
to indorse for them. Ryhiner v. Feickert, 92 111., 305; Story on 
Promissory Notes, sec. 125; Dan. on Negot. Inst., sec. 701a. 

While a joint payee or indorsee may not transfer the title, 
legal or equitable, by his separate indorsement, he may, however, 
transfer his interest in the same; Ryhiner v. Feickert, supra; Dan. 
on Negot. Inst., supra; in which case the transferee would take an 
equitable title only in the instrument. When joint payees become 
joint indorsers, the right of contribution exists among them. Lane 
v. Stacy, 8 Allen (Mass.), 41 (1864). 

By Whom May the Indorsement be Made ? — In case the 
contract can be transferred by indorsement, the general rule is that 
it may always be indorsed by the legal or lawful holder. It may 
also be indorsed by an infant or a person of unsound mind. 
When the indorsement is by an infant it will pass a good title to 
the paper; but the infant of course does not render himself liable 
thereon unless he desires so to be, or unless after reaching his 
majority he ratifies the contract. But the infant may indeed avoid 
his indorsement and intercept the payment to the indorsee, or by 
giving notice to the antecedent parties, of his avoidance, furnish 
to them a valid defense against the claim of the indorsee. But 
until he does so avoid it, the indorsement is to be deemed, in 
respect to such antecedent parties, as a good and valid transfer. 
Culver v. Leavy, 19 La. Ann., 202; Story on Bills and Notes, sec. 
80; Daniel on Negot. Inst., sec. 228; Tied, on Com. Paper, 
sec. 49. 

The indorsement by an infant is voidable only and not void. 
Goodsell v. Meyers, 3 Wend., 479. 

It has been said that, where he receives full consideration for 
the transfer, his right to avoid his contract is suspended until he 
reaches his majority; and that he cannot disaffirm it then without 
returning or offering to return the consideration received. There 
is some doubt, however, about this being the rule. Medbury v. 
Watrous, 7 Hill, no; Dan. on Negot. Inst., sec. 229. 



2 74 UNION BANK V. WILLIS. [CHAP. S r 

and several promisors. Payment of the note was demanded 
of Thompson, but not of Mirick & Co. The defendant is an. 
indorser, liable only upon legal notice of a demand upon the 
promisors and a refusal by them to pay the note; and we are 

In case of the death of the holder, the right in these con- 
tracts passes to his personal representatives — administrators or 
executors — and then must be indorsed by them. The personal rep- 
resentative cannot bind the estate which he represents by his 
indorsement. Curtis v. National Bank, 39 Ohio St., 579. Where 
there are several executors they must all indorse. Brown v. Salis- 
bury, 1 Glyn. & Jam., 407; Tiedeman on Commercial Paper, 262. 

At common law the husband by reducing the wife's chose in 
action to possession became the lawful owner of them and must 
therefore transfer them by indorsement. Conner v. Martin, 1 
Strange, 516; Miller v. Delameter, 12 Wend., 433. 

This rule has now been greatly modified in many of the states 
by statute, so that she now owns and controls her own estate just 
as though she were a. feme soule. 

A spendthrift or a person under guardianship can not contract, 
and therefore cannot pass title by an indorsement. Lynch v. 
Dodge, 130 Mass., 458. 

In case of bankruptcy all the property of the bankrupt passes 
to the assignee, and together with it the control, etc., and thereby 
the original holder loses the right to indorse. In such cases the 
assignee may indorse these contracts. 

Where these commercial contracts are made payable to a co- 
partnerships, any one of the firm may indorse it; but such indorse- 
ment must be in behalf of the partnership. Otherwise the member 
of the firm who indorses would be personally bound. If one of 
the firm dies, then the survivor may indorse in his own name. If 
the paper is payable to a corporation it must be indorsed by some 
agent of the corporation who has authority to bind the corpora- 
tion by contract, and then the indorsement must show that it is 
the act of the corporation, for otherwise the agent would be per- 
sonally bound. When a bill or note or other commercial contract 
is payable to two or more persons jointly and who are not part- 
ners, they must all join in the indorsement in order that the whole 
title may be passed. If one of them indorses alone, it passes his 
equitable interest only. The indorsee in this case could not main- 
tain an action on the paper. When, however, the paper is pay- 
able to either of two or more persons, then any one may pass the 
title by indorsement. Culver v. Leavy, 19 La. Ann., 202; Ryhiner 
v. Feickert, 92 111., 311. 

Of course one of joint parties may be authorized to indorse 
such contract. He may also indorse to the others, in which case 
the indorsement will carry with it all his interest. Russell v. 
Swan, 16 Mass., 314. 



SEC. 43.] UNION BANK V. WILLIS. 275. 

of opinion that he has a right to avail himself of this neglect 
to make demand on Mirick & Co. to discharge himself from 
his liability as indorser. 

Verdict set aside, and a new trial granted. 

Irregular or Anomalous Indorsement — Defined. — An 
irregular or anomalous indorsement is where a person who is not 
the payee, but a third party, places his name on the back of a 
commercial contract before the name of the payee or of the orig- 
inal party to the contract. It is the indorsement by a stranger 
before the delivery of a commercial contract. Where the payee 
of a commercial contract indorses it by placing his name on the 
back of the instrument, a contract of indorsement is created; and 
parol evidence is not admissible to change or vary the terms of his 
contract. Kingsland v. Koeppe, 137 111., 344; 28 N. E. R., 48; 
Good v. Martin, 95 U. S., 95; Blakeslee v. Hewitt, 76 Wis., 341 
(44 N. W. Rep., 1 1 05); Cady v. Shepherd, 12 Wis., 639; People's 
Bk. v. Jefferson, etc. Bk., 106 Ala., 624. The exact nature of the 
liability of one who, not being the payee, — a stranger, — writes his 
name across the back of a negotiable contract before delivery, is 
differently stated in the various jurisdictions. In some states he 
is held to be a guarantor; in some a joint maker; in others an in- 
dorser; in others as a co-surety; but in all of the states it is held 
that parol evidence may be admitted for the purpose of showing 
the intention of such signer at the making of such signature. In 
Indiana it is held that he is a co-security or joint maker if the 
contract is non-negotiable while if it is a negotiable contract the 
same act is held to be an indorsement and the party liable as an 
indorser. Some of the states have settled the nature of his lia- 
bility by statute. In Connecticut, New Jersey, Indiana, Wiscon- 
sin, Pennsylvania, New York, Maine and in the courts of the 
United States his liability is that of an indorser. Spencer v. 
Allerton, 60 Conn., 410; DePauw v. Bank, 126 Ind., 553; Chad- 
dock v. Vaness, 35 N. J. L., 517; Cady v. Shepherd, 12 Wis., 
639; Smith v. Kessler, 44 Pa. St., 142; Lester v. Paine, 39 Barb., 
616; Brown v. Butler, 99 Mass., 179; Sturtevant v. Randall, 53 
Me., 149; Good v. Martin, 95 U. S., 95. He is held to be a 
grantor in Illinois, Kansas, California, and Nevada. Kingsland 
v. Koeppe, 137 111., 344; Fullerton v. Hill, 48 Kan., 558; Riggs 
v. Waldo; 2 Cal., 485. He is held to be a joint maker or co- 
security in Tennessee, Missouri, Maryland and Vermont, Michi- 
gan, Massachusetts, Maine, Colorado, Arkansas, Delaware, Min- 
nesota, Missouri, Ohio, Rhode Island, North Carolina, South 
Carolina, Texas, Maryland, New Hampshire, Vermont, Utah. 
Bank of Jamaica v. Jefferson, 92 Tenn., 537; First Nat. Bk. v. 
Payne, 11 1 Mo., 291; O wings v. Baker, 54 Md., 82; Smith v. 
Long, 40 Mich., 555; Seymour v. Mickey, 15 Ohio St., 515. 



276 BROWN V. BUTCHER'S, ETC., BANK. [CHAP. 8, 



SECTION 44. 

NO PARTICULAR FORM IS REQUIRED FOR AN INDORSE- 
MENT. IT IS SUFFICIENT IF IT IS MADE, EITHER 
WITH AN INTENTION TO TRANSFER THE CONTRACT 
UPON WHICH IT IS WRITTEN, OR TO STRENGTHEN 
THE SECURITY AND TO TRANSFER THE CONTRACT.* 

BROWN v. BUTCHER'S, ETC., BANK.* 
In the Supreme Court, New York, May, 1844. 

[Reported in 6 Hill, 443, 41 Am. Dec, 755.] 

On error from the Superior Court of the city of New 
York, where the Butchers and Drovers' Bank sued Brown as 
the indorser of a bill of exchange, and recovered judgment. 
The indorsement was made with a lead pencil, and in figures 
thus, •• 1. 2. 8.," no name being written. Evidence was given 
strongly tending to show that the figures were in Brown's 
hand-writing, and that he meant they should bind him as in- 

! This case is cited in Daniel on Negotiable Instruments, 74, 
688a; Benjamin's Chalmers on Biils, Notes and Checks, 57; Nor- 
ton on Bills and Notes, 58, 108, 382; Tiedeman on Commercial 
Paper, 12, 265; Bigelow on Bills and Notes, 10, 25, 63; Bigelow's 
Cases on Bills and Notes, 77. See also 41 Am. Dec, 755, and 
■cases cited. 

*Form of Indorsement. — No particular form is required so 
long as it is in writing and placed upon the contract to be trans- 
ferred. It is quite immaterial whether the indorsement be written 
on the back of the instrument or on the face. Young v. Glover, 
3 Jurist (U. S.), 637; 1 Aures Cases on Bills and Notes, 228; Gor- 
man v. Ketchum, 33 Wis., 427; Chitty on Bills, 227; Haines v. 
Dubois, 30 N. J. L., 259; Rex v. Bigg, 1 Strange, 18; Shaw v. 
Sullivan, 106 Cal., 208; Quin v. Sterne, 26 Ga., 223; Arnot v. 
Symonds, 85 Pa. St., 99; Marion Gravel Road Co. v. Kessinger, 
■66 Ind., 553; Herring v. Woodhull, 29 111., 92; Yarborough v. 
Bank of England, t6 East, 12; Gibson v. Powell, 6 How. (Miss.), 
60; Moies v. Bird, 11 Mass., 436; Story on Promissory Notes, sec. 
121. 

The indorsement is generally written upon the back of the 
note and at the left-hand end thereof. In the case of Haines v. 
Dubois, supra, the payee wrote his name under that of the 
maker, and it was held to be a sufficient indorsement. 



SEC. 44.] BROWN V. BUTCHER'S ETC., BANK. 277 

dorser; though it also appeared that he could write. The 
court below charged the jury that, if they believed the figures 
upon the bill were made by Brown, as a substitute for his 
proper name, intending thereby to bind himself as indorser, 
he was liable. The jury found a verdict for the plaintiffs be- 
low, on which judgment was rendered, and Brown thereupon 
brought error. 

An Allonge Defined. — The indorsement may also be written 
upon another paper if the same is attached to the contract, in which 
case it is called an " allonge." It may sometimes happen that in 
numerous transfers from hand to hand, the back of the paper is 
covered by endorsements. In such case the holder may tack on a 
piece of paper sufficient to bear his own and subsequent indorse- 
ments. This addition is called an " allonge." Young v. Glover, 
3 Jurist (U. S. ), 637; French v. Turner, 15 Ind., 59; Cusley v. 
Roub, 1 6 Wis., 616; Folger v. Chase, 18 Pick (Mass.), 63; Helmer 
v. Com. Bank, 44 N. W. Rep., 482. 

The full name of the indorser should be written, and it is usual 
so to do; but the initials will be sufficient, as well as any mark or 
sign, instead of the name if made to represent it. Merchants Bank 
v. Spicer, 6 Wend., 443; Corgan v. Trew, 39 111., 31; Rogers v. 
Colt, 6 Hill, 322; Brown v. Butchers and Drovers Bank, 6 Hill 
322; Johnson's Cases on Bills and Notes, 114. 

The indorsement may be made with pen or pencil, so long as 
the intention of the parties can be ascertained. Geary v. Physic, 
5 Barn. & C, 234; Brown v. Butchers Bank, 6 Hill, 443; Closson 
v. Steans, 4 Vt., 11; 41 Am. Dec, 755. 

The following forms of expression have been held to consti- 
tute good indorsements when written across the instrument and 
properly signed: — 

"1, 2, 8;" " Pay the contents to A;" " Pay A;" " Pay A or 
order;" "Pay A or bearer;" " assign;" " sell and assign;" " Pay 
to the order of A;" "A;" " Pay A only;" " Pay A for the use of 
B;" " I hereby assign this draft and all benefit of the money 
secured thereby to B;" "I hereby assign all my right and title to 
the within note to B." Brown v. Butchers Bank, 6 Hill, 443; Ad- 
ams v. Blethen, 66 Me., 19; Sears v. Lantz, 47 la., 658; Vincent 
v. Horlock, 1 Camp., 442; Sands v. Wood, 21 Iowa, 263; Shelby 
v. Judd, 24 Kan., 166. 

" I hereby transfer my right and title to the within note to S. 
A. Yeoman," was held to be a good transfer of the contract in 
Michigan by assignment. Aniba v. Yeoman, 39 Mich., 171. 

The full name of the indorser should be given, but the initials 
will answer. No particular form is necessary. The following have 
also been held to constitute an indorsement: Just the name written 
across the back of note or bill; "Pay A. or order," or "bearer;" 

17 



278 B ROM AGE ET AL. V. LLOYD ET AL. [CHAP. 8, 

Decision. — It has been expressly decided that an indorse- 
ment written in pencil is sufficient; 1 and also that it may be 
made by a mark. 1 In a recent case it was held that a mark 
was a good signing within the statute of frauds; and the court 
refused to allow an inquiry into the fact whether the party 
could write, saying that would make no difference. 8 

These cases fully sustain the ruling of the court below. 
They show, I think, that a person may become bound by any 
mark or designation he thinks proper to adopt, provided it be 
used as a substitute for his name, and he intend to bind him- 
self. 4 

Judgment affirmed. 



SECTION 45. 

AN INDORSEMENT IS NOT COMPLETE UNTIL A DELIVERY 
OF THE CONTRACT UPON WHICH IT IS MADE. 

BROMAGE ET AL. v. LLOYD ET AL. 8 
In the Court of Exchequer, May, 1847. 

[Reported in I Exchequer Rep., J2.~\ 

The Form of Action. — Assumpsit. The declaration 

"assign;" "sell and assign;" any form of words, with the signa- 
ture, which will indicate the intention of theindorser. It has been 
held that the indorsement need not be on the back of the instru- 
ment. Rex v. Bigg, 1 Strange, 18. It matters not where the sig- 
nature appears, so long as it shows what the nature of the liability 
is. Quin v. Sterne, 26 Ga., 223; Arnot v. Symonds, 85 Pa. St., 99. 

'Geary v. Physic, 5 Barn. & Cress., 234. 
'George v. Surrey, 1 Mood. & Malk., 516. 
'Baker v. Dening, 8 Adol. & Ellis, 94; and see Harrison v. 
Harrison, 8 Ves., 186; Addy v. Grix, id., 504. 

4 See Rogers v. Coit, (ante. p. 322, 323). 

5 This case is cited in Daniel on Negotiable Contracts, 64, 267; 
Norton on Bills and Notes, 72, 135; Tiedeman on Commercial 
Paper, 34, 148; Benjamin's Chalmers on Bills, Notes and Checks, 
59, 61; Wood's Byles on Bills and Notes, 115, 285; Ames on Bills 
and Notes, 289. See also, Clark v. Sigourney, 17 Conn., 511; 
Clark v. Boyd, 2 Ohio, 56; Taylor v. Surget, 21 N. Y., 116; Mars- 
ton v. Allen, 8 Mees. & W., 494; Spencer v. Carstarphen, 15 Colo., 
445 (1890); 24 Pac. Rep., 882; Laird v. Davidson, 124 Ind., 412; 
Cooper v. Nock, 27 III., 301. 



SEC. 45.] BROMAGE ET AL. V. LLOYD ET AL. 279 

stated, that the defendants, on, etc., made their promissory 
note in writing, and thereby jointly and severally promised to 
pay one H. Lloyd Harries (since deceased) or order, £300 on 
demand, and then delivered the said note to the said H. Lloyd 
Harries, who then indorsed the said promissory note, but with- 
out making any delivery thereof: and afterwards, to wit, on, 
etc., the said H. Lloyd Harries died, having first made his last 
will and testament, in writing, duly executed and attested as 
by law required, and thereby appointed his then wife, to wit, 
one Jane Harries, executrix thereof, who, after the death of 
the said H. Lloyd Harries, to wit, on, etc. , duly proved the 
said will and took upon herself the execution thereof, and be- 
came and was sole executrix thereof; and she, as such exe- 
cutrix, afterwards, to wit, on, etc. , for good and valid con- 
sideration to her, as such executrix as aforesaid, in that be- 
half, transferred the said note, so indorsed as aforesaid, to the 
plaintiffs, to wit, by delivery thereof to them by her as such 
executrix as aforesaid; of all which the defendants then had 
notice, and then, in consideration of the premises, promised 
to pay the amount of the same note to the plaintiffs, accord- 
ing to the tenor and effect thereof, and of the said indorse- 
ment and delivery. 

General demurrer, and joinder. 

The Claim of Defendant. —The plaintiffs have no title 
to sue on the note. An indorsement consists of two things, 
namely, (1) the writing on the note of the name of the party 
transferring it, and (2) of a delivery for the purpose of complet- 
ing such transfer. 1 

In the present case, the testator wrote his name on 
the note, but did not deliver it; the executrix has delivered 
the note without indorsing it. The indorsement by the 
testator was a mere inchoate act which could not be ren- 
dered complete by the subsequent delivery of the executrix. 
In Rex v. Lambton, 2 Wood, B., says, "It is clear that a spe- 
cial indorsement does not transfer the property in bills until 
they are delivered over." Suppose the testator has sealed a. 

1 Marston v. Allen, 8 M. & W., 494. 

2 5 Price, 442. 



280 BROMAGE ET AL. V. LLOYD ET AL. [CHAP. 8, 

bond, and died without delivering it, a delivery by his execu- 
trix would not render it the deed of the testator. In Adams 
v. Jones, 1 Ld. Denman, C. J., says, "A bill may be indorsed 
to a party in two ways, either by special indorsement, making 
it payable to that party, or by a blank indorsement, and de- 
livery to that party. In the latter way, at all events, if not 
in the former, the bill must be delivered to the party as in- 
dorsee, in order to constitute an indorsement to him." An 
indorsement of a bill by an executor, with delivery, will not 
bind the assets of the testator. 2 A fortiori delivery, without 
indorsement, cannot do so. 

The Claim of Plaintiff. — First, upon general demurrer, 
there is a sufficient allegation of the transfer of the note. 
The declaration alleges that the executrix, for good and valid 
consideration to her as executrix, transferred the note so in- 
dorsed as the plaintiffs, to wit, by delivery thereof to them by 
her, as such executrix as aforesaid. That allegation is tanta- 
mount to a legal indorsement by the executrix. The promise 
alleged in the declaration is to pay according to the tenor and 
effect of the said indorsement. If a legal transfer can only 
be made by the party writing his name upon and delivering 
the note, then upon general demurrer, such must be taken to 
be the meaning of the word "transferred." The true con- 
struction of the declaration in this: that the executrix trans- 
ferred the note "being so indorsed as aforesaid;" that is, in- 
dorsed by another person. The videlicet does not control the 
operation of the word ' * transfer, " or render material the 
mode in which it is alleged to have been made. 8 A "trans- 
fer" may mean either an indorsement or assignment; which 
latter word is used in the statute 3 & 4 Anne, c. 9. If the 
defendant had pleaded by denying the transfer modo et form&, 
and that issue had been found against him, he could not after 
verdict have taken advantage of any ambiguity in the declara- 
tion. 

Secondly, even if it be taken on the face of the declara- 
tion that there was a mere writing of his name by the testator, 

'12 Adolph. & E., 459. 

a Childs v. Monins, 2 Brod. & Bing., 460; E. C. L. R., 6. 

"Hammond v. Colls, 1 C. B., 916. 



SEC. 45.] BROMAGE ET AL. V. LLOYD ET AL. 281 

and a delivery by the executrix, such transfer would pass the 
property in the note, and entitle the plaintiffs to sue upon it. 
Where the testator has delivered a note without indorsement, 
an indorsement by his executor is equally valid as if made by 
himself. 1 That case only decides, that where a party delivers 
a note for a valuable consideration, without indorsement, he 
creates an equitable, not a legal title, and the holder, having 
an equitable right, is entitled to call on the executor of the 
party who delivered it to give a formal transfer. If a note is 
transferred without indorsement before bankruptcy, the holder 
may call on the bankrupt or his assignees to indorse it. 2 There 
are many instances in which an executor may adopt and 
ratify the acts of his testator. A cognizance by a defendant, 
as bailiff of an executor, for rent due to the testator, is sup- 
posed by proof of a distress by him in the name of the testa- 
tor, and by his direction, but after his death; such distress, 
though made before probate, having been afterwards adopted 
and ratified by the executor.* In that case Ld. Denman, 
C. J., said, "The law knows no interval between the testator's 
death and the vesting of the right in his representative." An 
executor is not in the situation of a mere agent, but his acts 
are identified with those of his testator. 

Decision.— This is an action on a promissory note, upon 
which a party has written his name, and after his death his 
executrix delivers the note to the plaintiffs without indorsing 
it; so that there is a writing of his name by the deceased, and 
a delivery by his executrix. Those acts will not constitute an 

indorsement of the note; the person to whom it is so delivered 
has no right to sue upon it. 

The promissory note was made payable to the testator 

* * or order;" that means order in writing. The testator has 

written his name upon the note, but has given no order; the 



1 Watkins v. Maule, 2 Jac. & W., 237. 

2 Smith v. Pickering, Peake, N. P. C, 50; Arden v. Watkins, 
East., 317. 

"Whitehead v. Taylor, 10 Adol. & E., 210. 



282 HOTEL CO. V. BAILEY. [CHAP. 8, 

executrix has given an order, but not in writing. The two 
acts being bad, do not constitute one good act. 

The word "transfer" means indorsement and delivery. 

Judgment for the defendant.* 



SECTION 46. 

AN INDORSER CONTRACTS TO PAY THE BILL OR NOTE 
INDORSED ACCORDING TO ITS TENOR, IF, UPON PRE- 
SENTMENT TO AND DEMAND UPON (AND PROTEST 
WHEN NECESSARY), THE PARTIES WHO ARE PRIMAR- 
ILY LIABLE, PAYMENT IS REFUSED, HE IS DULY NOTI- 
FIED OF SUCH REFUSAL. 

HOTEL CO. v. BAILEY.* 
In the Supreme Court of Vermont, Mar., 1892. 

[Reported in 64 Vermont, iji; 24 At I. Rep., 136. ] 

The Form of Action. — Special assumpsit for the annual 
interest due on five promissory notes indorsed by the defend- 

*An acceptance or indorsement of a bill or note is not com- 
plete without actual or constructive delivery; Cox v. Troy, 5 B. & 
Aid., 474; Brind v. Hampshire, 1 M. & W. 65; Marston v. Allen, 
8 Id., 494; Belcher v. Campbell, 8 Q. B., 1. And as between the 
original parties and subsequent holders with notice, evidence that 
the delivery was merely for safe keeping, will, it seems, sustain a 
traverse of the indorsement, Marston v. Allen, supra; although 
not as against a subsequent bona fide purchaser, Hayes v. Caulfield, 
5 Q- B., 81. 

1 This case is cited in illustrative cases on Bills and Notes, 
109. See also Allin v. Williams, 97 Cal., 403; 32 Pac, 441; First 
Nat. Bank v. Crabtree, 86 Iowa, 731; 52 N. W., 559; Bowman v. 
Hiller, 130 Mass., 153; Ken worthy v. Sawyer, 125 Mass., 28; Sinker 
v. Fletcher, 61 Ind., 276; First Nat. Bank v. National M arine 
Bank, 20 Minn., 63 (Gil., 49). The indorser impliedly warrants 
that the paper is a valid obligation in every particular, that all the 
parties to said note were competent to contract; that he has a per- 
fect title to the paper; that the maker will pay it if properly pre- 
sented (Copp v. McDugall, 9 Mass., 1; Erwin v. Downs, 15 N. 
Y., 575; Prescott Bank v. Caverly, 7 Gray, 217); that the note is 
not usurious (Hazard v. Bank, 72 Ind., 130; Stewart v. Bramhall, 
74 N. Y., 85.) 

To charge an indorser there must be a demand and notice. 

1 Par., Bills and Notes, 353-356, 442, 443; Sto. Pr. Notes, s 135; 

2 Aik., 264; Whitney v. Dean, 22 Vt, 561. 



SEC. 46. ] HOTEL CO. V. BAILEY. 283 

ant. Plea, the general issue. Judgment for the defendant. 
The plaintiff excepts. 

Decision. — It appears by the statement of facts that Geo. 
Doolittle and Mrs. E. J. Doolittle promised to pay the defend- 
ant, William P. Bailey, or order, five thousand dollars, as 
their five promissory notes should respectively become due, 
and the interest thereon annually. The notes are dated April 
1, 1886, are for $1,000 each, and payable 16, 17, 18, 19 and 
20 years from their date. 

The plaintiff, as the indorsee of the notes, seeks to re- 
cover of the defendant, as indorser, the first three years' in- 
terest upon them without demand of the makers and notice 
to the defendant of the makers' default of payment. 

The defendant's counsel contended, — 1st, that the indor- 
ser cannot in any event be compelled to pay the interest as it 
annually falls due, that his conditional liability does not be- 
come absolute until the notes respectively mature, and then 
only after demand and notice. 

2d. That if the interest is collectable of the indorser as 
it annually accrues it is after the usual measures have been 
taken to make him chargeable. 

The general rule of law relative to the respective liabili- 
ties of the maker and indorser of a promissory note is well de- 
fined. The promise of the maker is absolute to pay the note 
upon presentment at its maturity. The promise of the in- 
dorser is conditional that if, when duly presented, it is not 
paid by the maker, he, the indorser, will, upon due notice 
given him of the dishonor, pay the same to the indorsee or 
other holder. 

It seems clear that the indorser is not liable for the an- 
nual payment of the interest without performance of these 
conditions by the holder. If he were thus liable his relation 
to the note would be like that of a surety or a joint maker, 
and his promise, instead of being conditional, would be abso- 
lute as to the payment of the interest. This is contrary to the 
general statement of the law that his liability is conditional. 
The relation of principal does not exist between him and the 
maker. They are not co-principals. Their contracts are 



284 HOTEL CO. V, BAILEY. [CHAP. 8, 

separate and they must be sued separately, at common law. 1 
The maker has received the money of the payee and in 
consideration thereof promises (absolutely) to repay it accord- 
ing to the terms of the note, and if he fails to pay, his con- 
tract is broken and he is liable for the breach. The contract 
of the indorser is a new one, made upon a new consideration 
moving from the indorsee to himself. His undertaking is in 
the nature of a guaranty that the maker will pay the principal 
and interest according to the terms of the note. His liability 
is fixed upon the maker's default upon demand, and notice to 
him of such default. This new contract cannot be construed 
as an absolute one to pay the interest without default of or 
demand upon the maker. The promise cannot be absolute as 
to the payment of interest when it is clearly conditional as to 
the payment of the principal. 

Interest Payable Annually. — When due. — It is held 
that though the annual interest (interest payable annually) 
upon a promissory note may be collected of the maker as it 
falls due, it is not separated from the principal so that the re- 
covery of it is barred by the statute of limitations until the re- 
covery of the principal is thus barred. 2 The holder of a note 
with interest payable annually loses no rights against the par- 
ties to it, whether makers or indorsers, by neglecting to de- 
mand interest, and he has the election to do so, or wait and 
collect it with the principal, for it is regarded as an incident 
of the principal. 8 But it is so far an independent debt that 
he may maintain an action against the makers for it as it an- 
nually accrues \ or allow it to accumulate and remain as a 
part of the debt until the ?wte matures. ,* In the latter course 
the makers would be chargeable with interest upon each year's 
interest from the time it was due until final payment. 5 It was 
said, by the court in Talliaferro's Ex'rs. v. Kings Admr, 6 



1 Randolph Com. Paper, s. 739. 

2 Grafton Bank v. Doe et al., 19 Vt., 463. 

8 National Bank of North America v. Kirby, 108 Mass., 497. 
* Catlin v. Lyman, 16 Vt, 44. 

5 1 Aik., 410; Austin v. Imus, 23 Vt., 286. 

6 9 Dana, 331, (35 Am. Dec, 140.) 



SEC. 46. ] HOTEL CO. V. BAILEY. 285. 

* * The interest \ by the terms of the covenant \ is made payable 
at the end of each year, and is as much then demandable as 
if a specific sum equal to the amount of interest had been 
promised; and, in default of payment, as much entitles the 
plaintiff to demand interest upon the amount so due and un- 
paid. The fact that the amount so promised to be paid is 
described as interest accruing upon a larger sum, which is 
made payable at a future day, cannot the less entitle the 
plaintiff to demand interest upon the amount, in default of 
payment, as a just remuneration in damages for the detention 
or non-payment." 

It is true that at the maturity of the notes the defendant 
would be liable, as indorser, for both principal and interest, 
upon due demand and notice, although these measures had 
not been taken to make him chargeable as the interest fell 
due each year. Notice of the maker's default of payment of 
interest need not be given annually to the indorser in order to 
charge him with liability for interest when the note matures. 
This is so stated by the court in National Bank of North 
America v. Kirby, supra. In Howe v. Bradley, 1 it is held 
that when a note is made payable at some future period, with 
interest annually till its maturity and no demand is made for 
the annual interest as it becomes due, or if made, no notice 
thereof is given the indorser, if duly notified of the demand 
and non-payment when the note falls due, is liable for the 
whole amount due, both principal and interest; that the obli- 
gation imposed by the law upon the holder is only to demand 
payment and give the required notice when the bill or note 
becomes payable. It is not held in this country that interest 
is subject to protest and notice, according to the law mer- 
chant, in order to charge indorsers with it when the note ma- 
tures. The usual consequence of omission to notify the 
indorser of the maker's default, namely, the release of the 
indorser, would not follow the omission to give him annual 
notice of such default. A note is not dishonored by a fail- 
ure of the maker to pay interest. 1 

'■■■■■ ' 111 ■■■■■— _- ^ ^— M   1  — .  — ■*■ ■' 

1 19 Me., 31. 

2 First National Bank v. County Commissioners, 14 Minn., 
77 (100 Am. Dec, 196, note). 



286 HOTEL CO. V. BAILEY. [CHAP. 8, 

The defendant's counsel argues that it would be incon- 
sistent to hold the indorser liable for interest, which is a mere 
increment of the principal, until his liability is established to 
pay the sum out of which the interest springs; that there may 
be defences to the note at its maturity which will release the 
maker and consequently the indorser, or that the indorser 
may then be released by neglect of demand and notice. On 
first impression it might seem inconsistent that the maker 
should be compelled to pay interest before his liability has 
been fixed to pay the principal, but that is his contract. It is 
also argued that the fact that the interest, when uncollected, 
is an incident of the debt so that as it annually falls due, de- 
mand and notice are not necessary in order to charge either 
the maker or the indorser with liability to pay it when the 
note matures, is ground for holding that the indorser is not 
liable for interest until he is made liable for the principal. 

The Indorser's Contract. — The question is whether the 
indorser, by the act of indorsement, promises to pay anything 
on the note till its maturity, at which time he clearly may be 
made liable for both principal and interest. The note bears 
upon its face an absolute promise by the maker to pay the 
principal when it becomes due and the interest thereon 
annually. His promise is two-fold. It is as absolute to pay 
the interest at the end of each year as to pay the principal at 
the end of the time specified. Now what is the nature of the 
contract which the indorser makes with the indorsee ? His 
contract is not in writing, like that of the maker, but his name 
upon the note is evidence that he has received value for it, 
and also of an undertaking on his part that it shall be paid 
according to its tenor. When he indorses it and delivers it to 
the indorsee he directs the payment to be made to the latter, 
and in effect represents that the maker has promised to pay 
certain sums of money according to the terms of the note, 
that is, the principal at maturity and the interest annually; 
that if the maker fails to pay on demand, he, the indorser, 
will pay on due notice. His conditional promise is concur- 
rent with the absolute promise of the maker. His liability to 
pay interest and principal, as each respectively falls due, 
arises from his contract. It is his contract that he will make 



SEC. 46.] HOTEL CO. V. BAILEY. 287 

payment whenever the maker is in default and he, the in- 
dorsee is duly notified thereof. 

It is true that interest is an incident, an increment of the 
principal, and that the holder may wait for it until his note 
matures and then collect it with the principal. He may, 
however, by the contract, collect it as it falls due, of the 
maker, and upon the latter's default, of the indorser. 

Presentment, Demand and Notice Necessary to Charge 
an Indorser with the Payment of Installments of Principal. 
— The courts of England have never recognized the American 
doctrine that interest is a mere incident, an outgrowth of the 
principal, and in many cases follows and is recoverable as 
such without an express contract. Until 37 Hen., 8, c. 9, it 
was unlawful to demand interest even upon a contract to pay 
it. Since the case of DeHavilland v. Bowerbank, 1 interest 
has been allowed in England upon express contracts therefor, 
and not otherwise. Where there is such a contract interest 
stands like the principal in respect to the rights and liabilities 
of an indorser. 9 In Jennings v. Napanee Brush Co.,* in a 
learned opinion by McDougall, J., it was held that where 
there was an express contract to pay interest annually or 
semi-annually, it was not different from a contract to pay an 
installment of the principal itself, and that notice to the in- 
dorser of the makers default was necessary to charge the 
indorser with it. In that case the indorser was released trom 
payment of the first two half-yearly installments of interest 
for want of demand and notice. 

While we adhere to the doctrine laid down in Grafton 
Bank v. Doe, et. al. , supra, that interest is in general an in- 
cident of the debt, it is consistent to hold that where the in- 
dorser is himself a party to the original contract to pay inter- 
est annually, as in the case at bar, by his indorsement he 
guarantees the performance of that contract. Any other hold- 
ing would make the indorser liable for only a part of the 
maker's contract. 

1 1 Camp., 50. 

*Sedg. on Dam., 383; Selleck v. French, 1 Conn., 32, (6 Am. 
Dec, 189, note.) 

'Reported in Canada Law Jour., Vol. 20, No. 19. 



288 HOTEL CO. V. BAILEY. [CHAP. 8, 

The case of Codman v. The Vt. and Can. Railroad Co., 1 
has been brought to our attention. The trustees and mana- 
gers of the Vermont Central Railroad Co. and the Vt. and 
Can. Railroad Co., issued notes to the amount of $1,000,000 
in sums of $1,000 each, payable to the defendant company, in 
twenty years from their date, with interest semi-annually on 
presentation of the interest coupons made payable to bearer 
and attached to the notes. On each note was this indorse- 
ment, signed by the treasurer of the defendant, under its seal: 
41 For value received, the Vermont and Canada Railroad Com- 
pany hereby guarantee the payment of the within note, prin- 
cipal and interest, according to its tenor, and order the con- 
tents thereof to be paid to the bearer." The coupons were 
not indorsed. The notes were put on the market and the 
plaintiff purchased fifty of them, and subsequently, after due 
demand, notice and protest, brought this suit to recover the 
amount of two coupons on each of his notes, the notes them- 
selves not having matured. Without passing upon the ques- 
tion whether the guaranty was negotiable and available to the 
plaintiff, as a remote holder, Wheeler, J., among other ques- 
tions that arose in the case, decided that the indorsement was 
a contract of indorsement running to the bearer, and that 
demand, notice and protest fixed the liability of the indorser 
to pay the coupons, and gave judgment for plaintiff for the 
amount of the coupons. 

Statute of Limitations — Annual Interest. — The Su- 
preme Court of the United States has repeatedly held that 
the statute of limitations begins to run upon interest coupons 
payable annually or semi-annually, from the time they re- 
spectively mature, although they remain attached to the bonds 
which represent the principal debt. 2 Where the indorser is 
the payee of the note there would seem to be no difference in 
his liability in respect to interest whether the maker's promise 
to pay it is contained in the body of the note or in interest 
coupons not indorsed, the notes to which they are attached 
being indorsed, and the coupons being mentioned in the notes; 
but it is unnecessary to decide that question here. 

l i6 Blatch., 165. 

2 Amy v. Dubuque, 98 U. S., 470. 



SEC. 46.] HOTEL CO. V. BAILEY. 289 

Upon the facts found by the county court this action can- 
not be maintained for the reason that the plaintiff never fixed 
the defendant's liability to pay the three years' accrued inter- 
est. It does not even appear that the makers refused pay- 
ment of it or that they were requested to pay it before this 
suit was brought; therefore nothing is due from the defendant 
to the plaintiff. 

Judgment affirmed. 

Ross, Ch. J., dissents. 

Ross, Ch. J. I concur in the disposal made of this 
case; and in most of the grounds and reasoning of the opin- 
ion. But I do not see my way clear to concur in holding, 
that an indorser upon a promissory note, payable on time, 
with the interest annually, can be made chargeable for the 
payment of the interest, before he can be, and is, charged with 
the payment of the principal. By placing his name on the 
back of the note as an indorser, without making any limita- 
tion upon his indorsement, he guarantees its payment, upon 
condition that the indorsee, when the time named in the note 
for its payment arrives, shall present it to the maker and 
demand its payment, and, if the maker fails to make payment, 
shall seasonably notify him of such failure. When this is 
done, the indorser promises to pay whatever of principal and 
interest, is then due upon the note. This condition attaches 
primarily to the principal of the note. I think it attaches to 
the interest only as it becomes a part of the principal. It 
seems to me to be illogical, and pressing the indorser's condi- 
tional undertaking beyond its proper scope and office, to hold 
that he can have his liability fixed to pay for the use, or legal 
rental of the principal, before his liability to pay the principal 
is fixed. Interest is legal damage, fixed usually by statute, for 
the detention and use of money. As soon as the money is 
due and payable, the law implies damage for its detention and 
use. It may also arise from the contract, for the detention 
and use of the principal before it is payable by the terms of 
the contract. When stipulated to be paid annually, it may 
be collected from the maker of the note at the end of each 



290 HOTEL CO. V. BAILEY. [CHAP. 8, 

year, because such is his contract. l It is an incident, and out- 
growth from the principal. The promise to pay it, whether 
implied or expressed, is a dependent promise. It is attached 
to and arises from the promise to pay the principal. When 
the interest is stipulated to be paid annually, and before the 
principal is payable, the maker when sued for the annual in- 
terest, because his promise to pay it is dependent upon his 
promise to pay the interest, may set up any defence to the 
suit for recovering the annual interest, which he could if the 
suit were for the recovery of the principal, such as fraud in 
the inception of the note; or want or failure of consideration, 
or duress, or that his liability for the principal is conditional, 
the terms of which have not been complied with. If he 
defeats the action, it will estop the holder from recovering the 
principal when due, and vice versa. 

The opinion recognizes this intimate, attached and depen- 
dent relation of the promise to pay the interest annually to the 
promise to pay the principal, from which the interest springs. 
It recognizes that the statute of limitations does not begin to 
run on such promise to pay interest annually until the princi- 
pal falls due, in accordance with Grafton Bank v. Doe et al. 2 
This must be because, until severed by enforced collection or 
payment, interest is but an incident, and dependent of the 
principal. It also recognizes this relation in holding that 
the indorsee may allow the interest to accumulate, and may 
fix the indorsees liability to pay it, by a proper demand, de- 
fault and notice in regard to the principal when that falls due. 
That is because liability for the principal carries its dependen- 
cies. I concur in the holdings. They are supported by the 
decisions cited in the opinion. But they rest, and, in my 
judgment, can rest only on the basis that the promise to pay 
the interest annually, both for its consideration and enforce- 
ment is dependent upon the promise to pay the principal. 
The opinion also holds that the liability incurred by the in- 
dorsement is conditional, that that condition attaches to the 

1 Ross, Ch. J., has not kept in mind that the contract of an 
indorser is in the nature of a guaranty that the maker will do 
exactly what he promised to do. 

a 19 Vt., 463. 



SEC. 46.] HOTEL CO. V. BAILEY. 29 1 

entire note, and that the liability of the indorser must be 
fixed by demand, default and notice, in regard to the interest 
payable from the maker yearly, as well as in regard to the 
principal. It then seems to conclude, that, because the in- 
dorsee can lawfully demand and collect of the maker, whose 
promise to pay the principal is absolute, upon his dependent, 
but yet absolute promise to pay the interest annually, he can 
by proper demand, default and notice, collect such annual 
interest of the indorser whose promise and liability to pay the 
principal is conditional, and cannot as yet be made absolute, 
and whose promise to pay the annual interest, it has already 
held is dependent upon his promise to pay the principal, and 
therefore, in my judgment, takes the condition attached to 
his liability to pay the principal. It is at this point that I fail 
to follow the reasoning of my associates. Here they assume 
— as I think — and proceed upon the basis, that, the indorsees 
implied promise to pay the annual interest, is not dependent, 
but independent, like what it would be, if it were an install- 
ment of the principal. The holdings in the opinion, that the 
indorsees liability for the accrued annual interest may be made 
absolute by a proper demand, default and notice in regard to 
the principal when it falls due, and that it may also be made 
absolute by a proper demand, default and notice yearly, re- 
sult in holding that the maker's promise to pay the interest 
annually which he indorses, is both dependent upon, and in- 
dependent of, his promise to pay the principal. I do not 
think that it has this double and inconsistent character, but 
only the former. If it be independent, must not demand and 
default be made, and notice given yearly, or the indorser be- 
come discharged? And if demand and default be made, and 
notice given annually, must not the statute of limitation begin 
to run from date of such demand? I think so. The result of 
giving this double character to the promise to pay interest an- 
nually will lead, I think, to some difficult legal problems. If 
the note is to mature at the end of twenty years, and the 
payee holds it and allows the interest to accumulate for ten 
years, and then having indorsed it, sells it, the indorsee must 
wait for the accumulated interest until the note falls due, be- 
cause the maker's promise and the indorsees liability in regard 



392 HOTEL CO. V. BAILEY. [CHAP. 8, 

to that interest is dependent upon the indorsees liability for 
the maker's promise to pay the principal, which is still condi- 
tional, and for that reason the indorsees liability to pay the 
accumulated interest is conditional, and will remain so until 
it is made absolute for the principal; but when the eleventh 
year's annual interest falls due, the indorsee may at once, by 
due demand, default and notice, fix the indorsees liability to 
pay that year's interest, and may enforce its payment by suit, 
while the indorsees liability for the payment of the principal 
from which the year's interest springs, cannot for years be 
made absolute and may never be. After the indorsees liabil- 
ity for the payment of the year's interest has thus become 
fixed by suit, on what legal principles governing res judicata, 
could the indorser defend, in a suit brought, without further 
demand, default and notice, at the maturity of the note, for 
the enforcement of the payment of the principal and the ten 
years accumulated interest? 

The only decision relied upon for the holding of my asso- 
ciates is from 6 Blatchford. I do not regard that in point. 
The guarantee was written instead of implied. The relation 
of the indorser to the obligation was exceptional, it having 
been given by its receivers and managers. The interest was 
expressed in separate coupons, which, for some purposes, are 
treated as independent obligations. The statute of limitations 
runs on them generally from their maturity. 1 In this respect 
they are unlike the promise in the note to pay the interest 
annually, as held in Grafton Bank v. Doe, et. al. 2 I do not 
think that the indorsee has the election to fix the indorser's 
liability for, and recover of him annually such yearly interest, 
or to wait and fix it by proper demand, default and notice in 
regard to the principal. I think his liability can only become 
absolute for the payment of the incident or outgrowth of the 
debt, when it becomes absolute for the payment of the prin- 
cipal from which that incident or outgrowth springs. The 
opinion on this branch of the case is made to rest upon the 
ground that the indorser's undertaking, on due demand and 
notice, is to make good to the indorsee any failure of the 

l Amy v. Dubuque, 98 U. S., 470 (25 L. C. P. Co., 228.) 
2 19 Vt, 463. 



SEC. 46.] HOTEL CO. V. BAILEY. 293 

maker to perform the contract, and, in that the maker has 
promised to pay the interest at the end of each year, the in- 
dorser has likewise so undertaken upon proper demand and 
notice. But his implied contract being conditional in regard 
to the payment of the principal I think is conditional also to 
any incident or outgrowth of the principal, so long as it is 
conditional in regard to the payment of the principal, and 

The Amount for which Indorsers are Liable. — (a). They 
are Liable for a Deficiency on Notes Secured by a Mortgage. — An 
indorser of a promissory note, secured by a mortgage given by the 
maker, is liable for any deficiency resulting after a sale of the 
mortgaged premises under a judgment of foreclosure against the 
mortgagor, providing the requirements of presentment, demand, 
and notice of dishonor were complied with. Allin v. Williams, 97 
Cal., 403; 32 Pac. Rep., 441 

(b). They are Liable for Attorney's Fees. — An indorser, by 
his contract of indorsement, promises, among other things, that 
he will discharge the note according to its tenor, upon due pre- 
sentment, demand, and notice of dishonor. Therefore an indorser 
of a bill or note which contains a stipulation for "reasonable attor- 
ney fees" "or collection fees" in case of suit, is as much liable 
for these amounts as he is for the principal of the bill or note. 
Benn v. Kutzschan, 24 Oregon, 28; 32 Pac. Rep., 763. 

(c). They are not Liable to Each Other — There is no Con- 
tribution. — Each indorser guarantees the payment of the contract 
(unless otherwise stipulated in the indorsement) to every subse- 
quent holder of the instrument. Each subsequent holder may 
recover the full amount due upon the contract from any one of the 
prior indorsers. No prior indorser can insist or compel a subse- 
quent indorser to contribute to the payment of the contract, unless 
otherwise stipulated. There is no contribution between indorsers 
as a general rule in the absence of a special agreement. Young v. 
Ball, 9 Watts. (Pa.), 139 (1839); Core v. Wilson, 40 Ind., 206; 
Shaw v. Knox, 98 Mass., 214; Bishop v. Hay ward, 4 Term., 470 
(1791); Penny v. Innes, 1 C. M. & R.. 439; Easterly v. Barber, 
66 N. Y., 443; Barrey v. Ranson, 12 N. Y., 462; Phillips v. Pres- 
ton, 5 Howard, 278; Givens v. Merchants' Bank, 85 111., 443; 
Hale v. Danforth, 46 Wis., 555. 

If, however, a subsequent indorsee holds collateral security 
from the maker and a prior indorser is called upon to pay the con- 
tract, he (prior indorser) may compel an appropriation of the col- 
lateral security to the payment of the instrument. In such case a 
trust is created in favor of the prior indorsers as well as the holder, 
to have the fund applied in the payment of the note. Price v. 
Trusdell, 28 N. J. E. R., 200. 

The indorsement may be joint, in which case, of course, con- 
is 



294 HOTEL CO. V. BAILEY. [CHAP. 8, 

that he only becomes absolutely bound to pay the interest at 
the end of each year, when he becomes bound absolutely to 
pay the principal. When so bound for the payment of the 
principal, then this obligation to pay the interest at the end 
of each year attaches, in respect both to the interest then 
accrued and the interest which may thereafter accrue. I 
would modify the opinion in the particular indicated. 

tribution may be enforced. Lane v. Stacey, 8 Allen (Mass.), 41. 

(d). They are Liable for the Full Amount due Upon the Bill 
or Note. — It may be stated generally that an indorser is liable for 
the full amount of the contract, including interest, protest fees and 
all costs of collection. 1 Daniel on Neg. Inst, sees. 766-768; 
Merritt v. Benton, 10 Wend., 116; Simpson v. Griffin, 9 Johns., 
131; National Bk., etc. v. Green, 33 la., 140; Durant v. Bunta, 3 
Dutch (N. J.), 623, 635; 2 Parsons on N. & B., 428; March v. 
Barnet, 114, Cal., 375. 

(e). Where Indorsee has Paid Less than Amount of Bill or 
Note — For what Sum is the Indorser Liable? — There is much con- 
flict in the authorities upon the question of how much may an 
indorsee recover of an indorser when the former has paid less than 
the full amount for the bill or note. 1 Daniel on Neg. Inst., sees. 
766-768; National Bank, etc. v. Green, 33 la., 140. If the trans- 
action was in good faith, we think the weight of authority permits 
the indorsee to recover the full amount of the contract. National 
Bk., etc. v. Green, supra; 2 Parsons, N. & B., 428; Bissell v. 
Dickerson, 64 Conn., 61; Cromwell v. County of Sac, 96 U. S., 
51, 60; R. R. Co. v. Schutte, 103 U. S., 118. 

The Consideration of the Indorsees Contract.— It is a 
well recognized rule of law that every binding contract must be 
supported by a consideration, and the contract of indorsement is 
no exception to this rule. But in the case of commercial contracts 
the consideration is presumed; this presumption, however, as be- 
tween the original parties may be rebutted. Dan. on Negot. Inst, 
sees. 174, 679. 

What is a sufficient consideration to support contracts in gen- 
eral is sufficient to support contracts of indorsements. Swift v. 
Tyson, 16 Pet, t; Pond v. Waterloo, 50 Iowa, 695; Bradsley v. 
Delp, 88 Pa. St., 420; Collier v. Mahan, 21 Ind., no. 

The rule is well settled that in order to charge an indorser, 
presentment and demand for payment, of the maker (or the facts 
which excuse such presentment and demand), and notice of dis- 
honor, must be proven by the plaintiff. Ankeny v. Henry, 1 
Idaho, 229; Ballingalls v. Gloster, 3 East, 481; Story on Bills, 
224, 255; Wood's Byles, 255. 



SEC. 47.] SMITH V. CLARKE. 295 



SECTION 47. 

THE NEGOTIABILITY OF A COMMERCIAL CONTRACT CAN- 
NOT BE RESTRAINED, AFTER AN INDORSEMENT IN 
BLANK BY THE PAYEE, BY AN INDORSEMENT IN FULL 

OR SPECIAL.* 

SMITH v. CLARKE.* 

In the Court of King's Bench, 1794. 
[Reported in 1 Espinasse> 181 ; Peake, 22j.] 

The Form of Action. — Assumpsit against the defendant 
as acceptor of a bill of exchange. 

The bill was drawn in favor of Lisle & Co. and they had 
indorsed it to Surtees, Burden & Co. , who had indorsed it to 
one Jackson: the first indorsement was general (in blank), but 

1 This case is cited in Benjamin's Chalmers on Bills, Notes 
and Checks, 128; Story on Bills of Exchange, 207; Chitty on Bills, 
228, 230; Wood's Byles on Bills and Notes, 251; Norton on Bills 
and Notes, 113, 117, 197; Daniel on Negotiable Instruments, 696. 
See also Walker v. McDonald, 2 Exch., 527; Johnson v. Mitchell, 
50 Tex., 212. 

♦Where a bill is by the payee indorsed in blank, a subsequent 
indorsee shall not by any special indorsement restrain its general 
negotiability, so far as to make it necessary to prove the hand- 
writing of such special indorsee, where the action is by a subse- 
quent bona fide holder. Where a bill or note is made payable to 
the "order" of the payee and indorsed in "blank" by him, it is 
then the same as if it had been made payable to ' ' bearer " origin- 
ally. But even though the instrument is made payable to "bearer " 
a particular subsequent indorser may, by a special or restrictive 
indorsement, limit his liability, because each indorsement is a new 
contract and the parties to it are liable only according to its terms. 
Curtis v. Sprague, 51 Cal., 239; Humphreyville v. Culver, 73 111., 
485;' Bank of, etc. v. Sherer, 108, Cal., 513; Beal v. Glen. Elect. 
Co., 38 N. Y., 527. 

Indorsement— Kinds or Varieties of — Enumerated. — 
Contracts of indorsement have assumed numerous forms, and the 
primary liability of an indorser depends upon the form or kind of 
his indorsement. The indorsement maybe (1) in blank, (2) in full 
or special, (3) implied or conditional, (4) restrictive, (5) absolute, 
(6) without recourse, (7) for accommodation, (8) irregular or 
anomalous. 

Blank Indorsement — Defined. — Where the payee or holder 
of a commercial contract writes his name across the back of such 



296 SMITH V. CLARKE. [CHAP. 8, 

the indorsement to Jackson by Surtees, Burden & Co. was a 

special one, viz., " Pay the contents to J. Jackson, or order. '* 

Jackson was the receiver-general of one of the northern 

counties, and kept an account with Muir, Atkinson & Co. 

instrument without any additions or explanations it is called an 
indorsement in blank, and the contract thereafter is the same as 
one payable to bearer; it may be transferred by delivery, and its 
possession is prima facie evidence of ownership. Palmer v. Nassau 
Bank, 78 111., 380; Morris v. Preston, 93 111., 215; Belden v. Hann, 
61 Iowa, 41. 

It has been held that the holder can fill up the blank indorse- 
ment and make it an indorsement in full, making it payable to him- 
self, to his own or to another's order. He may change it into any 
contract not inconsistent with the character of indorsement in 
blank, but he may not enlarge the liability of the indorser in blank 
by writing over it a waiver of any of his rights. The indorsement 
in blank may be either before or after the complete execution and 
delivery of a commercial contract. Central Bank v. Davis, 19 
Pick., 376; Hance v. Miller, 21 111., 636; Scott v. Calpin, 139 
Mass., 529, where it was held that the indorsee might write over 
the blank indorsement " I guarantee payment of the within note." 
Contra. Belden v. Hann, supra. 

Indorsement in Full or Special — Defined. — An indorse- 
ment in full, which is sometimes called a special indorsement, is 
where the indorser directs that the contract shall be paid to some 
"particular person or his order." To illustrate: " Pay to B or 
order," (signed) A; "Pay to B," (signed) A. It has been held 
that there is no distinction between the indorsements "Pay to B 
or order," and "PaytoB"; and the phrase "or order" makes 
no change in the special indorsement. In case of a special in- 
dorsement of a commercial contract, to enable any subsequent 
party to recover thereon he must be able to make his title through 
the special indorsee. Therefore it must appear that the contract 
has been re-indorsed by the special indorsee, or that he (special 
indorsee) has received satisfaction. The mere possession of a 
commercial contract which has been indorsed in full and which 
has not been indorsed by the special indorsee is not sufficient evi- 
dence of the holder's right of action thereon. The special in- 
dorsee in his transfer of the contract may use any of the regular 
forms of indorsement he desires; and if he uses a blank indorse- 
ment, the contract thereby becomes transferable by mere delivery. 
Mitchell v. Fuller, 15 Pa. St., 268; Johnson v. Mitchell, 50 Tex., 
212; Reamer v. Bell, 79 Pa. St., 292; Morris v. Preston, 93 111., 

In case there are several indorsements in blank, the holder 
may strike out any one or change them to some other form of in- 
dorsement, so long as he does not affect his own title or increase 



SEC. 47.] SMITH V. CLARKE. 297 

This bill had been sent among others to Muir, Atkinson Co. , 
desiring them to get it discounted anywhere, provided it did 
not come to the Bank of England; but there was no evidence 
of any indorsement by Jackson on it. 

the liability of indorsers. He may not, however, strike out a spe- 
cial indorsement and insert his own name, for the reason that he 
thereby destroys his own title. Johnson v. Mitchell, 50 Tex., 212, 
where Gould, J., said, "The rule is well settled that if a bill be 
once indorsed in blank, although afterwards indorsed in full, it will 
still, as against the drawer, the payee, the acceptor, the blank in- 
dorser, and all indorsers before him, be payable to bearer, though 
as against the special indorser himself, title must be made through 
his indorsee." 

The holder of a contract which has been indorsed in blank 
may change it to one in full and make the contract thereby pay- 
able to some particular person. Johnson v. Mitchell, 50 Tex., 
212; Hance v. Miller, 21 III., 636. 

Conditional Indorsement — Defined. — An indorser may 
impose some condition upon his liability in the contract of in- 
dorsement and he would not be liable thereon if such condition is 
broken or unfulfilled. And if the party who is primarily liable 
upon the principal contract pays the amount to such conditional 
indorsee before the performance of the condition, this fact will 
not preclude a recovery for the full amount by the conditional in- 
dorser in an action against him. The party who is primarily liable 
upon a commercial contract is bound to take notice of conditions 
imposed or annexed to indorsements thereon. Dan. on Negot. 
Inst., Sec. 697; Robertson v. Kensington, 4 Taunt., 30. 

These conditions may be either precedent or subsequent. To 
illustrate: An indorsement "Pay to A if he arrives at twenty-one 
years of age," or "if he is living when it becomes due," is an in- 
dorsement upon a condition precedent; and if the maker of such 
contract should pay to such indorsee before the happening of such 
condition, he might again be called upon to pay the contract to 
the conditional indorser. This is true whether the condition be 
precedent or subsequent. An example of an indorsement upon a 
condition subsequent would be, "Pay to A unless before payment 
I give you notice to the contrary." Robertson v. Kensington, 
supra; Story on Bills, Sec. 217; Chitty on Bills, ch. 6, p. 268. 

Restrictive Indorsement — Defined. — An indorser may 
not only impose conditions upon his liability as an indorser, but 
he may restrict the further negotiability of the instrument, in 
which case the indorsement is called restrictive. To illustrate: 
"Pay to A only" (signed) B; or "Pay to A for the use of B"; or 
"Pay to A for my use"; or "for collection"; or "for collection 
and immediate returns"; or "credit my account"; are examples 
of restrictive indorsements. An examination of the various re- 



2gS SMITH V. CLARKE. [CHAP. 8, 

Muir, Atkinson & Co. discounted it with the plaintiffs, 
who were their bankers. 

Muir & Atkinson became bankrupts, and soon after Jack- 
son also became a bankrupt; and this defense was in fact by 

strictive indorsements will show that they may be divided into two 
classes: (i) where they are indorsed for the use of the indorser, 
or to an agent; and ( 2 ) where they are indorsed for the use and 
benefit of some third person, or to a trustee. In the first of these 
cases, or in a restrictive indorsement to an agent, the indorser still 
retains the title to the contract; while in the second the title passes 
from the indorser to the trustee upon condition. In either case, 
however, the restrictive indorsee has no authority to indorse the 
contract to another — he is only authorized to collect the amount 
due upon said contract and apply it according to the terms of the 
indorsement. The terms, annexed to a restrictive indorsement, are 
notice to all subsequent holders of the nature thereof. Neither 
does the indorser incur any liability to the indorsee in a restrictive 
indorsement. Nat. Butchers' Bk. v. Hubbell, 117 N. Y., 384; 
Manf. Nat. Bk. v. Contanentile, 148 Mass., 553; First Nat. Bk. 
v. First Nat. Bk., 76 Ind., 561; Briggs v. Central Nat. Bk., 80 N. 
Y., 182; iEtna Ins. Co. v. Alton City Bk., 25 111., 243; Dan. on 
Negot. Inst., Sec. 698; Johnson v. Donnell, 90 N. Y., 1; White 
v. Miner's Nat. Bk., 102 U. S., 658; Hook v. Pratt, 78 N. Y., 
371; Leavitt v. Putman, 3 Corns., 499; People's Bank v. Jefferson 
Co., etc., Bk., 106 Ala., 624 (17 So. Rep., 728); Freeman's Nat 
Bk. v. National Tube Works, 151 Mass., 413; 24 N. E. Rep., 
779; 21 Ans. St. Rep., 461; Bank v. Weiss, 67 Texas, 331; Blakes- 
lee v. Hewitt, 76 Wis., 341; 44 N. W. Rep., 1105. An indorse- 
ment for "collection" is not a contract of indorsement, but the 
creation of a power, the indorsee being a mere agent or trustee to 
receive the money for the use of another. Freeman v. Exchange 
Bk., 87 Ga., 45; 1 Daniel on Neg. Inst., Sec. 698. See Hook v. 
Pratt, 78 N. Y., 371, for a full discussion of the nature of a 
strictive indorsement; Edie v. East India Co., 2 Burr., 1221; Sig- 
ourney v. Lloyd, 8 B. & C, 622; Fennings v. Brown, 9 Mees & 
W., 496; Brook, Oliphant & Co. v. Vannest, 58 N. J. L., 162; 
Commercial Bk. v. Armstrong, 148 U. S., 50; Butcher's, etc. Bk. 
v. Hubbell, 117 N. Y., 384; Power v. Finnie, 4 Call (Va.), 411. 

An Absolute Indorsement — Defined. — An absolute or 
unconditional indorsement is one by which the indorser makes 
himself liable, binds himself to pay the contract in case the maker 
or the party who is primarily liable thereon does not, subject to 
the condition, however, of presentment, demand, protest (when 
necessary) and notice. 

Indorsement Without Recourse — Defined. — There is 
still another method by which an indorser may limit his liability 
in the contract of indorsement. It is by an indorsement " sans 



SEC. 47.] SMITH t>. CLARKE. 299 

his assignees, on the ground that the indorsement to Jackson 
being special, that it restrained the farther negotiability of 
the bill and defeated the plaintiff's right to recover, unless 
Jackson's indorsement was proved. 

recours, ,, or " without recourse," or by adding the words "at the 
owner's own risk," or by using any term or phrase which indicates 
that he does not intend to incur liability as an indorser. Such an 
indorsement has the effect of transferring the title of the instru- 
ment to the indorsee without rendering the indorsee personally 
responsible on the contract. An indorser without recourse assumes 
the same liability that a transferer does without indorsement, of a 
commercial contract payable to bearer, being released from all 
liabity for the dishonor of the bill based upon the incapacity or 
refusal of the maker to pay. 

He is not, however, released from all liability. He impliably 
warrants: 

1. That the original parties had capacity to execute and 
deliver such a contract; 

2. That they did execute and deliver the particular con- 
tract; 

3. That there is no illegality or defense existing between 
the original parties which can be interposed to defeat the payment 
of a contract; 

4. That he has a good title to the instrument. 

In short, an indorser without recourse warrants that the con- 
tract is a valid, subsisting contract; but does not warrant that the 
original makers will pay, or that they are solvent. Dumont v. 
Williamson, 18 Ohio St., 515; Chitty on Bills, 247; Watson v. 
Chesire, 18 Iowa, 202; Bourdon v. Collar, 26 Mich., 410; Rieman 
v. Fisher, 4 Am. Law Reg., 433; Allen v. Pegran, 16 Iowa, 163; 
Challiss v. McCrum, 22 Kan., 157; Drenian v. Bung, 124 111., 175. 

Accommodation Indorsement. — Defined. — An accommo- 
dation maker or indorser of a commercial contract is one who has 
signed or executed and delivered a commercial contract without 
consideration and for the purpose of giving his name to some other 
person as a means of credit. As to third persons, the liability of 
an accommodation party to a commercial contract, whether maker, 
drawer, acceptor or indorser, is the same as that of corresponding 
parties receiving valuable consideration; but between the accom- 
modation party and the accommodated party there is no such lia- 
bility, and one who draws, makes, accepts or indorses a commer- 
cial contract for the accommodation of another is not liable to 
him in any capacity. Miller v. Lamed, 103 111., 562. 

As to third parties who take the contract before maturity, an 
accommodation party is liable according to the terms of his con- 
tract, whether it be that of maker, drawer, acceptor or indorser; 
and it makes no difference whether the holder or third person took 



300 SMITH V. CLARKE. [CHAP. 8, 

The Claim of the Plaintiff.— For the plaintiff it was 
contended, that the first indorsement being general, that the 
bill thereby acquired a general negotiability; nor could it by 
any subsequent indorsement be restrained; and that how 

the note with knowledge that the parties were accommodating par- 
ties, or not, providing that they are otherwise bona fide holders, 
i Parsons on Notes and Bills, 183, 226; Nat. Bk. v. Grant, 71 
Me., 374; Winters v. Home Ins. Co., 30 Iowa, 172; Miller v. Lar- 
ned, supra; Seyfert v. Edison, 45 N. J. L., 393; Norfolk Nat. Bk. 
v. Griffin, 107 N. C, 173. 

It has been held also that an accommodation party is liable 
according to the terms of his contract to a holder or indorsee, in 
good faith, as collateral security for an antecedent debt or in pay- 
ment of a pre-existing or concurrent debt of such holder or indor- 
see. Miller v. Larned, supra; Pitts v. Fogelsing, 37 Ohio St., 676; 
Altoona Bk. v. Dunn, 151 Pa. St., 228. 

There may be successive accommodation indorsers upon the 
same contract, and in which case they will be liable to each other 
according to the priority of their indorsement. Accommodation 
indorsers are not co-sureties in the absence of an agreement to that 
effect, therefore, contribution does not lie between them. A subse- 
quent accommodation indorser who pays the note may recover the 
full amount of a prior indorser and not merely a contribution as in 
case of co-sureties. Moody v. Findley, 43 Ala., 167; DePauw v. 
Bank, 126 Ind., 553; Esterly v. Barber, 66 N. Y., 433; Shaw v. 
Knox, 98 Mass., 214; McGurk v. Huggett, 56 Mich., 187; Kelly 
v. Burroughs, 102 N. Y., 93. 

Some of the courts have held, however, in the case of accom- 
modation indorsers, that they are considered as co-sureties where 
there is no special agreement to the contrary, and that subsequent 
indorsers cannot recover more than a contributive share against a 
previous indorser. Douglas v. Waddle, 1 Ohio, 413; 13 Am. D., 
630; Barnett v. Young, 29 Ohio St., 11; Pitkin v. Flanagan, 23 
Vt., 160. 

It has been held that an accommodation party to a commer- 
cial contract is not liable thereon if it has been fraudulently di- 
verted from the purpose for which it was intended to <i person who 
has knowledge of such diversion, even if he pays value for it and 
acquires it before maturity. Grocer's Bk. v. Penfield, 69 N. Y., 
502; 25 Am. R., 231; Daggett v. Whiting, 35 Conn., 366; Fetters 
v. Muncie Nat. Bk., 34 Ind., 251; 7 Am. R., 225. 

Diversion cannot be shown, however, against a bona fide holder 
for value without notice. Clark v. Thayer, 105 Mass., 216; Frank 
v. Quast, 86 Conn., 649; Jackson v. First Nat. Bk., 42 N. J. L., 
177; Meeker v. Shanks, 112 Ind., 207. 

The rule that equities may be interposed against the purchaser 
after maturity applies to an accommodation contract; and some of 



SEC. 47.] SMITH V. CLARKE. 301 

many names soever appeared on the back of the bill, or how- 
ever many special indorsements such as the present, that the 
bona fide holder might strike out the names of all the inter- 

the courts have held that the paper as an accommodation paper of 
itself constitutes an equity under such circumstances. This, how- 
ever, is contrary to the weight of authority. An accommodation 
indorser is liable under the same conditions and to the same extent 
as a regular indorser. 

Agents, Corporations and Partners Cannot Execute and 
Deliver Accommodation Commercial Contracts Without 
Express Authority. — There is some question whether an agent, 
a corporation, or a partner may execute and deliver an accommo- 
dation commercial contract without express authority. It has 
been held that a general power given to an agent to make or in- 
dorse commercial contracts will not warrant the agent in execu- 
ting and delivering or indorsing contracts for accommodation. 
German Nat. Bk., v. Studley, i Mo. App., 260; Gulick v. Grover, 
33 N. J. L., 463; 97 Am. D., 728. 

A corporation has only such powers, as a general rule, as are 
expressly given it or necessarily implied from the nature and char- 
acter of its business. It has been held that the indorsement of 
commercial contracts for accommodation by a corporation is not 
a necessary incident to the business of a corporation. If, there- 
fore, a corporation is not expressly authorized to execute and de- 
liver a commercial contract for accommodation and it does so, the 
corporation is not liable thereon. Nat. Bk. v. Wells, 79 N. Y., 
498; Smead v. Indianapolis, etc., 11 Ind., 105. 

As a general rule one partner cannot without express or im- 
plied authority bind the firm in the execution and delivery of an 
accommodation contract. Sweetzer v. French, 2 Cushing, 309; 
48 Am. D., 666; Bank of Ft. Madison v. Alden, 129 U. S., 372; 
Heffron v. Hanford, 40 Mich., 305. 

And in case a partner does execute and deliver an accommo- 
dation commercial contract, the burden is on the holder to show 
that such partner was expressly authorized to bind the firm. Sweet- 
zer v. French, supra; Nat. Security Bk. v. McDonald, 127 Mass., 
82; see a general discussion of the rights and liabilities of accom- 
modation parties, 31 Am. St. R., 742, 757. 

General Effect of an Indorsement. — The indorser by 
placing his name upon the instrument enters into a contract with 
the indorsee, which is a complete contract independent of the con- 
tract of any other party to the paper, and requires all the essen- 
tial elements of a contract. He thereby engages that the com- 
mercial contract upon which his endorsement is placed will be 
paid when due according to the tenor therof, upon due present- 
ment and demand by the parties to that contract; and if not, then 
by himself on receiving due notice of their failure. The contract 



302 SMITH V. CLARKE. [CHAP. 8, 

mediate indorsers, and prove only the first indorsement in 
order to entitle him to recover. 

The Claim of the Defendant. — The counsel for the 
defense insisted, that its negotiability could at any time be 
restrained; and cited Ancher v. Bank of England 1 as deciding 
the point; but they further pressed, as a general question, the 
propriety of admitting special indorsements, for the purpose 
of greater security in the remitting of bills of exchange by 

of an indorser of a commercial contract is the same as that of a 
drawer of a bill of exchange or other commercial contract. The 
purpose of an indorsement is usually two-fold: (i) to transfer the 
title to the instrument; (2) or to strengthen the security. The 
liability of a indorser, outside of the warranties which he makes, 
must always depend upon the kind of indorsement. The first 
indorser is responsible to every holder and subsequent indorser 
who has been compelled to pay the amount of the note, upon due 
presentment, demand and notice. Mc Knight v. Wheeler, 6 Hill, 
492; Maine Trust Co. v. Butler, 45, Minn., 506; Ankeny v. Henry, 
1 Idaho, 229; Rhodes v. Jenkins, 184, Col., 449; Aymarv. Shel- 
don, 12 Wend., 438. 

If the commercial contract is overdue, the indorsement is 
equivalent to drawing a new contract payable at sight, upon which 
the indorser is liable upon proof of a demand upon the maker 
within a reasonable time, and immediate notice of the default. 
Colt. v. Barnard, 18 Pick., 260; 29 Am. D., 584; Leavitt v. Put- 
man, 3 N. Y., 494; 53 Am. D., 322. 

Some of the courts have held that an indorsement upon an 
over-due commercial contract is an original and unconditional en- 
gagement 'to pay the same, without presentment, demand and 
notice. Brown v. Davies, 3 T. R., 80; Jordan v. Hurst, 12 Pa. 
St., 269. 

The mere indorsement of the name of the payee or holder on 
a negotiable contract is ineffectual to pass the title thereto without 
delivery. The term " indorsement " implies a delivery. If the 
contract is payable to "bearer," it may be transferred by delivery 
without indorsement. This is true also when it is payable to " or- 
der," after being indorsed in blank. Spencer v. Carstarthen, 15 
Col., 445; 24 Pac. R., 882; Loyd v. Howard, 152 B., 995; Mars- 
ton v. Allen, 8 Mees & W., 454; Ross v. Smith, 19 Tex., 171; 
Smalley v. Wight, 44 Me., 442. 

The promise of the indorser is conditional and his liability 
depends upon due presentment, demand, protest (when necessary) 
and notice. Mt. Mansfield Hotel Co. v. Bailey, 64 Vt, 151; 24 
24 Atl. R., 136. 

1 Doug., 615. 



SEC. 47.] SMITH V. CLARKE. 303 

post; to which the restriction contended for would greatly 
contribute. 

The counsel for the plaintiff admitted that the payee 
might restrain the negotiability of a bill by a special indorse- 
ment; but contended that it -was confined to him, and did not 
extend to any subsequent indorser; and that uhe case cited of 
Ancher v. Bank of England established that point as to the 
payee only. 

Decision. — Ld. Kenyon ruled with the plaintiffs. He 
said that the doctrine contended for by the defendant's coun- 
sel was not supported by any case; that it would clog the cir- 
culation of bills of exchange if by indorsements of this sort, 
where there might be several, the holder was obliged to prove 
the handwriting of the several indorsers; that a bill being 
payable generally to a payee or his order, when he to whose 
order only it was payable, by a blank indorsement, sent it 
into the world, that he meant it should have a general circula- 
tion. That any person to whose hands it came bona fide, by 
proving the handwriting of the payee, entitled him to sue, 1 
that as this gave him a legal title, he might strike out the 
names of all the intermediate indorsers, whether the indorse- 
ments to them were special or not. 8 

The plaintiff had a verdict. 

"Vide Moor v. Manning, Com., 311; Acheson v. Fountain, 
1 Stra., 557; Morris v. Foreman, 1 Dal., 193. 

'Chaters v. Bell et al., post, vol. 4, p. 210. After a special 
indorsement by the payee, a subsequent indorser may again make 
the bill negotiable from him. Holmes v. Hooper, Bay, 158. 

Had this action been brought by any indorsee subsequent to 
the special indorsee against this special indorser, then it would 
have been necessary for him to prove the handwriting of the spe- 
cial indorsee. But as to any party prior to the special indorser, 
the maker, drawer, acceptor, payee and all prior indorsers, it is 
sufficient for him to prove the indorsement of the person to whose 
4 i order" the contract was made payable. 



304 MITCHELL V. FULLER. [CHAP. 8, 



SECTION 48. 

A SPECIAL INDORSER IS LIABLE ONLY TO SUBSEQUENT 
INDORSEES WHO MAKE THEIR TITLE THROUGH HIS 
SPECIAL INDORSEE. SUBSEQUENT INDORSEES MAY 
STRIKE OUT THE SPECIAL INDORSEMENT AND RE- 
COVER AGAINST PRIOR INDORSERS.* 

MITCHELL v. FULLER.* 

In the Supreme Court of Pa., Dec, 1850. 

{Reported in 15 Pa. St. , 268. ] 

The Form of Action. — This was a suit brought by Mar- 
tha Ann Fuller, executrix, etc. , of Horace Fuller, deceased, 
against Matthew Pope Mitchell and Benjamin N. Wynkoop, 
upon the following drafts: — 

iK $799-oi. "New York, April jot A, 184.6. 

1 1 Sixty days after date, pay to the order of ourselves, 
seven hundred and ninety-nine dollars and one cent, value re- 
ceived, which place to account of Sands, Fuller & Co. " 

4 * To Messrs. Mitchell & Wynkoop. 

1 1 (Accepted by) Mitchell & Wynkoop. " 

1 ' (Indorsed) Sands, Fuller & Co. " 

* According to the elementary authorities, a bill or note pay- 
able to order and indorsed in blank, so long as the indorsement 
continues blank, "is in effect payable to bearer." Chit. Bills 

nth ed.), 227; 3 Kent, Comm. (9th Ec), side p. 89; Story, Bills. 

60; 2 Pars. Notes and Bills, p. 19, note w; Edw. Bills and Notes, 
131, 269; 1 Daniel Neg. Inst, § 693; Greneaux v. Wheeler, 6 Tex., 
522; Weathered v. Smith, 9 Tex., 625; Whithed v. Mc Adams, 18 
Tex., 553; Ross v. Smith, 19 Tex., 172. 

Ld. Mansfield said, in Peacock v. Rhodes: "I see no differ- 
ence between a note indorsed in blank and one payable to bearer;" 
and Chancellor Kent said in Conroy v. Warren: "A note indor- 
sed in blank and one payable to bearer are of the same nature. 
They both go by delivery, and possession passes property in both 
cases." 2 Doug., 63653 Johns Cas., 263. So " a note payable to 
the maker's order becomes, in legal effect, when indorsed in blank, 

1 This case is cited in Norton on Bills and Notes, 113, 117; 
Illustrative Cases on Bills and Notes, 130. See also Burnap v. 
Cook, 32 111., 168 contra. Johnson v. Mitchell, 50 Tex., 212^ 
Smith v. Clarke, 1 Esp., 180. 



SEC. 48.] MITCHELL V. FULLER. 305 

4 * $744. 77. 4 4 New York, April 30th, 184.6. 

4 • Ninety days after date, pay to the order of ourselves, 
seven hundred and forty-four dollars and seventy-seven cents, 
value received, which place to account of 

Sands, Fuller & Co." 
1 * To Messrs. Mitchell & Wynkoop. 

4 4 (Accepted by) Mitchell & Wynkoop. " 
44 (Indorsed) Sands, Fuller & Co." 

To which the following affidavit of defence was filed: — 

That the bills upon which said suit is brought, are both 
specially indorsed to J. B. Trevor, Esq., cashier, or order. 

And that the writing filed in the above case, as a copy of 
the said bills, is not a true copy thereof, as will appear on the 
production of the said bills, and as defendant is informed and 
believes, and expects to prove. 

The original drafts were as the copies set forth in the 
paper-book of plaintiff in error, but with the following addi- 
tional indorsement: 

4 4 Pay to J. B. Trevor, Esq. , cask, or order, 

(in red ink) Hammond & Co." 

a note payable to bearer." Byles Bills, p. 68, c. 7; Brown v. De- 
Winton, 6 Man. G. & S., 336. 

The rule is well settled that "if a bill be once indorsed in 
blank, though afterwards indorsed in full, it was still, against the 
drawer, the payee, the acceptor, the blank indorser, and all in- 
dorsers before him, be payable to bearer, though as against the 
special indorser himself title must be made through his indorsee." 
Byles Bills (5th ed. ), 109, cited by Pollock in 2 Exch. infra.; 
Chit. Bills, 228, 230a; 3 Kent, Comm., side p. 90; Story, Prom. 
Notes, § 139; 2 Pars. Notes and Bills, 19, 26; Walker v. McDon- 
ald, 2 Exch., 531, citing Smith v. Clarke, 1 Peake, 295, and 1 
Esp., 180; Mitchell v. Fuller, 15 Pa. St., 270; Huie v. Bailey, 16 
La., 213; Little v. O'Brien, 9 Mass., 423; Dugan v. U. S., 3 
Wheat., 172; Edw. Bills and Notes, 275, citing Dollfus v. Frosch, 
1 Denio, 367; Savannah Nat. Bank v. Haskins, 10 1 Mass., 370. 

It may be objected that the safe transmission, by mail, or 
otherwise, of notes and bills payable to bearer requires a different 
rule. The answer is — First, that such a consideration will not jus- 
tify a departure by the courts from established principles and pre- 
cedents; second, that what is known as a " restrictive "indorsement 
stops the currency of negotiable paper. Chit. Bills, 232; Story 
Prom. Notes, § 142 et. seq.; 2 Pars. Notes and Bills, 21; 1 Dan- 
iel Neg. Inst., § 698. 



306 MITCHELL V. FULLER. [CHAP. 8, 

The name of Hammond & Co. was erased before the 
notes were placed in the hands of counsel. 

The case was then one of an indorsement in blank by the 
payees, and a special indorsement by a subsequent holder to 
J. B. Trevor, Esq., cashier, or order. 

There was no indorsement by Trevor. 

41 November 24, 1849, on motion, and upon inspection of 
the originals of the copies filed, judgment is granted by the 
court for plaintiff, for want of a sufficient affidavit of defence." 

The Claim of Defendant. — The defendant made the fol- 
lowing claims: 

1. The court entered judgment for the plaintiff below, 
notwithstanding an affidavit of defence had been filed. 

2. The court entered judgment against the defendants, 
although the affidavit of defence filed set forth a full defence. 

The Claim of Plaintiff.— The plaintiff claimed that the 
affidavit of defence alleges that the bills are specially indorsed 
to J. B. Trevor, Esq., cashier, or order, and, in case of spe- 
cial indorsement, to enable any one but the special indorsee 
to recover on the bill, it must appear either that it is re- 
indorsed by the special indorsee, or that he has received satis- 
faction. 1 That there would be no use in a special indorse- 
ment if any holder could maintain the action without showing 
title in himself. 2 Such an indorsement cannot be stricken out 
by the plaintiff.' The only exception to the rule is where the 
plaintiff is the drawer, or a prior indorser. Where such an 
one comes again into possession of the bill, such possession is 
prima facie evidence of ownership. 4 

Decision. — In the case of a special indorsement of a bill 
of exchange or promissory note to enable any one but the 
special indorsee to recover on the bill, it must appear either 
that it is reindorsed or re-assigned by the special indorsee, or 
that he has received satisfaction. The mere possession of the 
note or bill of exchange by the indorser who had indorsed it 

l 2 Dal., 144; 1 Yeates, 94; 12 Ser. & R., 43. 

2 7 Cranch, 159. 

2 1 Peter's C. C. Rep., 171. 

4 3 Wheat., 183. 



SEC. 48.] MITCHELL V. FULLER. 307 

to another, is not sufficient evidence of his right of action 
against his indorser, without a re-assignment or receipt from 
the last indorsee. 1 But this rule obtains only when the note 
is specially indorsed by the payee, or made payable specially 
by the maker, for when the note or bill is indorsed in blank, 
the rule is otherwise. A blank indorsement makes the bill 
transferable by mere delivery. When the first indorsement is 
in blank, the bill or note as against the payee, drawer, or ac- 
ceptor, is afterwards assignable by mere delivery, notwith- 
standing it may have subsequent indorsements in full; because 
a subsequent holder by delivery may declare and recover, as 
the indorsee of the payee, and strike out all the subsequent 
indorsements, whether special or not. 8 

In Smith v. Clarke, 8 a bill was indorsed in blank by the 
payee, and after some other indorsements, indorsed to Jack- 
son or order; Jackson never indorsed the bill, but a recovery 
was had by a subsequent holder who had stricken out all the 
indorsements but the first. Ld. Kenyon gives the reason for 
the decision. He said the doctrine contended for by the de- 
fendant's counsel was not supported by any case, and that it 
would clog the circulation of bills of exchange, if, by indorse- 
ment of this sort, where there might be several, the holder 
was obliged to prove the hand-writing of the several indorsers; 
that a bill being payable generally to a payee or his order, 
when he, to whose order only it was payable, by a blank in- 
dorsement, sent it into the world, that he meant it should 
have a general circulation, and any person into whose hands 
it came, bona fide, by proving the hand- writing of the payee, 
entitled himself to sue; that as this gave him a title, he might 
strike out the names of all the intermediate indorsers, whether 
the indorsements to them were special or not. 

Thus the distinction is clearly taken; this case falls with- 
in the latter class. Since Smith v. Clarke, the law has been 



^his is ruled in Gorgerat v. McCarty, 2 Dal., 144; 1 Yeates, 
94; Zeigler v. Geary, 12 Ser. & R., 43; 7 Cranch, 159; and in 
Craig v. Brown, 1 Peter's C. C. Rep., 174; Reamer v. Bell, 79 
Pa. St., 292; Lawrence v. Fussell, 77 Pa. St., 460. 

'Chitty on Bills, 175-6, 5th edition. 

*i Esp. Rep., 180; S. C. Peake's Rep., 225. 



308 MITCHELL V. FULLER. [CHAP. 8, 

considered settled, and it would be dangerous now to disturb 
it. I know of no case where it has been even questioned. 
The latter class seems to be the rule, the former for special 
reasons, is the exception. It has always been the policy of 
the courts, accommodating themselves to the wishes of the 
mercantile world, to promote the free, unconstrained circula- 
tion of commercial paper; and hence it is they have adopted 
the rule that the holder may maintain suit in his own name, 
by striking out the special indorsements. The presumption, 
and it is a fair one, is that he is a bona fide holder for value, 
or a trustee or agent for collection. The rule, however, is re- 
laxed in favor of the maker of a note, who may make it pay- 
able in full, by inserting the name in whose favor it is made, 
as drawee of a bill of exchange or payee of a note, who may 
indorse it specially for purposes of transmission and for safety, 
and so far to clog its circulation. Beyond this, the courts have 
wisely decided, they are not at liberty to go. When the note 
is once indorsed in blank, subsequent holders cannot control 
its circulation. These principles are fully sustained by the 
authorities. 

After an indorsement in blank by the payee or subsequent 
indorser, it is competent for the holder of the bill or note to 
make himself the immediate indorsee, and to claim by the 
blank indorsement. 1 

And where a person fairly and without fraud becomes 
possessed of a negotiable note, indorsed in blank, it has been 
held that he may maintain an action thereon, although it has 
not been legally transferred to him. 8 

An Indorsement in Blank may be Changed to a Spe- 
cial Indorsement. — So, where a promissory note, payable to 
order, is indorsed in blank, the holder has a right to fill it up 
with any name he pleases, and the person whose name is in- 
serted will be deemed the legal owner; and if in fact the in- 
dorsement in blank was intended as a transfer for the benefit 
of another person, yet he would be considered as a trustee, 

Baylor v. Binney, 7 Mass., 481; Mullen v. French, 9 Watts, 
96. 

*Little v. O'Brien, 9 Mass., 423; Bowman v. Wood, 15 Mass., 
534- 



SEC. 48.] MITCHELL V. FULLER. 309 

suing for the benefit of the person having the legal interest. 1 
This view of the case, so fully sustained by authority, is 

an answer to the other exception. The holder having stricken 

out the indorsements, the record contains a true copy of the 

note on which suit is brought. 
Judgment affirmed. 

'Lovell v. Evertson, n Johns. R., 52; n Ser. & R., 179, 
Sterling v. Marietta Co.; Curtis v. Sprague, 51 Cal., 239; Middle- 
ton v. Griffith, 57 N. J. L., 442; Berney v, Steiner Bros., 108 
Ala., in. 



19 



CHAPTER IX. 
Warranties or Admission of Indorsers.* 



SECTION 49. 

AN INDORSER WARRANTS OR ADMITS THAT THE BILL 
OR NOTE IS JUST SUCH A CONTRACT AS IT APPEARS 
TO BE; THAT IT IS IN EVERY WAY A VALID, SUBSIST- 
ING, GENUINE CONTRACT. 

EX. PARTE CLARKE. 1 

In the High Court of Chancery, March, 1791. 

[Reported in 3 Brown 9 s Chancery Cases, 2j£.] 

The Form of Action. — Petition to be admitted a cred- 
itor, in respect to certain bills indorsed by the bankrupt to 
the petitioner. The bills were made to fictitious payees. But 

J This case is cited in Chalmers* Bills, Notes and Checks, 222; 
Chitty on Bills and Notes, 158, 705. See also Heylyn v. Adam- 
son, 2 Burr., 669; McGregor v. Rhodes, 25 L. J. Q. B., 318; Sel- 
ser v. Brock, 3 Ohio St., 302; Canal Bank v. Bank, 1 Hill., 287; 
Turner v. Keller; 66 N. Y., 66; Watson v. Chesire, 18 la., 202. 

♦Warranties or Admissions of Indorser. — Every in- 
dorser of whatever kind, as well as every transferer without 
indorsement (where the title can be transferred without indorse- 
ment), makes certain warranties or admissions, which he is 
estopped from denying. A regular indorser in full or in blank 
warrants: 

1. That the contract is in every way genuine; 

2. That the prior parties thereto are competent; 

3. That he has a lawful title to the instrument; 

4. That he has a right to transfer the title to the same; 

5. That the contract is in every way just such a contract as 
it purports to be and that the parties are liable thereon according 
to the terms of their apparent contract; and 

6. That the parties who are primarily liable thereon are 
able to pay and will pay at maturity upon presentment and 
demand. 



SEC. 49.] EX. PARTE CLARKE. 3II 

it was said, that that circumstance was of no consequence 
against the indorser. 

Decision. — It is clear that, as against the indorser, it 
does not signify what the bill is. The indorsee may come 

The foregoing warranties or admissions are made by every 
indorser without recourse, as well as by those who transfer com- 
mercial contracts without indorsement, except the last (6th). 
Therefore, if, in the case of an indorsement without recourse, or 
transfer by delivery simply, it should turn out that the original 
contract was a forgery, or that the original parties thereto were 
not liable by reason of incapacity for any reason, or that they had 
been discharged lawfully, or that the contract was invalid by 
reason of the statute or the common law or public policy, such 
indorser or transferer would be liable thereon by reason of a 
breach of his warranty or admission. Story on bills, no, 235; 
Rhodes v. Jenkins, 18 Col., 49; Willis v. French, 84 Me., 593; 30 
Am. St R., 416; Frank v. Lanier, 91 N. Y., 112; Harris v. Brad- 
ley, 7 Yerg (Tenn.), 310; Erwin v. Downs, 15 N. Y., 575; Bow- 
man v. Hiller, 130 Mass., 153; Fish v. First Nat. Bk., 42 Mich., 
203; Merriden Bk. v. Gallaudet, 120 N. Y., 298; Selser v. Brock, 
3 Ohio St., 302; Dumont v. Williamson, 18 Ohio St., 515; 98 Am. 
D., 186; Turnbull v. Bowyer, 40 N. Y., 456; Cover v. Meyers, 75 
Md., 406; Redington v. Woods, 45 Cal., 406; Aldrich v. Jack- 
son, 5 R. I., 218. 

In the transfer of commercial contracts on account of their 
general purpose the maxim of caveat emptor does not apply. Du- 
mont v. Williamson, supra. 

An indorser admits all prior indorsements to have been duly 
made. It is said the indorser warrants the title and genuineness 
of the paper he transfers, and that when sued he cannot deny the 
existence, legality, or validity of the contract which his indorse- 
ment put in circulation, for the purpose of defeating his own 
liability. Edwards on Bills and Notes, 289, 291 ; Fish v. First 
Nat. Bank, 42 Mich., 203. 

This is strictly right. Parties dealing in such paper are not 
expected to be familiar with the signatures of the several indorsers. 
If satisfied that the last indorsement is genuine, they are not re- 
quired to look beyond in the absence of such facts as would im- 
pute to them bad faith in case they did not. A person has no 
right to indorse paper, thereby making it negotiable, and offer it 
or permit it to be offered in the usual course of business, unless 
satisfied that the signatures previously appearing thereon are genu- 
ine. Mills v. Barney, 22 Cal., 240; Merriden v. Gallaudet, 120 
N. Y., 298; 4 Ohio St., 628. 

The holder of a bill or note has nothing to do with the pre- 
ceding indorsements, and whether genuine or not his immediate 
indorser is liable to him. The last indorsement is, in fact, a 



312 EX. PARTE CLARKE. [CHAP. 9, 

against the indorser, though the bill is a mere nullity in other 
respects. It is the indorsees business to see what he can 

guaranty of the preceding indorsements, and admits the hand- 
writing of drawer and prior indorser, although the bill be forged. 
Chitty on Bills, 197-8; 3 Kent Com., 60; 2 Salk., 127. 

Forged Indorsement — Effect of. — If an indorsement is 
forged by one lawfully in possession of a commercial contract 
which cannot be transferred without indorsement, and he transfers 
it, so indorsed, to an innocent purchaser for value, the latter does 
not acquire any title thereto. Roach v. Woodall, 91 Tenn., 206; 
Foltier v. Schroeder, 19 La. Ann., 17; Roberts v. Tucker, 16 
Q. B., 560. 

The holder of a commercial contract payable to bearer or 
indorsed in blank may recover upon the same, providing he took 
it innocently, in the due course of trade, for a valuable considera- 
tion and before maturity, even though the transferer had stolen or 
found the same. If, however, it becomes necessary for the finder 
or the thief, in order to transfer the contract, to forge the indorse- 
ment of the original parties, then the indorsee takes no title what- 
ever against the original parties. Story on Promissory Notes, 
381-383; Roach v. Woodall, supra; Miller v. Race. 

The original parties, however, to the contract may be estopped 
in certain cases from setting up that the indorsement was a forgery. 
Benjamin's Chalmers B. & N., 92. 

Effect of Indorsement After Maturity. — Liability of 
the Indorser. — When a negotiable contract is indorsed after 
maturity, presentment and demand must be made within a reason- 
able time, and notice, in case acceptance or payment is refused, 
must be given to the indorser in order to charge him. The indorser 
cannot be held liable without presentment, demand and notice, 
unless these conditions are excused or waived. Indorsing a com- 
mercial contract after maturity is equivalent to making a new con- 
tract payable on demand. Dan. on Negot. Inst., 611, Beer v. 
Clifton, 98 Cal., 323; Goodwin v. Davenport, 47 Me., 112; Graul 
v. Strutzel, 53 Iowa, 712; Bassenhorst v. Wilby, 45 Ohio St., 336. 

There is no precise time where a note payable on demand is 
deemed to be dishonored. As a general rule it is due within a 
reasonable time after its date, and what is a reasonable time is a 
question of fact. Goodwin v. Davenport, supra; Field v. Nicker- 
son, 13 Mass., 131; Leavitt v. Putman, 53 Am. D., 322. 

In Vermont the indorsee must prove demand and notice within 
sixty days of the indorsement to him in order to charge his in- 
dorser. Verder v. Verder, 63 Vt., 38. 

In Michigan, a commereial contract payable on demand is 
payable at once and without demand, so that the statute of limi- 
tations begins to run from its delivery. Palmer v. Palmer, 36 
Mich., 487; In re. King's Estate, 94 Mich., 411, 425; Fenno v. 



SEC. 49.] EX. PARTE CLARKE. 313 

make of the bill, but he, by his indorsement, is certainly 
liable to the indorsee. 1 

Gay, 146 Mass., 118; McMullen v. Rafferty, 89 N. Y., 456. 
The fact that a commercial contract has matured does not 
destroy its negotiability. Bassenhorst v. Wilby, 45 Ohio St., 333; 
13 N. E. R., 75; Leavitt v. Putman, 3 N. Y., 494. 

1 So it has since been determined, that in action against in- 
dorser, it is not necessary to prove any indorsement on the bill 
prior to that of the defendant. Critchlow v. Parry, 1 Campb., 
182. It had long before been decided, that in an action against 
the indorser, the handwriting of the drawer need not be proved. 
Lambert v. Pack, 1 Salk., 127; Lambert v. Oakes, S. C, 1 Ld. 
Raym., 443. 

The present was one of the numerous cases which arose in the 
bankruptcies of Livesay & Co. and Gibson & Co., a succinct ac- 
count of which will be found in the note to the case of Bennett v. 
Farnell, 2 Campb., 130, 180. 



CHAPTER X. 

Warrants or Admissions of an Indorser " Without 

Recourse." 



SECTION 50. 

AN INDORSER "WITHOUT RECOURSE" WARRANTS, OR 
ADMITS: (x) THAT HE IS A LAWFUL HOLDER OF THE 
CONTRACT; (2) THAT HE HAS A JUST AND LAWFUL 
TITLE TO THE SAME; (3) THAT THE CONTRACT IS IN 
EVERY WAY A VALID, SUBSISTING OBLIGATION; (4) 
THAT HE HAS A RIGHT TO TRANSFER IT. 

DUMONT v. WILLIAMSON. 1 
In thb Supreme Court op Ohio, Dec, 1869. 

[Reported in 18 Ohio St., 515; 5 Am. Law Reg, {N. S. ), 330 ; 98 

Am. Dec, 186.] 

The original action in this case was brought by the 
plaintiff in error, who states in his petition 4 * that Henry 
Essman, on the 12th of May, i860, at Cincinnati, made his 
promissory note in writing of that date, and thereby promised 
to pay to the order of William Wolff five hundred dollars, for 
value received, in four months after the date thereof, and 
which said promissory note purports to be indorsed on the back 
thereof by Wm. Wolff, which said note afterward came to the 

1 This case is cited in Benjamin's Chalmers Bills, Notes and 
Checks, 129, 222; Tiedeman on Commercial Paper, 260; Daniel 
on Negotiable Instruments, 670; Norton on Bills and Notes, 119, 
167; Wood's Byles on Bills and Notes, 256. See also Watson v. 
Chesire, 18 Iowa, 202; 87 Am. D., 382; Goupy v. Harden, 7 Taun- 
ton, 159, 163; 2 Marsh, 454; Gurney v. Wormsley, 28 Eng. L. & 
Eq., 256; 4 EH. & BL, 132; Gompertz v. Bartlett, 24 Eng. L. & 
Eq., 156; Baxter v. Duren, 29 Me., 434; Terry v. Bissel, 26 
Conn., 23. Judge Redfield's review of the decision of the court 
below in this case, vol. 5, p. 356, April number 5 of American 
Law Register; Wheeler v. Miller, et al., 2 Handy, 149; Ellis and 
Morton v. O. L. Ins. & Tr. Co., 4 Ohio St., 628. 



SEC. 50.] DUMONT V. WILLIAMSON. 315 

hands of the defendant, who afterward then and there indor- 
sed and delivered the same to the plaintiff, but without re- 
course on him. The plaintiff avers that the defendant did 
thereby warrant that the indorsement on the back thereof was 
the signature of William Wolff, and was made by him, whereas 
in truth and in fact said signature on the back of said note was 
not made by said William Wolff, but was and is a forgery, 
and by reason thereof said note was wholly worthless, and of 
no value, the said Henry Essman, the maker thereof, being 
wholly insolvent." 

The petition proceeds to allege due demand and notice of 
non-payment at maturity, and asks judgment for the amount 
of the note, with interest. 

A copy of the note is attached to the petition, which, 
with the indorsement thereon, corresponds with the state- 
ments of the petition. 

To this petition the defendant demurred, and the case 
was thereupon reserved from special term for the opinion of 
the judges in general term upon the questions of law arising 
on the demurrer. By the judgment of the court in general 
term the demurrer was sustained, and the plaintiff not desir- 
ing to amend his petition, it was thereupon dismissed, and 
judgment rendered against plaintiff for costs. 

The plaintiff here asks a reversal of this judgment on the 
ground of error in the Superior Court in sustaining the demur- 
rer to his petition. 

There is no statement in the petition of the circumstan- 
ces under which the note in this case was transferred to the 
plaintiff, or the consideration paid therefor, but it is to be 
presumed that it was so transferred for a valuable consider- 
ation. If the fact be otherwise, this is a matter of defense, 
to be set up by answer. 

There is no averment of fraud, or that the defendant had 
knowledge at the time of the transfer, of any defect in the 
note, which he concealed. The question therefore arises, 
whether upon the sale and transfer of a promissory note by 
indorsement, 4 * without recourse, " the vendor impliedly war- 
rants that the signatures of the prior parties whose names ap- 
pear thereon are genuine. 



316 DUMONT V. WILLIAMSON. [CHAP. IO, 

Whilst the words " without recourse," accompanying an 
indorsement, clearly indicate that the party making the trans- 
fer does not intend to assume the position of an unconditional 
indorser, or to incur any liability if the note is not paid at 
maturity, upon due demand, or even if all the parties to the 
paper should prove to be wholly insolvent, we think they can 
not be construed as importing more than this. At least they 
do not divest such indorser of his character as a vendor of the 
note, nor exempt him from the liabilities arising from a sale 
and transfer by delivery, where the note is capable of being 
thus transferred. In such case, then, is there no implied 
warranty on the part of the vendor that the note is not forged? 
That it is in fact what it purports on its face to be? 

On this question the language of the text-books, in this 
country at least, is nearly, if not quite, uniform. 

The Contract of a Transferrer, Simply, of a Commer- 
cial Contract. — Justice Story, in his Commentary on Promis- 
sory Notes, 1 speaking of the liabilities of a party who transfers a 
note by delivery only, says: "In the first place he warrants 
by implication, unless otherwise agreed, that he is a lawful 
holder, and has a just and valid title to the instrument, and 
a right to transfer it by delivery; for this is implied as an 
obligation of good faith. In the next place, he warrants, in 
like manner, that the instrument is genuine, and not forged 
or fictitious'' To this the editor of the fourth edition of the 
work, published in 1856, adds in brackets: ["that it is of the 
kind and description it purports on its face to be; unless 
where the note is sold, as other goods and effects, by delivery 
merely, without indorsement, in which case it has been de- 
cided that the law respecting the sale of goods is applicable, 
and that there is no implied warranty ;"] referring in the notes 
to the cases of Baxter v. Duren, 2 Ellis v. Wild, 8 and other 
authorities, also to conflicting decisions. This new matter 
was added to the text after Justice Story's death, as is shown 
by the brackets, and was evidently intended only as a state- 
ment of the authorities bearing on the question. The excep- 

■§ 118. 

2 29 Maine R., 434. 

*6 Mass. R., 321. 



SEC. 50.] DUMONT V. WILLIAMSON. . 317 

tion stated to the general rule as laid down by Judge Story 
can not, therefore, claim the sanction of his name. 

The law is similarly stated in Parson on Notes and Bills, 1 
where it is said to be * ' well settled that the vendor without 
indorsement [the transferrer] warrants that the paper is of 
the kind and description that it purports to be" In a note 
on page 38, the case of Baxter v. Duren, supra, is referred 
to, where it was held that one who sells and transfers a prom- 
issory note by delivery is not liable on an implied warranty of 
its genuineness, if he sold the same as property \ and not in 
payment of a debt previously existing or then created, and if 
he did not know of the forgery. But it was said in that case 
that if the note was transferred by delivery merely, in pay- 
ment of a debt due, or for goods then purchased, or by way 
of discount for money then loaned, there would in such case be 
an implied warranty of the genuineness of the paper. 44 But," 
adds the learned author, ' 4 this distinction does not seem to 
be well founded." And again, at page 589 of the same vol- 
ume, the principle is broadly stated 44 that any transferrer of a 
note or bill transferable by delivery \ warrants that it is no 
forgery. If it turns out that the name of one of the parties 
is forged, and the bill becomes valueless, the vendor, though 
no party to the bill, becomes liable to the vendee as upon a fail- 
ure of consideration" He then proceeds to state, without 
further comment, the distinction which was taken in the case 
of Baxter v. Duren, supra, and of which has previously disap- 
proved. 

So, in Edwards on Bills and Promissory Notes, page 291, 
it is said: 44 The party assuming to transfer a negotiable 
instrument thereby asserts it to be genuine, and is bound to 
make his assertion good." And on page 289: 44 Though the 
indorser transfers the note upon condition that it is to be col- 
lected at the risk of the indorsee, he is nevertheless responsi- 
ble if the note proves to be a forgery. 2 

In England, it seems to be well settled, by the latest 
decisions on the subject, that the vendor of a bill of exchange 

l Vol. 2, pages 37, 39. 

2 Shaver v. Ehle, 16 Johns. R., 201, and 20 N. Y. R., 226. 



318 DUMONT V. WILLIAMSON. [CHAP. 10, 

is responsible for its genuineness. Thus, in Gompertz v. 
Bartlett, decided in 1853, it was held by the Court of Queen's 
Bench that the vendor of a bill of exchange impliedly war- 
rants that it is of the kind and description that it purports on 
the face of it to be. } And in Gurney and others v. Womers- 
ley, 2 decided in 1854 by the same court, it was held that the 
vendor of a bill of exchange, though no party to the bill, is 
responsible for its genuineness ; and if it turns out that the 
name of one of the parties is forged, and the bill becomes 
valueless, he is liable to the vendee, as upon a failure of con- 
sideration. Both these cases were decided on the same prin- 
ciple which is applied in sales of personal property generally, 
that the vendor impliedly warrants that the article sold is of 
the kind and description which it imports and is understood 
by the parties to be. 

In the case of Baxter v. Duren, 3 supra, it was held that 
one who sells a promissory note, by delivery, upon which the 
names of indorsers have been forged, is not liable upon an 
implied promise to refund the money received therefor, if he 
sold the same as property, and not in payment of a precedent 
debt, and did not know of the forgery. 

The same doctrine was held in the case of Ellis v. Wild, 4 
where the same distinction was made between the sale of the 
note and its transfer in payment of a debt. But the doctrine 
is no longer maintained in that commonwealth. 6 In the last 
of these cases, Ellis v. Wild and Baxter v. Duren are both 
considered, and, for what seems to us good reasons, disap- 
proved; and it is held that there is no valid reason for the 
distinction taken in those cases. 

In Aldrich v. Jackson/ the doctrine is expressly stated 

! 24 Eng. L. and E. Rep., 156; 23 L. J. Ex., 65; see also 
Challis v. McCrum, 22 Kan., 157; Bell v. Dagg, 60 N. Y., 528; 
Bell v. Cafferty, 21 Ind., 411. 

"24L. J., Q. B., 46. 

•29 Me., 434. 

4 6 Mass., 321. 

6 Cabot Bank v. Morton, 4 Gray, 156; Lobdell v. Baker, 1 
Met, 193; Merriam v. Wolcott, 3 Allen, 258. 

•5 R. I., 218. 



SEC. 50.] DUMONT V. WILLIAMSON. 319 

that * 4 the vendor of a bill or note, by the very act of sale, 
impliedly warrants the genuineness of the signatures of the 
previous parties to it." 

The same doctrine is held in- Terry v. Bissel, 1 and in 
Thrall v. Newell. 2 

And the principle upon which these decisions rest has its 
foundation, as we think, in reason and justice. 

1 26 Conn., 23. 
2 19 Vt., 202. 

An unqualified indorsement is the assumption of a conditional 
liability. The indorser becomes a new drawer, and is liable on the 
default of the drawee. "Without recourse," does away with this 
•conditional liability. It leave the indorsement simply as a trans- 
fer of title, and the indorser liable only as vendor; yet it leaves 
him a vendor, and divests him of none of the liabilities of a ven- 
dor. It makes the transaction the equivalent of a delivery of 
paper payable to bearer, and transferable by delivery. (H annum 
v. Richardson, 48 Vt., 508.) 

The Warranties of Tranferrer. — Independent of any 
matter of indorsement, what implied warranty is there in the 
transfer by delivery simply of a promissory note ? Two things 
are clear under the authorities: 1st, that there is an implied war- 
ranty of the genuineness of the signatures; and 2nd, that there is 
no warranty of the solvency of the parties. It is unnecessary to 
more than refer to a few of the authorities upon these proposi- 
tions: Byles on Bills, pp. 123, 125, and cases in notes; Jones v. 
Ryde, 5 Taunt., 488; Gurney v. Womersley, 4 El. & BL, 132; 
Gompertz v. Bartlett, 24 Eng. Law & Eq., 156; Terry v. Bissell, 
26 Conn., 23; Merriam v. Wolcott, 3 Allen, 259; Aldrich v. Jack- 
son, 5 R. I., 218; Lobdell v. Baker, 3 Mete, 469; 1 Addison on 
Cont., p. 152; Ellis v. Wild, 6 Mass., 321; Eagle Bank v. Smith, 
5 Conn., 71; Shaver v. Ehle, 16 Johns., 201; Dumont v. William- 
son, 1 8 Ohio St., 515; 2 Parsons on Notes and Bills, ch. 2, § 2. 

A reference to some of the leading cases will throw light upon 
this question. 

In Thrall v. Newell, 19 Vt, 203, it appeared that one of the 
makers of a note was insane. The vendor made a written assign- 
ment, in which was a description of the note, and the court con- 
strued this as an express warranty that the instrument was the legal 
obligation of the apparent makers, and one of them being incap- 
able of contracting, gave judgment against the vendor on account 
of this breach for the amount received by him. While the judg- 
ment of the court is rested upon the fact of an express warranty, 
the judge who writes the opinion expresses his individual convic- 
tion that the same result would follow on a mere transfer without 
any express warranty, and quotes approvingly an extract . from 



320 DUMONT V. WILLIAMSON. [CHAP. 10, 

In the sale what purports to be a promissory note, it is 
not the material substance of the paper and ink for which the 
consideration is understood by the parties to be paid, but it is 
the chose in action of which the note purports to be the evi- 
dence, that is the real subject of negotiation and transfer. 
But if the note is forged, if no such chose in action exists, if 
the vendor neither owns nor parts with anything of the kind, 

Rand's edition of Long on Sales, that "there is an implied war- 
ranty in every sale that the thing sold is that for which it is sold." 

In Lobdell v. Baker, 3 Mete, 469, it appeared that the owner 
of a note procured the indorsement of a minor, and then put the 
paper in circulation. He was held liable to a subsequent holder. 
Ch. J. Shaw, delivering the opinion of the court, said: 

* * Whoever takes a negotiable security is understood to ascer- 
tain for himself the ability of the contracting parties, but he has a 
right to believe, without inquiring, that he has the legal obligation 
of the contracting parties appearing on the bill or note. Unex- 
plained, the purchaser of such a note has a right to believe, upon 
the faith of the security itself, that it is indorsed by one capable 
of binding himself by the contract which an indorsement by law 
imports." 

In Hannum v. Richardson, 48 Vt., 508, a note was given for 
liquor sold in violation of law, and was by statute void. Defend- 
ant knowing its invalidity, transferred it by an indorsement with- 
out recourse, and was held liable to his vendee. 

In Delaware Bank v. Jarvis, 20 N. Y., 226, a usurious note 
was sold, and the vendor was adjudged liable, not merely for the 
money received by him, but also the costs paid by his vendee in a 
suit against the makers of the note. In the opinion, Mr. Justice 
Comstock uses this language: 

"The authorities state the doctrine in general terms that the 
vendor of a chose in action, in the absence of express stipulation, 
impliedly warrants its legal soundness and validity. In peculiar 
circumstances and relations, the law may not impute to him an en- 
gagement of this sort. But if there are exceptions, they certainly 
do not exist where the invalidity of the debt or security sold arises 
out of the vendor's own dealing with or relation to it. In this case, 
the defendant held a promissory note which was void, because he 
had himself taken it in violation of the statutes of usury. When 
he sold the note to the plaintiffs and received the cash therefor, by 
that very act he affirmed in judgment of law that the instrument 
was unattained so far at least as he had been connected with its 
origin. " 

In Young v. Cole, 3 Bingham (N. C), 724, certain bonds were 
sold as Guatemala bonds, which turned out afterward to be lack- 
ing the requisite seal, and the vendor, though ignorant of the de- 



SEC. 50.] DUMONT V. WILLIAMSON. 32 1 

it is difficult to see any just ground upon which he can be 
allowed to retain the purchase money. He has undertaken to 
sell what he did not own, and that which in fact has no exist- 
ence. The maxim of caveat emptor is inapplicable to such a 
case. 

The present case, however, is much stronger. It is not 
a case of sale by delivery merely, but by indorsement, quali- 
fied, it is true, so as to exclude the liabilities consequent 

feet and innocent of wrong, was compelled to refund the money. 
The thing in fact sold was not the thing supposed and intended to 
be sold. 

In Gompertz v. Bartlett, 24 Eng. Law and Eq., 156, the plain- 
tiff discounted for the defendant an unstamped bill, purporting on 
its face to have been a foreign bill, drawn at Sierra Leone and ac- 
cepted in London, but which was in fact drawn in London. If 
actually a foreign bill, it required no stamp, and was valid; but 
being an inland bill, it required a stamp to make it a valid bill in a 
court of law. The acceptance was genuine, and the acceptor had 
previously paid similar bills. But the acceptor becoming bank- 
rupt, the commissioner refused to allow it against his estate be- 
cause not stamped. Thereupon the plaintiff, who had sold the 
bill, and had been compelled to take it up, brought his action to 
recover the price he had paid for it, and the action was sustained. 
Ld. Campbell, before whom the case had been tried, and who then 
held adversely to the plaintiff, said: 

"I then thought that the rule caveat emptor applied; but after 
hearing the argument and the authorities cited, I think the action 
is maintainable, and upon this ground: that the article sold did not 
answer the description under which it was sold. If it had been a 
foreign bill, and there had been any secret defect, the risk would 
have been that of the purchaser; but here it must be taken that the 
bill was sold as and for that which it purported to be. On the 
face of the bill it purporting to be drawn at Sierra Leone, and it 
was sold as answering the description of that which on its face it 
purported to be. That amounted to a warranty that it really was 
of that description." 

In Ticonic Bank v. Smiley, 27 Me., 225, an overdue note was 
transferred with this indorsement, "Indorser not holden;" yet it 
was decided that the indorser was liable to his vendee for any pay- 
ment made on the note before the transfer, or any set-off existing 
against it of which the note gave no indication and the vendor no 
information. 

In Snyder v. Reno, 38 Iowa, 329, it was held that there is an 
implied warranty that there has been no material alteration in the 
paper since its execution. The court says: "We have no doubt 
that there is an implied warranty of the transferrer that there is no 



322 DUMONT V. WILLIAMSON. [CHAP. IO, 

thereon under the commercial law. Still, the defendant is a 
party to the note, he has sold and transferred it as such, and 
he is bound to make his representation good. On this ques- 
tion we know of no conflict in the authorities. 

The judgment of the court below must then be reversed, 
the demurrer to the plaintiff's petition overruled, and a proce- 
dendo awarded. 

defect in the instrument, as well as that the signature of the maker 
is genuine." See also, Blethenv. Lovering, 58 Me., 437; Ogden v. 
Blydenburgh, 1 Hilton, 182; Fake v. Smith, 2 Abb. (N. Y.), App., 
76; 2 Parsons on Notes and Bills, ch. 2, § 2, and cases in notes; 
Terry v. Bissell, 26 Conn., 23; 1 Daniel on Neg. Instruments, 
§ 670. 

The Contract of an Indorser "Without Recourse." — 
* ' When the indorsement is without recourse, the indorser specially 
declines to assume any responsibility as a party to the bill or note; 
but by the very act of transferring it, he engages that it is what it 
purports to be — the valid obligation of those whose names are 
upon it. He is like a drawer who draws without recourse but who 
is never less liable if he draws upon a fictitious party, or one with- 
out funds. And, therefore, the holder may recover against the in- 
dorser without recourse, ( 1 ) if any of the prior signatures were not 
genuine; or, (2) if the note was invalid between the original par- 
ties, because of the want, or illegality of, the consideration; or, 
(3) if any prior party was incompetent; or, (4) the indorser was 
without title." For a further discussion of this rule see Watson v. 
Chesire, 18 Iowa, 202; Hailey v. Falconer, 32 Ala., 536; Rice v. 
Stearns, 3 Mass., 225; Ticonic Bank v. Smiley, 27 Me., 225. 

If an indorsement is intended to be "without recourse" that 
fact should be indicated; for it is a well settled rule of law that an 
unqualified indorsement, in full or in blank, cannot be varied by 
parol as against a subsequent bona fide holder. Daniel on Nego- 
tiable Instruments, 699, 719; Dale v. Gear, 38 Conn., 15; 9 Am. 
Dec, 353; Hill v. Shields, 81 N. C, 250; 31 Am. Rep., 499; 
Martin v. Cole, 104 U. S., 30; ^Charles v. Denis, 42 Wis., 56; 24 
Am. Rep., 383; Lee v. Pile, 37 Ind., 107, no; Rodney v. Wilson, 
67 Mo., 123. 

An Indorsement "Without Recourse" Does not Im- 
pair the Negotiable Quality of Commercial Contracts. — 
An indorsement "without recourse" does not impair the nego- 
tiable quality of commercial contracts. Neither does it put a sub- 
sequent purchaser upon inquiry concerning defenses which might 
be set up by prior parties. Borden v. Clark, 26 Mich., 410; Rice 
v. Stearns, 3 Mass., 225; Stevenson v. O'Neal, 71 111., 314; Bis- 
bing v. Graham, 14 Pa. St., 14; Gompertz v. Bartlett, 24 Eng. L. 
& Eq., 156. 



CHAPTER XI. 

Warranties or Admissions of a Transferrer of a Commer- 
cial Contract Without Indorsement. 



SECTION 51. 

THE TRANSFERRER OF A COMMERCIAL CONTRACT, PAY- 
ABLE TO BEARER, WITHOUT INDORSEMENT, IM- 
PLIEDLY WARRANTS OR ADMITS: (x) THAT HE IS A 
LAWFUL HOLDER OF THE CONTRACT; (a) THAT HE 
HAS A JUST AND LEGAL TITLE TO THE SAME; (3) THAT 
THE CONTRACT IS IN EVERY WAY A VALID, SUBSIST- 
ING OBLIGATION; (4) THAT HE HAS A RIGHT TO TRANS- 
FER IT; (5) THAT IT IS THE KIND AND DESCRIPTION 
OF A CONTRACT THAT IT PURPORTS TO BE. 

GOMPERTZ v. BARTLETT.' 
In the Court of Queen's Bench, Nov. 14, 1853. 

[Reported in 24 English Law and Equity, 156; 2j Law J. Rep. 
(N. S.)> Q. B., 65 ■; 18 fur., 266; 2 Ellis & Blackburn, 849.] 

The Form of Action. — Action for money payable by the 
defendant to the plaintiff, and for money received by the de- 
fendant for the use of the plaintiff. 

Plea of the general issue. 

On the trial, before Ld. Campbell, C. J., at the sittings 
in London after Trinity term last, it appeared that the plain- 
tiff and the defendant had for the previous six or eight months 
considerable dealings together in respect of the discounting of 
bills of exchange; and in January last the defendant produced 
to the plaintiff, for the purpose of being discounted, an un- 
stamped bill, purporting on the face of it to have been a for- 
eign bill drawn at Sierra Leone, and accepted in London, but 

^his case is cited in Wood's Byles on Bills and Notes, 268, 
568; Benjamin's Chalmers Bills, Notes and Checks, 227. See also 
Webb v. O'Dell, 49 N. Y., 583; Bell v. Dagg, 60 N. Y., 528; Mur- 
ray v. Judah, 6 Cowen, 483; Brown v. McNamara, 20 N. Y., 287. 



324 GOMPERTZ V. BARTLETT. [CHAP. II, 

which it appeared was, in fact, drawn in London. The de- 
fendant then stated to the plaintiff that he believed the bill to 
be perfectly good, and that it would be paid at maturity; that 
he would not put his own name upon it, but that the plaintiff 
might take the bill and make inquiries about it and that if he 
approved of it he, the defendant, would pay a liberal discount 
upon its being taken without his name. The plaintiff took 
the bill, and upon inquiry was informed that the parties to it 
were respectable, and he thereupon paid the defendant the 
amount of the bill, less 85/. discount. The plaintiff after- 
wards indorsed the bill to a person named Rogers, for the full 
amount, less 5/. per cent, discount. The bill was afterwards 
dishonored, the acceptor becoming bankrupt, the plaintiff was 
compelled to repay the amount he had received from Rogers y 
Bills of the same kind had before been paid by the acceptor, 
and an endeavor was made to prove under the bankruptcy of 
the acceptor for the amount of the bill, but the commissioner 
refused to allow it, as the bill was not stamped. Upon these 
facts, the learned judge was of opinion that the action could 
not be maintained, and the plaintiff was non-suited, leave 
being reserved to move to set aside the non-suit, and to enter 
a verdict for the plaintiff for 815/. 

The Claim of the Plaintiff. —The plaintiff contended 
that the bill was a perfect bill of exchange, though unstamped. 
The acceptor was in the habit of paying bills such as these. 
The mere fact that his bankruptcy prevented him paying it, 
cannot entitle the plaintiff to recover back the money he paid 
for it. There has been no failure of consideration. 

There is no implied warranty that the bill was drawn at 
any particular place, or that it did not require a stamp, or that 
it was more a bill of exchange than it purported to be on its 
face, or that it was of a merchantable character. In Parkinson 
v. Lee, l it was held that there was no warranty that hops sold 
by sample were of a merchantable quality, and there was no 
more warranty of the bill in this case. The principle of 
caveat emptor clearly applies. 51 Here the plaintiff had the bill 

1 2 East, 314. 

'Co. Lit., 102, a. Bree v. Holbech, Dougl., 630; Chandelor 
v. Lopus, Cro. Jac., 4, and Taylor v. Bullen, 5 Exch. Rep., 779. 



SEC. 51.] GOMPERTZ V. BARTLETT. 325 

to inspect. He took it away, and made such inquiries 
about it as he pleased. He had every power of ascertaining 
the truth. 

[Wightman, J., put this question: il How can you dis- 
tinguish this from the case of a forged bill? There is an im- 
plied warranty that the instrument is genuine, though there is 
none that the parties are solvent." Byles on Bills, 266.] 

It has never been held as a part of a definition of a bill 
of exchange that it should be drawn upon a proper stamp. 
This bill is a genuine bill and might have been enforced 
abroad. If a horse sold without a warranty die, the day after 
the purchase, of a latent defect existing before the sale, the 
loss falls on the purchaser. Jones v. Ryde ' is distinguishable, 
for a forged bill is no bill at all. Chapman v. Speller 2 is 
much in point to show that the plaintiff cannot recover this 
money back; this is like the case of Baglehole v. Walters, 8 
and Pickering v. Dowson. 4 There was no representation 
whatever made at the sale of the bill, which distinguishes this 
case from Bridge v. Wain. 6 At most, it was but a sale of 
what purported to be a foreign bill. Wilson v. Vysar. 8 

The remedy here, if at all, was by a special action, and 
the plaintiff cannot sue for the whole price, upon the ground 
of failure of consideration. Kempson v. Saunders 7 may be 
relied on by the other side, but that case rests upon the 
ground that the shares sold were not saleable at all. 

The Claim of the Defendant. — The question is, whether 
a vendor of that which purports to be a valid security is not 
liable if it turns out upon some latent defect to be invalid. 
The authorities that have been cited do not apply. Here the 
bill of exchange sold was not of the description which it pur- 
ported to be when sold. It does not confer the rights and 
powers which it purported to give. The sale and purchase 

] 5 Taunt, 488. 

a i4 Q. B. Rep., 621. 

8 3 Camp., 154. 

*4 Taunt., 779. 

6 1 Stark, 504. 

6 4 Taunt., 288. 

7 4 Bing., 5. 
20 



326 GOMPERTZ V. BARTLETT. [CHAP. II, 

was of a bill of exchange of value and capable of being en- 
forced. In Young v. Cole, 1 where bonds were sold as Guate- 
mala bonds, and it turned out that they had not been sealed 
at the time required to render the estate liable, it was held 
that they could not be considered as Guatemala bonds, and 
that the vendor was bound to refund the purchase money. 
So, here, in point of law, this cannot be considered as a bill 
of exchange. It purported to be a foreign bill, and apparently 
did not require a stamp, and the defendant impliedly repre- 
sented it to be a foreign bill. 

In Addison on Contracts, 2 the law is correctly stated to 
be, that if a man goes into the money market with a bill or 
note and gets it discounted, and it is not the bill or note of 
the parties whose names appear upon it, the money received 
in exchange for it cannot lawfully be retained, and that de- 
clining to indorse the bill does not rid the party negotiating it 
from the liability which attaches to him for putting off an in- 
strument as of a certain description which turns out not to be 
such as it is represented. The case of Jones v. Ryde 8 is not 
distinguishable from the present, and the decisions on the 
cases of forged signatures apply strongly to this case. 

Decision.— Ld. Campbell, C. J., said, "At the trial I 
entertained an opinion adverse to the plaintiff. I was struck 
with the consideration that this was the case of a mere sale, 
and that the vendor had title in the thing sold, and knew 
nothing of any secret defect when he sold. And it was diffi- 
cult to say that the bill was of no value at the time of the 
sale, because at that time there was no strong reason for sup- 
posing that it would have been paid if the acceptor had not 
been insolvent, and even now payment might perhaps be en- 
forced in a foreign country. I then thought that the rule of 
caveat emptor applied; but after hearing the argument and 
the authorities cited, I think the action is maintainable, and 
upon this ground, that the article sold did not answer the 
description under which it was sold. If it had been a foreign 
bill and there had been any secret defect, the risk would have 

] 3 Bing., (N. C), 724. 
2 Vol. 1, p. 152. 
8 5 Taunt, 488. 



SEC. SI.] GOMPERTZ V. BARTLETT. 327 

been that of the purchaser; but here it must be taken that the 
bill was sold as and for that which it purported to be. On 
the face of the bill it purported to be drawn at Sierra Leone, 
and it was sold as answering the description of that which on 
its face it purported to be. That amounted to a warranty 
that it really was of that description. It is not a foreign bill, 
but was drawn in London, and payment of it could not be en- 
forced here. This is not the case of a sale of goods answer- 
ing the description of the goods sold, and a secret defect in 
the goods; but it is the case of a thing which is not what it 
professed to be when sold, and upon this ground I think the 
money must be taken to have been paid upon a mistake of 
fact, the bill not answering the description of that sold. 

The passage quoted from Addison on Contracts very 
clearly, I think, lays down the law on this subject, and both 
Jones v. Ryde 1 and Young v. Cole 2 are authorities in support 

J 5 Taunt., 488. 
3 3 Bing. (N. C), 724. 

Warranties or Admissions of a Transferrer. — While the 
transferrer cannot be held liable to a subsequent transferree either 
upon the instrument or the consideration, he may be liable upon 
his warranties or admissions. The transferrer, while he does not 
warrant the solvency of the prior parties, he does warrant: 

1. That the contract, in every respect, is a genuine one; 

2. That he has a good title to the same; • 

3. That the parties to the instrument were competent to con- 
tract; 

4. That the contract is not forged or fictitious; 

5. That the contract is just what it purports to be. Merriam 
v. Wolcott, 3 Allen, 258 (1861); Gurney v. Womersley, 4 El. & 
BL, 123; Shaver v. Eale, 16 John., 201; Bell v. Dagg, 60 N. Y., 
528; Wilder v. Cowles, 100 Mass., 487; Swanzey v. Parker, 50 
Pa. St., 441; Lobdell v. Baker, 3 Metcalf, 469 (1842); Bayard v. 
Shunk, 1 W. & S. (Pa.), 92; Erwin v. Down, 15 N. Y., 575; 
Tiedeman on Com. Paper, 244; Thrall v. Baker, 4 Metcalf, 193. 

Some cases hold, however, that where a commercial contract 
is transferred or exchanged without indorsement, that no such 
warranties or admissions are implied. Batzer v. Ruren, 29 Me., 
434; Fisher v. Rieman, 12 Md., 497; Ellis v. Wild, 6 Mass., 321. 

It has been held that the transferrer also warrants that he has 
no knowledge at the time of the transfer of any defenses or facts- 
which will defeat the enforcement of the contract. The suppres- 
sion of the truth is a fraud and he is liable. Wood's Byles on B. 
& N., 269; Camidge v. Allenby, 6 B. & C, 373 (1827); 60 E. C. 



328 GOMPERTZ V BARTLETT. [CHAP. II, 

of the action. In principle the case is the same as if the ven- 
dor had professed to sell a bar of gold, which turned out to be 
mere dross colored and disguised. I am, therefore, of opin- 
ion, that the law implies to a promise on the part of the vendor 

L. R.; Fenn v. Harrison, 3 T. R., 759 (1790); Delaware Bk. v. Jer- 
vis, 20 N. Y., 228 (1859); Bridge v. Batchelder, 9 Allen, 394 
(1864). 

The rule as to what defenses may be interposed against the 
holder of negotiable contracts applies to a transferree. Equities 
may be interposed against him if he is not a bona fide holder. 

Transfer by Delivery Simply. — When a commercial con- 
tract is payable to bearer it may be transferred so that the holder 
or transferree would take both the equitable and legal title, by de- 
livery simply without indorsement. This is true of a commercial 
contract payable to order, also, after it has been once indorsed in 
blank, for the reason that a note payable to order and indorsed in 
blank is equivalent to a commercial contract payable to bearer. 
Lamb v. Matthews, 41 Vt., 42 (1868); Holcomb v. Beach, 112 
Mass., 450; Curtis v. Sprague, 51 Cal., 239 (1876); O'Keefe v. 
First Nat. Bk., 49 Kan., 347; Russ v. Smith, 19 Tex., 171; 70 
Am. Dec, 327. 

The transferrer by a mere delivery of a commercial contract, 
payable to bearer without indorsement, incurs no liability on the 
instrument to the transferree; that is, he is not liable upon the 
consideration for the transfer. He is only liable upon his war- 
ranties or admissions. The transferree can never look to the 
transferrer for payment, if the contract is a valid subsisting one. 
Wood's Byles on B. & N., 265; Benjamin's Chalmers on B. & N., 
226; Roberts v. Haskill, 20 111., 59, where Canton, C. J., says, 
"By receiving and passing the note while under a blank indorse- 
ment, and without putting his name to it, he (transferrer) assumed 
no responsibility in relation to it. The moment he parted with it 
he became as much a stranger to it as if he had never held it. 
Had the party to whom he passed it wished him to assume any 
responsibility in relation to it, he should have required his indorse- 
ment upon it. By taking it without such indorsement he waived 
any such guaranty and agreed to take it upon the sole reponsibil- 
ity of the names already on the note." 

In case the contract is payable to a particular person or to his 
'order, and is transferred without indorsement, the transferree 
takes but an equitable title and has the rights of an assignee only. 

In Illinois, however, it is held that where a negotiable con- 
tract is payable to a particular person or bearer it cannot be trans- 
ferred by mere delivery, so as to vest the legal title in the trans- 
ferree; so that the word " bearer" in such a note is surplusage in 
that state. Hilborn v. Artus, 3 Scam., 344; Roosa v. Crist, 17 
111., 450. 



SEC. 51.] GOMPERTZ V. BARTLETT. 329 

to repay the purchase money, and that the action is well 
brought. 

Coleridge, J. — This is the case of a mere sale, and where 
there is a sale of goods without a warranty the vendor is not 



Indorsement of a Non- Negotiable Instrument. — An 
indorsement upon a non-negotiable contract does no more than to 
transfer the equitable interest therein with the right to recover the 
money due thereon. It amounts to a mere assignment of the con- 
tract. It is not an unusual way of transferring non-negotiable 
contracts for the holder to write his name across the back thereof, 
but such act imports no legal liability on the part of the indorser 
to pay the amount of the claim in case of failure by the debtor. 
To hold otherwise would be giving to the apparent indorsement 
the same character and effect of an indorsement and to subject 
the maker of it to the liability of an indorser of a commercial 
contract. Story v. Lamb, 62 Mich., 525. 

Indorsement — Statute of Limitations. — At common law 
when a cause of action once accrues, an action might be brought 
upon it at any time subsequently. The action was never barred 
by reason of a mere lapse of time; and it was not untill after the 
middle of the thirteenth century when by statute the time within 
which an action must be brought was limited. These statutes at 
first limited the time within which an action pertaining to real 
property should be brought. Early in the seventeenth century 
similar statutes were enacted applying to actions concerning per- 
sonal property. Now all the states have statutes limiting the time 
within which actions may be brought. The statutes of limitation 
do not destroy the debt, they simply bar the remedy. In order 
for the defendant to secure the advantage of these statutes he must 
specially plead them. In some jurisdictions, however, under 
proper circumstances the advantages under the statutes of limita- 
tions may be taken by demurrer. 

The statutory period within which an action must be brought 
commences to run from the time an action accrues. To illustrate: 
a commercial contract is nominally due upon the first day of the 
month, but if grace is allowed it is not legally due until the fourth 
day of the month, and no action can be brought upQn the fourth, 
for the reason that the maker has the entire day in which to pay 
the same; therefore no action can be brought until the fifth, at 
which time the statute of limitations begins to run. 

If the contract is payable on demand, the statute of limita- 
tions does not begin to run until a demand is made, but it does 
run from that time, for the reason that an action accrues immedi- 
ately. If the contract is payable a certain time after demand, then 
of course that period must elapse before the statutes begin to run. 
In some jurisdictions, however, where the commercial contract is 
payable on demand it is payable at once and without demand; 



33° GOMPERTZ V. BARTLETT. [CHAP. It, 

bound to see that the thing he sells possesses either the qual- 
ity or value supposed at the time of the sale. But a vendee 
is entitled to have a thing of the kind and description which 
the thing professes to be at the time of the sale. Here, in 

and in such juristictions the statutes run from its delivery, for the 
reason that an action may be brought at once without a demand. 
Palmer v. Palmer, 36 Mich., 487; in re. King's estate, 94 Mich., 
411, 425; 54 N. W. R., 178; Hitchings v. Edmands, 113 Mass., 
338; Fenno v. Gay, 146 Mass., 118; 15 N. D. R., 87; McMullen 
v. Rafferty, 89 N. Y., 456; Jones v. Nicholl, 82 Cal., 32; Massie 
v. Byrd, 87 Ala., 681; and this is true whether the note be payable 
with or without interest. Wenman v. The Mohawk Co., 13 
Wend., 267; Wheeler v. Warner, 47 N. Y., 519; 7 Am. R., 478. 

If the contract is payable at sight it becomes due at sight, 
and the statute of limitations runs from that date. If the contract 
becomes due upon the happening of some event, the statute of 
limitations begins to run from such event. If the contract is in- 
dorsed or transferred after maturity, the indorsement is equivalent 
to the drawing of a new contract payable on demand, and an 
action may be brought immediately thereon. If there is a breach 
in any of the warranties made by an indorser, an action may be 
brought against him immediately, even before the maturity of the 
principal contract. Blethen v. Lovering, 58 Me., 437 (1870); 
Turnbull v. Bowyer, 40 N. Y., 456 (1869); Graham v. Robertson, 
79 Ga., 72. 

If an action is barred by reason of the statute of limitations, 
no action can be maintained upon the collateral security given for 
the payment of the debt. When the action on the principal con- 
tract is barred an action on the security is also barred. Schmucker 
v. Siberl, 18 Kan., 104; Grattan v. Wiggins, 23 Cal., 16; Wood 
v. Goodfellow, 43 Cal., 185; Pollock v. Maison, 41 111., 516; 
Medley v. Elliott, 62 111., 532; Day v. Baldwin, 34 la., 380. 

Indorsement After Payment — Effect of. — Maturity of a 
commercial contract does not destroy its negotiability; but who- 
ever takes it after maturity, as a general rule, takes it with notice 
of existing equities. Therefore, if the holder of a negotiable con- 
tract should negotiate the same after maturity and after payment, 
he could not thereby render the makers liable thereon. He would 
be liable only upon the warranties of an indorser. 

Payment Before Maturity — Liability of Maker. — A 
different condition would arise where the maker should pay a com- 
mercial contract before maturity and permit the payee to negotiate 
it thereafter before maturity, in such a case, if a contract should 
come into the hand of a bona fide holder, he (maker) might be 
called upon to pay the contract a second time. Morley v. Culver- 
well, 7 Mess. & W., 174. 

Payment before maturity by the maker of a commercial con- 



SEC. 51.] GOMPERTZ V. BARTLETT. 33 1 

the absence of all fraud, both parties thought they were deal- 
ing about a foreign bill, which on the face of it this bill pur- 
ported to be, and it turns out not to be a bill of that kind and 
description, and therefore [because it is unstamped it is] of no 

tract to the holder thereof, if not followed by a surrender of the 
same, will not protect him. Wheeler v. Guild, 20 Pick., 545; Mil- 
ler v. Race, 1 Burr., 452; Kingman v. Pierce, 17 Mass., 247; 
Bleaden v. Charles, 7 Bing., 246. 

Indorsement — Mistake in. — A mistake in the indorsement 
will not necessarily render it void. If the name of the special 
indorsee is misspelled, he may indorse it by spelling his name 
properly. Leonard v. Wilson, 2 C. & M., 589; Wood's Byles on 
B. & N., 152. 

Indorsees Right to Fill Up a Blank Indorsement.— 
The holder of a commercial contract indorsed in blank can 
convert it into an indorsement in full in his own favor by super- 
scribing the necessary words. He may also change the blank 
indorsement into one in full in the same way, making it payable 
to a stranger. In case there are several blank indorsements, the 
holder may fill up any one of them, making it an indorsement in 
full, or he may make his title through all of them. He may, in 
short, so long as he does not increase the liability of any of the 
parties t) the instrument, change any or all blank indorsements to 
indorsements in full to himself or strangers. He may fill up a 
blank indorsement, by a superscription, with any contract con- 
sistent with the character of that indorsement. Bank of Utica v. 
Smith, 18 Johns., 230; Mitchell v. Culver, 7 Cowan, 336; Cope v. 
Daniel, 9 Dana (Ky.), 415 (1840); Cole v. Cushing, 8 Pick., 
48; Vincent v. Horlock, 1 Camp., 442. 

The Holder's Right to Strike Out an Indorsement. — 
The holder of a commercial contract upon which there are indorse- 
ments may strike out any or all of such indorsements which are 
not necessary to his title. If the contract is payable to bearer and 
there are several indorsements in blank, the holder may strike out 
all of them. By striking out an indorsement, if intentional, the 
indorser is thereby released from all liability. Middleton v. Grif- 
fith, 57 N. J. L., 442; 51 Am. St. R., 617, 619; Mendelhall v. 
Banks, 16 Ind., 284; Parks v. Brown, 16 111., 454; Brett v. Mars- 
ton, 45 Me., 410. 

These indorsements may be struck out at any time either 
before or during the trial. Middleton v. Griffith, supra; Porter v. 
Cushings, 19 111., 572. 

The holder must not, however, strike out the indorsement 
through which he makes his title. If the indorsements are in 
blank and the instrument payable to bearer, as was said above, he 
may strike out all; if, however, it is payable to a particular person 
or order and is indorsed by him and several others in blank, he 



332 GOMPERTZ V. BARTLETT. [CHAP. II, 

value; and common justice requires that the vendee should 
not be bound, and that the purchase money should be recov- 
ered back. 

Wightman, J. — I am of the same opinion, on the ground 
that the thing sold does not answer the description of that 

may not strike out the indorsement of the original payee without 
changing the transfer by indorsement to an assignment, for the 
reason that he would not be able to make his title through the 
original payee or his order. 

Transfer of Negotiable Contracts by Operation of Law. 
— While commercial contracts may be transferred by assignment, 
by indorsement and by delivery, they may also be transferred by 
operation of law. A transfe* of a commercial contract by opera- 
tion of law will occur in the following cases: 

t. In the case of bankruptcy or assignment for the benefit of 
creditors, where all the property of the bankrupt or of the assignor 
passes to the assignee without an express assignment or indorse- 
ment; 

2. In the case of the death of a payee or holder, his right 
and title passes to his personal representatives; 

3. In the case of the death of one of the joint payees, the 
title vests at once in the survivors; 

4. Where a note is transferred to a married woman, the title 
at once vests in the husband, unless otherwise provided for in the 
statutes under the married woman's acts. Norton on Bills and 
Notes (2d ed. ), 191. 

The Indorsement Must Not be Partial. — The law will 
not permit the parties to split their cause of action, therefore the 
holder of a commercial contract will not be permitted to indorse 
for a part of the amount; but in case a part of the amount has 
been paid, an indorsement may be made of the balance, which of 
course is not a violation of the rule. At common law a transfer of 
a part only of a commercial contract could not be recognized, and 
no action at law could be maintained on such a title by any of the 
parties. Hawkins v. Cardy, 1 Ld. Raym., 360; Heilbut v. Nevil, 
4 L. R. C. P., 358; Conover v. Earle, 26 Iowa, 169; Goldman v. 
Blum, 58 Tex., 636; Lindsay v. Price, 33 Tex., 282. 

But now by statute in many of the states the indorsee or 
assignee of a part of a demand may sue by making the indorser or 
assignor a party, either plaintiff or defendant. Lapping v. Duffy, 
47 Ind., 571; Gorves v. Ruby, 24 Ind., 418; Fordyce v. Nelson, 
91 Ind., 448. 

In the case of a partial assignment, the indorsee will have a 
lien upon the instrument to the extent of the indorsement Flint 
v. Flint, 6 Allen, 36. 

When May an Indorsement be Made? — The indorsement 
or transfer of a commercial contract may be made any time after 



SEC. 51.] GOMPERTZ V. BARTLETT. 333 

which the vendor professed to sell. On its face the bill 
purports to be a foreign bill of exchange not requiring a 
stamp. It turns out, however, that so far from answering 
the description of that for which it was sold, it was not a 

its execution and delivery, either before or after maturity. Matur- 
ity does not destroy the negotiability of these contracts. Leavitt 
v. Putman, 3 N. Y., 494; Scott v. First Nat. Bk., 71 Ind., 448. 

But when a person takes a commercial contract after maturity, 
or with notice of its having been dishonored, he takes it subject to 
all the equities which might have been interposed against the party 
from whom he receives it. Robinson v. Lyman, 10 Conn., 30; 
Lansing v. Gaine, 2 Johns., 300. If, however, he takes it from 
one having a title freed from equities, then he gets the title of his 
indorser and may recover. Kost v. Bender, 25 Mich., 515. And 
this is true even though he had knowledge of the equities. 

The Law of What Place Governs the Indorsement. — 
Commercial contracts, like common law contracts, in the absence 
of stipulations to the contrary, are governed according to the lex 
loci; and in case of indorsement, there is a presumption that it was 
made at the place where the contract was made. This presump- 
tion, however, may be rebutted by positive proof to the contrary. 
Unless otherwise stipulated, a contract of indorsement is controlled 
by the law of the place where made. There is some conflict of 
authority in the case where a contract is executed and delivered in 
one place to be performed in another, as to the laws of which place 
controls. It was held in the case of Staples v. Nott, upon a prom- 
issory note bearing date at Washington, D. C, and payable at a 
bank in Watertown, N. Y., that the plaintiffs was entitled to re- 
cover as upon a contract made under the government of the laws 
of the District of Columbia. 128 N. Y., 403; 28 N. E. Rep., 515; 
Bank v. Low, 81 N. Y., 566; Sheldon v. Haxton, 91 N. Y., 124. 

In the case of Alister v. Smith, it was held that the laws, of 
the state where a negotiable contract is made, will fix the rate of 
interest that it is to draw. 17 111., 328. 

Some of the courts have made a distinction between a case 
where the note was given for an original indebtedness or as a re- 
newal note simply. Staples v. Nott, supra; 65 Am. D., 651; Du- 
gan v. Lewis, 79 Tex., 246; 23 Am. St. R., 332; New England Co. v. 
McLaughlin, 87 Ga., 1; Hanover Nat. Bk. v. Johnson, 90 Ala., 

549- 

While Beck, C. J., in the. case of Bigelow v. Burnham, says: 

" It is a well settled rule that the law of the place where a contract 

or a note by its terms is to be performed determines the question 

of its validity." 83 Iowa, 120; Burrows v. Stryker, 47 Iowa, 47 7 \ 

Story on Conflict of Laws, §§ 242, 280, 281; Andrews v. Ponds, 

13 Peters, 65; City of Aurora v. West, 22 Ind., 88; 85 Am. D., 

413; Mason v. Dousay, 35 111., 424; 85 Am. D., 368. 



334 GOMPERTZ V. BARTLETT. [CHAP. II, 

bill drawn at Sierra Leone, but an inland still requiring 
a stamp, and therefore not a valid bill in any court of law. I 
agree, that if an article sold and delivered without a warranty 
answers the description of that which at the time of sale it 

The parties may, however, where a contract is executed in one 
place to be performed in another, stipulate as to the laws of which 
place shall control, and in that case their agreement will be car- 
ried out. New England Co. v. McLaughlin, supra. 

It is a well recognized rule of law that a commercial contract 
must conform to the place where made as to the formality of its 
execution and the consideration necessary to its validity; the lex 
loci governs also in its interpretation, nature and effect. Evaus v. 
Anderson, 78 111., 558; King v. Sarria, 69 N. Y., 24; The Free- 
man's Bk. v. Ruckman, 16 Gratt. (Va.), 126. 

It is often difficult to determine whether a matter relates to 
the rights of the parties or to the remedy, and whether it is gov- 
erned by the lex loci or the lex fori. Leroux v. Brown, 12 C. B., 
801; 74 E. C. L. R., 801; The Freeman's Bank v. Ruckman, 16 
Gratt., 126. 

The Laws of What Place Govern Negotiable Con- 
tracts. — In the case of Kilgore v. Dempsey, it was held, where 
the maker of a commercial contract resided in Ohio, where the law, at 
the time, allowed the parties to contract for any rate of interest not 
exceeding ten per cent, and the payee resided in Pennsylvania, 
where six per cent, was a legal rate of interest, that on a loan of 
money made in Ohio the parties had a right to stipulate in the note 
for interest at ten per cent, per annum and to make the note pay- 
able in Pennsylvania, without thereby rendering a contract usur- 
ious. 25 Ohio St., 413; Chapman v. Robertson, 6 Paige, 627; 
Peck v. Mayo, 14 Vt, 33, where Redfield, J., in delivering the 
opinion in an action upon a contract executed and delivered at 
Montreal, Canada, and payable in New York, said, "If a contract 
be entered into in one place to be performed at another, and the 
rates of interest differ in the two countries, the parties may stipu- 
late for the rate of interest of either country, and thus, by their 
own express contract, determine with reference to the law of which 
country that incident of the contract shall be recited. " Harvey v. 
Archbold, 1 Ryan & Moody, 184; E. C. L. R., 412; Dessau v. 
Humphreys, 20 Martin, 1; Andrews v. Pond, 13 Peters, 65; Ekins 
v. The East India Co., 1 P. Wms., 395. 

If, however, the contract is entered into in one country to be 
performed in another having established a lower rate of interest 
than the former, and the contract stipulates interest generally, it 
has always been held that the rate of interest recoverable was that • 
of the place of performance only. Robinson v. Bland, 2 Burrow, 
101 7; Fanning v. Cousequa, 17 Johns., 511; Scofield v. Day, 20 
Johns., 102. 



SEC. 51.] GOMPERTZ V. BARTLETT. 335 

professed to be, and the vendor professed to sell, the rule of 
caveat emptor applies. Young v. Cole ! and Jones v. Ryde 2 
are both authorities in support of the action; and Jones v. 
Ryde is more especially an authority in point. 
Rule absolute. 

! 3 Bing. (N. C), 724; 4 Scott, 495. 
2 5 Taunt, 488; 1 Marsh., 157. 



CHAPTER XII. 
Protest. 



SECTION 52. 

THE "CERTIFICATE OF PROTEST" SHOULD SHOWC(i) A 
COPY OF THE INSTRUMENT OR SHOULD SET IT OUT 
ACCORDING TO ITS LEGAL EFFECT; (2) THAT PRE- 
SENTMENT AND DEMAND WERE MADE; (3) THE TIME 
AND PLACE OF PRESENTMENT AND DEMAND: (4) THE 
PARTIES BY AND TO WHOM PRESENTMENT AND DE- 
MAND WERE MADE; (5) THE ANSWER, IF ANY, GIVEN 
TO THE DEMAND; OR THAT NO ANSWER WAS GIVEN; 
OR THAT THE PARTY COULD NOT BE FOUND; OR THE 
FACTS WHICH EXCUSE PRESENTMENT AND DEMAND; 
(6) THAT NOTICE OF DISHONOR HAD BEEN GIVEN; (7) 
THE SIGNATURE AND SEAL OF THE NOTARY. 

MUSSON v. LAKE.* 

In the Supreme Court of the U. S-, Dec, 1845. 

[Reported in 4 Howard, 262, ] 

The Form of the Action. — Lake was sued as indorser 

of the following bill of exchange: — 

11 Vicksburg, 17th December \ 1836. 

1 ' Exchange for $6, 133 M,. 

1 • Twelve months after first day of February \ 1837, of 

this first of exchange {second of the same tenor and date un- 

paid), pay to the order of R. If. & J. H. Crump six thou- 

^his case cited in Story on Bills of Exchange, 325; Wood's 
Byles on Bills and Notes, 575; Benjamin's Chalmers on Bills, 
Notes and Checks, 165; Bigelow on Bills and Notes, 87, 107; 
Bige low's Cases on Bills and Notes, 100; Daniel on Negotiable 
Instruments, 654, 896, 898, 953, 970, 983; Norton on Bills and 
Notes, 127, 160, 322, 349; Tiedeman on Commercial Contracts, 
326, 318, 334, 346, 507, 508; Randolph on Commercial Paper,. 

*9> 37, 47- 



SEC. 52.] MUSSON V. LAKE. 337 

sand, one hundred and thirty-three dollars, value received, 
and charge the same to account of 

Steele, Jenkins & Co." 
1 * To Kirkman, Rosser & Co. , 

New Orleans." 
"Indorsed: R. H. & J. H. Crump, 

W. A. Lake." 
44 Kirkman, Rosser & Co., New Orleaus, 3d February, 
1838, — protested for non-payment . 

A. Mazureau, Not. Pub." 
It being admitted, that Vicksburg, where said bill bore 
date, was in the State of Mississippi, and New Orleans, the 
place of payment, was in the State of Louisiana, the plain- 
tiffs then offered to read in evidence to the jury, the protest 
of said bill of exchange; which protest, thus offered to be 
read, is in the words and figures following, to- wit: — 

United States oe America, State of Louisiana. 

By this public instrument, protest, be it known, that on 
the third day of February, in the year one thousand eight 
hundred and thirty-eight, at the request of the Union Bank 
of Louisiana, holder of the original draft, whereof a true 
copy is on the reverse hereof written, I, Adolphe Mazureau, a 
notary public in and for the city and parish of New Orleans, 
State of Louisiana aforesaid, duly commissioned and sworn, 
demanded payment of said draft, at the counting-house of 
the acceptors thereof, and was answered by Mr. Kirkman 
that the same could not be paid. 

Whereupon I, the said notary, at the request aforesaid, 
did protest, and by these presents do publicly and solemnly 
protest, as well against the drawer or maker of the said draft, 
as against all others whom it doth or may concern, for all 
exchange, re-exchange, damages, costs, charges, and interests, 
suffered or to be suffered for want of payment of the said 
draft. 

Thus done and protested, in the presence of John Cragg 
and Henry Frain, witnesses. 

In testimony whereof, I grant these presents under my 
signature, and the impress of my seal of office, at the city of 
New Orleans, on the day and year first herein written. 

[l. s.] A. Mazureau, Notary Public. 



338 MUSSON V. LAKE. [CHAP. 12, 

But the defendant objected to said protest, and the copy 
of the bill on the reverse side thereof written being read in 
evidence to the jury \ on the ground that it was not stated in 
said protest that the notary presented said bill of exchange 
to the acceptors, or either of them; or had it in his posses- 
sion when he demanded payment of the same. 

And that for this alleged defect, which it was insisted 
could not be supplied by other proof, the said protest was 
invalid and void upon its face, and could not be received as 
evidence of a legal presentment of the bill for payment, or of 
the dishonor of the bill. And, thereupon, on the question 
whether the said protest could be read to the jury, as evidence 
of a legal presentment of the bill for payment, or of the dis- 
honor of said bill, the judges were opposed in opinion. 
Which is ordered to be certified to the Supreme Court of the 
United States for their decision. 

J. McKinley. [l. s.] 
J. Gholson. [l. s. ] 

The Claim of the Plaintiff. — On the trial of this cause, 
and after the original bill of exchange, upon which the suit 
was brought, had been read to the jury, the plaintiff offered 
in evidence the protest thereof. 

The counsel of the parties to this suit do not differ at all 
as to the duty of a notary, when making a personal demand 
of the payment of negotiable paper prior to the protest 
thereof. We concur in opinion, that he must have the note 
or bill with him, and should present it for ^payment, etc.; 
and the only difference which arises is, as to the species of 
evidence which is indispensable to prove the fact of present- 
ment. Must the term itself be used in the protest, and will 
no form of words therein supply its place ? This is the posi- 
tion assumed for the defendant; and, this being controverted, 
the issue is made which is now to be disposed of. 

A number of authorities have been cited by the learned 
counsel for the defendant, which, though certainly applicable 
to the duties to be performed by a notary ante protest, are 
believed not to decide the question raised here; nor, if they 
did, can it be conceded that they would be conclusive, upon 
a matter specially pertaining to Louisiana's jurisprudence. 



SEC. 52.] MUSSON V. LAKE. 339. 

The stress of the argument in the learned counsel's brief 
is that in all cases the fact of presentment must appear, in 
verbo y upon the face of the protest, and this is assuredly not 
so. For example: if a note or bill should be payable at a 
particular place, and the notary takes it thither at maturity, 
and there should be no one there to whom to present it, or of 
whom to demand payment, the law dispenses the party with 
making either, and the notary, of course, from certifying 
either, for nullus cogitur ad vana. So in the case of a lost 
note; a valid protest could could be made thereof without its 
production, if an adequate indemnity was tendered to protect 
the party from all future liability, or to reimburse him for any 
payments he should be constrained to make. In these and 
analogous cases, it could hardly be insisted, either that the 
law required the notary to certify to a presentment which was 
never made, and the failure whereof the law excuses; or, that 
the protest would be invalid without it. One of the most 
important of the cases cited adversely is a strong authority to 
establish this. It is the case of Freeman et al. v. Boynton. 1 
The court there, after affirming the necessity of having the 
note or bill present when the demand is made, says: — 

41 This rule may admit of exceptions, — as where the 
security may be lost; in which case a tender of sufficient 
indemnity would make the demand valid, without producing 
the security. And where, from the usual course of business, 
of which the parties are conversant, the security may be 
lodged in some bank, whose officers shall demand payment, 
and give notice to the indorser, according to the custom of 
such banks, — the security not being presented at the time of 
the demand^ but the parties being presumed to know where it 
may be found." Here, again, presentments are dispensed 
with, in cases where protests are authorized; and surely these 
protests must dispense with averments which would not be 
true. 

The forms of protest vary in different countries. They 
vary in different states. They vary in the same state. They 
must necessarily adapt themselves to the true circumstances 
attendant upon the dishonor of bills and notes. 

1 7 Mass. R., 483. 



340 MUSSON V. LAKE. [CHAP. 12, 

The acts of public officers are favored to the extent that 
they are presumed to know their duty, and to do their duty, 
unless the contrary appears. A notary has no right "to 
demand payment," in the absence of the security which 
attests the party's liability, or without its presentment; 
and of course he is presumed to know that he cannot do it. 
Where, then, notaries "demand payment," they have a right 
to the presumption that the demand followed the presentation. 
A contrary doctrine casts the] presumption against the officer, 
and arraigns him, by implication, for a breach of duty; and 
that, too, in the absence of an interest or a motive. Hence, 
therefore, a "demand of payment," in the absence of other 
words, far from implying an actual presentment, would imply 
that there was none. It is believed that no principle, nor 
usage, nor even precedent, gives the sanction of its authority 
to accusatory implications like these. 

If the protest had averred, that "payment was duly de- 
manded, " surely that would have implied that the demand 
was made upon presentment; and if so, it is to be implied 
that the demand alleged in this protest was otherwise than 
duly made. If a protest states the substance of what is re- 
quired to be done, it is all that is needed. No form of words 
is sacramental; protests have been holden good, though they 
stated that the demand was made "at the maturity" of the 
bill or note; or "at the time they were due," in lieu of the 
usual mode of stating the precise day, month, and year when 
the demand was made. So, notaries must make their demand 
within certain hours of the days when the bills or notes ma- 
ture. Demands made in unseasonable hours would be of no 
avail. Nevertheless, protests but rarely enter into such de- 
tails, but the thing itself — the presentation — is as much re- 
quired to be made within the prescribed hours, as it is re- 
quired to be made at all. Why, then, is more specialty of 
statement needed about the exact performance of one duty 
than the other? Why, if the demand of payment implies that 
it was made in due time, may it not imply that it was made 
after due presentation? 

But the protest ad hoc was made in Louisiana. If good 
there, it must be good elsewhere. Commercial usages, how- 



SEC. 52.] MUSSON V. LAKE. 341 

ever ancient, however prevalent, and however reasonable, 
cannot confront her statutes and annul them, nor reverse her 
courts' judgments which settle their meaning. Most disas- 
trous would be the results were it otherwise; for notarial 
offices in the large cities have their printed forms of protests, 
which they use in all cases in like conjunctures, and which 
have been in use for years, and are in daily use; and in heavy 
business offices (like that of Mazureau's), there are sometimes 
from twenty to a hundred protests made in a single day, in 
behalf of the banks; and hence there are vast and incalculable 
interests dependent upon the validity of these protests, and it 
would be an intolerable grievance to dealers in commercial 
paper, if, while these protests bound indorsers in Louisiana, 
they released them elsewhere. 

A rapid synopsis of the statute and decisions of the Su- 
preme Court of Louisiana will settle the law of protests spe- 
cially applicable to the case at bar. 

The act of the Louisiana General Assembly, of March 
13th, 1827, section i, provides: — "That all notaries, or per- 
sons acting as such, are authorized in their protests of bills of 
exchange, promissory notes, or orders for the payment of 
money, to make mention (not of the presentment, but) of 
the demand made upon the drawer, acceptor, or person, on 
whom such order or bill of exchange is drawn or given; and 
of the manner and circumstances (not of such presentment, 
but) of such demand; and whenever they shall have so 
done, a certified copy of such protest, etc. , shall be evidence 
of all the matters therein stated." 

In the case of the Louisiana Ins. Co. v. Shaumburg, 1 it 
was decided that a notary's certificate of demand of payment 
and protest may be contradicted by other evidence. If it 
might, evidence might be marshalled to rebut that contradic- 
tion, and even supply, by parol, omissions excepted to; and 
if this were so, the objection to the protest at bar should not 
have been to its admissibility, but to its effect, etc. And this 
would accord with the decision of Allain v. Whittaker, et al., a 
which declares that * ' the uniform practice in this state has 

1 2 Mar., N. S., 511. 

a 5 N. S., 513. 
21 



342 MUSSON V. LAKE. [CHAP. 12, 

been to receive the protests of notaries as evidence of the 
demand on the maker of a note or acceptor of a bill of ex- 
change. " 

In the case of Gale v. Kemper's Heirs, 1 the court says, — 
•'The note was made payable at the office of discount and de- 
posit of the Bank of the United States, in the city of New 
Orleans, and the protest states, that (not the presentation, 
etc. , but) the demand was made there of the proper officer. 
When a note is payable at a particular place, a personal de- 
mand on the drawer or maker cannot be made, and it is not 
always required. It suffices to have been made of any per- 
sons there. " 

In the case of Thatcher v. Goff, 2 the court gave a striking 
instance of its liberality of interpretation when construing the 
language of protests. It decided that, where certain notes, 
payable at the Branch of the United States Bank at Natchez, 
are protested by a notary residing in Natchez, who states in 
his protest that he demanded payment at the United States 
Bank, it will be considered as meaning the Branch at Natchez, 
and not the principal Bank of Philadelphia; thus supplying, 
by intendment, the important words, "Bank at Natchez,' 
which the notary had omitted in his protest. 

The learned counsel has cited the case of Warren v. Bris- 
coe;' but it is believed to be clearly distinguishable from the 
case at bar. There the note was 4 • payable at the Planter's 
Bank of Mississippi at Natchez," and the protest stated that 
"he went to the Planter's Bank, Natchez, and was informed 
by the teller, there were no funds in the bank for the payment 
of said note; wherefore he protested," etc. Not only is no 
presentment stated, but there are no words from which it is 
to be implied, for no demand is stated to have been made; 
and though it be inferable that there was some note of the 
party which the bank had no funds to take up, yet non constat 
that it was the note in question, unless the same had been ex- 
hibited to the teller. But this case was fully reviewed in the 
next case to be cited, which it is respectfully suggested is de- 
cisive of the validity of the protest in question. 

1 io Louisiana, 208. 
2 1 \ Louisiana, 363. 



2 13 Louisiana, 363. 
3 12 Louisiana, 472. 



SEC. 52.] MUSSON V. LAKE. 343 

The case referred to is that of Nott's Executor v. Beard. 1 
The protest passed upon was from the identical notarial office 
which made the one in the case at bar. It is couched in the 
like language, thus: — " I demanded payment of said draft at 
the counting-house of the acceptors thereof, and was answered 
by Mr. Burnett, one of said firm, that the same could not be 
paid." It is to every extent the very case at bar; it decides 
emphatically, that, under the laws of Louisiana, the word 
presentment is unnecessary in notarial protests; and the word 
demand implies the presentment, and is all-sufficient. 

The Claim of the Defendant. — This is an action brought 
by the plaintiff against the defendant, as indorser of a foreign 
bill of exchange. The question raised in the Circuit Court, 
and upon which the judges divided in opinion, was Whether 
the protest offered in evidence showed upon its face ' * that a 
presentment to the drawees of a bill" and a demand of pay- 
ment, had been made. The protest does not state that the 
bill was * ' presented " to the drawees and payment demanded, 
but simply that the notary demanded payment of the bill, 
without alleging that he presented it, or that he had it with 
him and exhibited it at the time he made the demand. We 
maintain that, by the settled principles of the commercial law, 
the protest of a foreign bill must show, that at the time the 
notary demanded payment he had the bill with him, ready to 
deliver in case it should be paid; this is generally done by 
stating that he presented or exhibited the bill. It does not 
necessarily follow, from a mere statement that he demanded 
payment of the bill, that he had the bill with him, and pre- 
sented it or exhibited it to the drawees or acceptor, because 
he could demand payment of the bill without actually having 
it with him. To present a bill for payment is to exhibit or 
show the bill itself to the drawer or acceptor; to demand pay- 
ment of a bill is to request its payment; and this request may 
be made whether the bill be present or not. A presentment 
ex vi termini imports that the bill itself was shown to the ac- 
ceptor. A mere demand of payment does not necessarily im- 
port that the bill was shown and exhibited to the acceptor at 
the time the demand was made. 

1 16 Louisiana, 308. 



344 MUSSON V. LAKE. [CHAP. 12, 

It is essential, to constitute a legal demand of payment of 
a bill or note, that it should be presented to the acceptor at 
the time the demand is made, or, in other words, that the 
person who makes the demand should have the bill with him. 
In Hansard v. Robinson, 1 the court of the King's Bench de- 
cided that the holder of a bill of exchange cannot insist on 
payment without producing and offering to deliver up the bill. 
The same principle is asserted in Freeman v. Boynton, 8 and 
other authorities. 8 

The contract of an indorser is conditional; he promises 
that the bill shall be paid if it is duly presented for payment, 
or if not paid upon presentment, and notice of its non-pay- 
ment be given to him, that he will pay it. These constitute 
conditions precedent to a right of recovery against him. 4 And 
being conditions precedent, the proof must be clear and ex- 
plicit to charge him. 5 In the last case, the Supreme Court of 
New York say: — "The question is not what inference the 
jury might draw from the evidence, but what testimony does 
the law require in such case. We have seen that this is a 
condition precedent, and strict proof is required. The law 
has allowed the indorser this protection; nothing short of clear 
proof of notice shall subject him to liability. The reason and 
justice of requiring proof against a surety will not be doubted. 
It is imposing no hardship on the party," etc. In that case, 
the proof was, that notice was left at the office of the defend- 
ant, or at the post-office. In the one case the notice would 
have been sufficient, in the other it would not; and as the 
proof did not affirmatively and clearly show that it was left at 
the office of the defendant, it was held insufficient. So here, 
if the bill was present, and shown to the acceptor when the 
demand was made, it was sufficient to charge the indorser; if 
it were not present, and ready to be delivered up when pay- 
ment of it was demanded, it was not sufficient; and as the 

1 7 Barn. & Cressw., 90; 14 Eng. Com. Law Rep., 20. 

8 7 Mass. Rep., 483. 

8 Vide Chitty on Bills, edit, of 1836, 385, et seq.\ 12 Louisiana, 

473- 

4 Chitty on Bills, edit, of 1836, 385. 

5 20 Johns., 381. 



SEC. 52.] MUSSON V. LAKE. 345 

evidence (that is, the protest) does not show it was presented 
or exhibited when the demand was made, it necessarily follows 
that the proof was insufficient to charge the indorser; because, 
as before shown, the statement in the protest, that he de- 
manded payment of the bill, does not of itself import ex vi 
termini that he had the bill with him when such demand was 
made. The refusal to pay in this case, when payment was 
demanded, may have been jyediqledLupon the fact, that the 
notary did not have the bill. Every fact stated by the notary 
in this protest may be true, and yet no dishonor of the bill 
have occurred on which to charge the indorser. The protest 
must show every act to have been done that is necessary to 
charge the indorser, and can leave nothing to inference or in- 
tendment. If every fact stated in this protest might be true, 
and the bill itself never have been exhibited or shown for pay- 
ment, the proof is insufficient. 

In suits against indorsers of foreign bills of exchange, the 
only legal evidence to prove the presentment of the bill and 
demand of payment is the protest. In regard to the drawer, 
if he had no funds in the hands of the drawee no protest is 
necessary, and an explicit promise to pay by an indorser may 
waive the necessity of a protest; but without such express 
waiver, a protest is the only evidence of presentment and de- 
mand known to the law. " Whenever," says the law, 1 
• 4 notice of non-payment of a foreign bill is necessary, a pro- 
test must also be made, which, though on first view it might 
be considered mere matter of form, is, by the custom of mer- 
chants, indispensably necessary, and cannot be supplied by 
witnesses or the oath of the party, or in any other way; and 
it is said is part of the constitution of a foreign bill of ex- 
change, because it is the solemn declaration of a notary, who 
is a public officer recognized in all parts of Europe that a due 
presentment and dishonor has taken place, and all countries 
give credence to his certificate of the facts stated. " a 

To make the protest evidence of presentment and dis- 
honor, it must then show on its face the solemn declaration 

Shitty on Bills, edit, of 1836, 489, et seq. 

2 10 Mass. R., 1; 12 Pick., 484; 4 Har. & Johns., 54, 61; 4 
Wash. C. C. R., 468. 



34$ MUSSON V. LAKE. [CHAP. 12, 

of the notary, that a due presentment of the bill and its 
dishonor has taken place, and to constitute such due present- 
ment and dishonor, it has been shown that a presentation or 
exhibition of the bill itself to the acceptor, and a demand of 
payment, is necessary. And to establish a legal presentment, 
the bill must accompany the demand. The evidence must 
affirmatively show that fact, and as the protest in case of a 
foreign bill is the only evidence admissible to prove it, it must 
show that the bill accompanied the demand, by stating that 
it was presented, etc. , or other equivalent words. This is ex- 
pressly stated by Mr. Chitty. 1 He says, — "When the drawee, 
etc., refuses to pay the bill, the holder should cause it to be 
protested. For this purpose, he should carry the bill to a 
notary, who is to present it again to the drawee and demand 
payment," etc. If the drawee again refuses to pay, the no- 
tary is thereupon to make a minute, etc. The next step is to 
draw up the protest, which is a formal declaration, on pro- 
duction of the bill itself, etc. , « * that it has been presented for 
payment and payment refused, " etc. 

In countries governed by the commercial law, the form 
of the protest shows that the bill itself must be stated to 
have been presented in the protest, as well as the demand of 
payment. The form runs thus: "On this day, the 1st, etc., 
at the request of A. B., bearer of the original bill of exchange, 
whereof a true copy is on the other side written, I, B. C, 
notary, etc., did exhibit the said bill," etc., etc. The demand 
of payment and refusal is then stated, vede form. 2 

If it be necessary to exhibit the bill at the time payment 
of it is demanded, it would seem necessary to prove it; and if 
it be necessary to prove it, the protest, which is the instru- 
ment of proof, must not only show a demand of payment, 
but a presentation of the bill itself at the time the demand 
was made. And in conformity with these principles, the Su- 
preme Court of Louisiana held, in the case of Warren v. 
Briscoe, 8 the protest must show that the bill itself was pre- 
sented, etc. 

Shitty on Bills, edit, of 1836, 492. 
a Chitty on Bills, edit. 1836, 497. 
8 12 Louisiana Rep., 475. 



SEC. 52.] MUSSON V. LAKE. 347 

This case, it is true, has in effect been overruled by the 
case ot Nott's Executor v. Beard, 1 although the court en- 
deavored to reconcile the two cases. The last case, it is sub- 
mitted, is irreconcilable with the principle and the adjudicated 
cases hereinbefore cited. It substitutes inference or presump- 
tion for fact, and decides the point mainly on the ground that 
the notary is a public officer, and must be presumed to have 
done his duty. It introduces a new rule, unknown to the 
commercial law, and substitutes inference of a fact, the exis- 
tence of which the law required should be shown by express 
proof; and, moreover, it assumes to raise the presumption 
from the statement of a fact (to wit, demand), which by no 
means necessarily imports that the bill was presented when 
such demand was made. The case is, as we will endeavor to 
show, inconsistent not only with the previous case in the same 
court in 12 Louisiana, but with principle. 

The court (p. 312) admit the law to be, that the person 
making the demand must have the bill with him; but, say 
they, 4i It does not follow as a consequence, because both 
words are not used in the protest, that he had not the bill 
with him." By "both words," we understand the court to 
mean the words "presentment" and "demand," as used in 
the previous part of the sentence, in which they say, — "The 
person making the 'presentment 1 or 'demand* must have the 
bill with him." With all due deference to the opinion of that 
court, for whom we entertain the highest respect, the question 
was not whether it followed as a consequence, because both 
words were not used, that the notary had not the bill with 
him, but whether it followed as a consequence, from the state- 
ment of the one used, to wit, "demand," that he had the bill 
with him. The law required the plaintiff to prove that he 
presented the bill and demanded its payment, which was re- 
fused. It does not follow, that, because he demanded pay- 
ment of a bill, therefore he had the bill itself with him and 
presented it. He may have had it when he demanded pay- 
ment, or he may have demanded payment of the bill without 
having it. It is probable he had it, but the law will not per- 
mit the liability of an indorser to be established by the substi- 

1 i6 Louisiana R., 308. 



34^ MUSSON V. LAKE. [CHAP. 12, 

tution of probability for proof. The statement, therefore, that 
he demanded payment of it, is not proof that he presented or 
exhibited it. If it be essential that the bill should be pre- 
sented or shown, and payment thereof demanded, it follows 
that both the presentment of the bill for payment and the de- 
mand of payment should be stated. Chitty (page 492) says 
the notary should present it and demand payment, and if pay- 
ment is refused he should protest it, which is a formal declar- 
ation that he presented it, etc. From this, it appears the 
protest must state the presentment, that is, the exhibition of 
the bill to the acceptor, and the demand of payment. 

Aware of the difficulty of sustaining their opinion, if the 
same rule of evidence applied to the statements of the notary 
that would apply to the same statements on oath by a private 
individual, they say he is a public officer, and it is not to be 
presumed that he would do so unless an act as to go to the 
house of the acceptor and demand payment if he had not the 
bill with him, and that the law will presume the notary had 
done his duty. The principle, that the law presumes public 
officers to do their duty, it is respectfully submitted, was mis- 
applied by the court. It is true, in a proceeding against an 
officer for dereliction of duty, the presumption is that he has 
done his duty, and the contrary must be proved, though it in- 
volve a negative. But if this principle applies to a collateral 
proceeding like this, it proves too much, and the long train of 
recorded decisions, requiring a protest to be produced on the 
trial, will at once be struck from the commercial code. If the 
law presumes he will do his duty, why require the protest to 
be produced, proof that the bill was left with him to protest 
would be sufficient, because, as it was his duty to protest it, it 
will be presumed he did so. So, when it is made his duty to 
give notice when he protests a bill, as is the case in some 
states, no notice need ever be proved; all that is necessary, 
upon the principle assumed by the court, is in such case to 
prove the protest, and then, as it was the notary's duty to give 
the notice, it will be presumed he gave it. Nay, if it be 
proved that the bill was put in his hands to protest, it will be 
presumed he did his duty, and therefore it will be presumed 
he did protest it. But the question might be here asked, 



SEC. 52.] MUSSON V. LAKE. 349 

What is the duty of a notary when a foreign bill is placed in 
his hands for protest? It is not merely to present and demand 
payment, but to set forth these facts in his protest. If he 
omits to do so, the protest on its face shows he has not done 
his duty, and of course the presumption falls to the ground. 
The principle might be carried out to cure any defective state- 
ment as to the time notices were given; if omitted to be stated 
when notice was given, as the notary's duty was to give notice, 
at furthest, the day after the protest, it could be presumed he 
did so, although his protest does not show the time when he 
gave the notice. 

The court endeavor to distinguish the case from the one 
in 12 Louisiana, 472. They say, in the last named case, the 
notary certified that he went to the Planters' Bank, and was 
informed by the teller there were no funds in the bank to pay 
the note, etc. He does not say, says the court, that 4< he 
presented the note or made a demand of payment." What 
was the use to do so, if their opinion in 16 Louisiana is cor- 
rect? According to that opinion, as he was presumed to do 
his duty, and as it was his duty to present the note and de- 
mand payment, this would be presumed; nay, as they say in 
that case, that it is not to be presumed the notary would do 
so unless an act as to go to the house of the acceptor without 
the bill; so, in this case, they might with equal justice have 
said it would not be presumed he would go to the bank to de- 
mand payment, and yet make no demand when he got there. 
Why was it not presumed he did his duty in that case, as well 
as in the last? Simply because in that case the court decided, 
very correctly, that the facts which constitute a legal present- 
ment, etc. , must appear on the face of the protest, and can- 
not be presumed. 

Upon the whole, it is believed, both on principle and au- 
thority, that the case in 16 Louisiana cannot be sustained, 
and that the protest in this case is not legal evidence of pre- 
sentment, to charge the defendant. 

Decision. — The plaintiffs brought an action of assumpsit, 
in the Circuit Court of the United States for the Southern Dis- 
trict of Mississippi, against the defendant, as indorser of a bill 
of exchange, drawn at Vicksburg, in said state, by Steele, 



35° MUSSON V. LAKE. [CHAP. 12, 

Jenkins & Co., for $6,133, payable twelve months after the 
first day of February, 1837, to R- H. & J. H. Crump; and ad- 
dressed to Kirkman, Rosser & 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 presented the bill 
to the acceptors* or either of them, when he demanded pay- 
ment 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 pro- 
tested, and due notice to be given to the indorser, then he 
promises to pay it. All these conditions enter into and make 
part of the contract between these parties to a foreign bill of 
exchange; and the law imposes the performance of them upon 
the holder, as conditions precedent to the liability of the in- 
dorser of the bill. A presentment to and demand of payment 
must be made of the acceptor personally, at his place of busi- 
ness or his dwelling. 1 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. 1 

Why Must a Presentment be Made. — The reasons why 
presentments should be made to the drawee are: 

1 Story on Bills, § 325. 

9 Chitty on Bills, 7th London ed., 246, 247; Story on Bills, 
360; 5 Taunt. R., 30; 12 Wend. R., 439; 2 Douglass, 515; War- 
rington v. Furbor, 8 East, 245; Esdaile v. Sowerby, 11 East, 
117; 14 East, 500. . 



SEC. 52.] MUSSON V. LAKE. 35 1 

i st. That he may judge of the genuineness of the bill; 

2nd. That he may judge of the right of the holder to re- 
ceive the contents; and 

3rd. . That he may obtain immediate possession of the 
bill upon paying the amount. 

The acceptor has a right to see that the person demand- 
ing payment 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. 1 

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 presentment, and 
to whom made, and the reason, if assigned, for non-pay- 
ment." 3 This, with the authorities already referred to, shows 
that the protest should set forth the presentment of the bill, 
the demand of payment, and the answer of the drawee or ac- 
ceptor. The holder of the bill is the proper person to make 
the presentment of it for payment or acceptance. 8 But the 
law makes the notary his agent for the purpose of presenting 
the bill, and doing whatever the holder is bound to do to fix 
the liability of the indorser. Every thing, therefore, that he 
does in the performance of his 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 pro- 
test is credited in all foreign courts.* 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. 

1 Story on Bills, § 361; Hansard v. Robinson, 7 Barn. & 
Cressw., 90. 

2 Story on Bills, 302, note. 
8 Story on Bills, § 360. 

*Chitty on Bills, 215; Rogers v. Stephens, 2 T. R., 713; 
Brough v. Parkings, 2 Ld. Raym., 993; Orr v. Maginnis, 7 East, 
359; Chesmer v. Noyes, 4 Camp., 129. 



352 MUSSON V. LAKE. [CHAP. 12, 

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 Nott's Executor v. Beard, 1 
have so changed the law merchant, as to render unnecessary 
the presentment of a foreign bill for payment. After a care- 
ful 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 con- 
trary, they attempt by argument and authority to bring the 
case within that law. The question before that court was the 
identical question now before us. The protest was objected 
to because it did not show that the bill had been presented by 
the notary to the acceptors for payment. To this objection, 
that court said it might perhaps have been more specific if in 
the protest it had been stated that the bill was 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 presentment for, or 
demand of, payment, and give notice of the refusal. Here, 
then, is a definite proposition, asserting that a presentment 
for payment and a demand of payment are convertable 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 annotations 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 

1 1 6 Louisiana, 308. 



SEC. 52.] MUSSON V. LAKE. 353 

have laid down on the subject of demand and presentment, 
and from all their reasoning in support of it. Due diligence 
is a question of law; and we think we have shown, by abun- 
dant authority, that the holder of an accepted bill, to fix the 
liability of the drawer or indorser, must present it to the ac- 
ceptor and demand payment thereof. It may be well here to 
repeat what Ld. Tenterden, C. J., said on this subject, in 
delivering the judgment of the Court of King's Bench, in the 
case of Hansard v. Robinson, before referred to. He said, — 
• * The general rule of the English law does not allow a suit by 
the assignee of a chose in action. The custom of merchants, 
considered as part of the law, furnishes in this case an excep- 
tion to the general rule. What, then, is the custom in this 
respect? It is, that the holder of the bill shall present the in- 
strument, 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 posses- 
sion 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, fur- 
nishes a full answer to all that has been said by the Supreme 
Court of Louisiana to prove that it is not necessary to present 
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 de- 
mand, we proceed to examine its provisions. The principal 
object of the legislature in passing this statute seems to have 
been, to give authority to notaries 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 mak- 
ing it, and the other circumstances attending it, was not in- 
tended as a new enactment on these subjects, but as induce- 
ment to the powers conferred on the notary, which was the 



354 MUSSON V. LAKE. [CHAP. 12, 

principal object of the statute, as will appear, we think, by 
reading it. That part of it which relates to this subject is in 
these words: "That all notaries, and persons acting as such, 
are authorized, in their protests of bills of exchange, promis- 
sory 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 circumstances of such demand; 
and by certificate, added to such protest, to state the manner 
in which any notices of protest to drawers, indorsers, or other 
persons interested were served or forwarded; and whenever 
they shall have so done, a certified copy of such protest 
and 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 sub- 
stance of it, to which the notary was required to add a certifi- 
cate 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, evidence of notice in the courts 
of Louisiana. But independent of this view of the subject, 
we think the language employed in this statute includes the 
presentment of the bill for payment, and for all other pur- 
poses, 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 im- 
portant 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 legislature cannot 



SEC. 52.] MUSSON V. LAKE. 355 

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 holding drawers and indorsers to their 
liabilities. It is but reasonable, therefore, to give 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 legisla- 
ture. 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 acceptance of a bill, without a pre- 
sentment for acceptance ? Until the bill becomes due, pay- 
ment cannot be demanded of the drawee. This shows, that 
without the word presentment and the word demand also, the 
plain meaning of the statute could not be carried into effect. 
A bill y payable at a fixed period after its date, need not be 
presented for acceptance ; it is sufficient to present it and de- 
mand payment when it arrives at maturity ; but a bill pay- 
able at sight, or after sight, can never become due until after it 
has been presented for acceptance or payment. How is the 
holder or the notary to obtain the acceptance of such a bill, 
under the decision of the Supreme Court of Louisiana? Will 
it be sufficient to demand payment of the bill? That would 
be a nugatory act, because it is not due, then it must be ad- 
mitted, 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 decis- 
ion of the Supreme Court of Louisiana has changed the law 
merchant in any of these respects. 



35 ^ MUSSON V. LAKE. [CHAP. 12, 

The Laws of What Place Control the Liability of 
Parties to Negotiable Contracts. — There is, however, an- 
other question, entirely independent of the statute and the 
decision of the Supreme Court of Louisiana, which may be 
decisive of the case before this court; and that question is, 
Whether the contract between the holder and indorser of the 
bill in controversy is to be governed by the laws of Louisiana, 
where the bill was payable, or by the laws of Mississippi, 
where it was drawn and indorsed. The place where the con- 
tract is to be performed 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 
concerned, they were governed by the laws 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 pay- 
ment from them, he would pay it, with interest and damages. 
This part of the contract was, by the agreement of the par- 
ties, to be performed in Mississippi, where the suit was brought, 
and is now depending. The construction 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. 1 

Whatever, therefore, may have been the intention of the 
legislature in passing the statute, and of the Supreme Court of 
Louisiana in the decision of the case referred to, neither can 
affect, in the slightest degree, the case before us. In Missis- 
sippi the custom of merchants has been adopted as part of the 
common law: and by that law and their statute law, this case 

1 Story on Bills, § 366; 4 Peters, 123; 2 Kent's Comm., 459; 
13 Mass. R., 4; 12 Wend. R., 439; Story on Bills, § 76; 4 Johns. 
R., 119; 12 Johns. R., 142; 5 East, 124; 3 Mass., R., 81; 3 
Cowen, 154; 1 Cowen, 107; 5 C ranch, 298. See also Daniel on 
Negotiable Paper, Sec. 1265; 28 N. E. Rep., 515; 81 N. Y., 571; 
57 N. W. Rep., 865; 91 Ind., 440; 22 la., 194; 46 N. H., 300; 
25 Ohio St., 413; 55 Minn., 259; 47 la., 477; Story on the Con- 
flict of Laws, Sees. 242, 280, 281; 39 Ohio St., 63. 



SEC. 52.] MUSSON V. LAKE. 357 

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 ac- 
ceptors for payment, nor as evidence of the dishonor of the 
bill; which is ordered to be certified to the Circuit Court ac- 
cordingly. 

Mr. Justice McLean said, ' ' I think the protest was evi- 
dence. The notary made demand of payment, at the matur- 
ity of the bill, and we know that he had possession of the bill, 
from the fact of the protest being made on the same day. 
Now as the notary could not make a legal demand in the ab- 
sence of the bill, the fair, if not the necessary, inference is, 
that he had possession of the bill when he demanded pay- 
ment." 

Mr. Justice Woodbury said, " I regret being compelled to 
dissent from a portion of the opinion of the majority of the 
court which has just been pronounced. This I should be con- 
tent to do without explanation, if the grounds for it did not 
appear to be misunderstood. I do not question that a note 
should be present usually when payment is demanded; ! and 
that a written protest is the proper evidence to show a pre- 
sentment or demand in the case of a foreign bill of exchange.* 
But, in my view, a protest like this was competent evidence 
to be submitted to the jury, in order that they might infer 
from it that the note was presented when the demand was 
made. That was the point presented by the division of opin- 
ion between the judges in the court below. One held it was 
competent evidence from which to make such an inference, 
and the other, it was not; and we are merely to decide which 
was right. 

The question of due presentment and demand is a mixed 
one of law and fact, and not one of mere law, unless all the 
facts are first conceded or agreed. 8 This is an analogy of the 
rule about notice,* In all cases where it is possible for the 

1 Freeman v. Boynton, 7 Mass. R., 483; 17 Mass. R., 449; 3, 
Metcalf, 495. 

2 8 Wheat., 333; Burke v. McKay, 2 Howard, 71. 

'United States v. J. Barker, 1 Paine'sC. C. R., 156. 

*i Peters, 583. 
22 



35 8 MUSSON V. LAKE. [CHAP. 12, 

jury on any reasonable hypothesis to infer a proper present- 
ment from the protest offered, it is safer that the writing should 
not be withdrawn from them, but go in, and the court instruct 
the jury on the whole evidence what the law was on such facts 
as they might be satisfied of. Chancellor Kent ' thinks it very 
difficult, in these mixed questions of law and fact about com- 
mercial paper, to do justice by any other course. In this case 
the jury might or might not be satisfied of the fact of the bill 
being present when the demand was made. But why not let 
them pass on that fact? It is manifest that no evil or danger 
would result from leaving the matter to them, under due in- 
structions from the court, provided there be no legal obstacle 
to such a course. 

It is conceded, on both sides, that the protest is compe- 
tent evidence, and contains enough from which the jury could 
infer a demand of payment. That is the most material part 
of the notary's duty. It is not only so described in some ele- 
mentary treatises, but the duty of having the note present, or 
of calling with it at the hours of business alone, are not des- 
cribed separately; but are involved or implied in the general 
duty of making a demand. Thus Dane, in his Abridgment, 
Bills of Exchange, 2 says, — li In making a protest, three things 
are to be done, — the noting, 8 demanding, and drawing up the 
protest." " The material part is the making of the demand." 
So the word demand is at times used as synonymous with the 
word presentment by Bailey. 4 

But the protest in this case states not only a demand, but 
that payment of the bill was refused, and he had it in posses- 
sion, so as to make a copy "of the original draft," on the 
back of the protest, or, to use his own words, • l whereof a true 
copy is on the reverse hereof written, " and also 4 * demanded 

1 3 Comm., 107. 

2 Art. 11, § 1. 

8 The "noting 'Ms simply the making of a memorandum of 
what the notary did so that he may subsequently have the facts 
upon which the certificate may be made. This should be done on 
the day the demand and presentment are made. The certificate 
of protest may be made at any time. Dennistown v. Stewart, 17 
How., 606. 

*i6 Louisiana Rep., 311. 



SEC. 52.] MUSSON V. LAKE. 359 

payment of said draft," and was answered, "that the same 
could not be paid." 

Under these expressions, it could hardly be deemed un- 
fair, or any stretch of probability, to infer that the bill was 
present at the demand, and the more especially as the notary 
knew it was his duty to have it present, and does not state 
that any objection was made, or refusal to pay, on account of 
its absence, as he should have stated, if such was the truth. 
My views do not differ from those of a majority of this court 
concerning the importance of having the principles as to com- 
mercial law, and especially commercial instruments, uniform, 
and as little fluctuating as possible; and hence as to them I 
would make no innovation here. But our difference is rather 
on a question of evidence. Thus, had the testimony offered 
been submitted to the jury, and they had inferred from it a 
due presentment of the note, it would not change any com- 
mercial principle as to the necessity of presentment, but 
merely establish the fact of presentment here on evidence 
deemed by the jury to render that fact probable. And if 
juries should be disposed to find such a fact on slight testi- 
mony, it would do no injury to commercial paper, or commer- 
cial principles, or substantial justice between parties, but 
merely indicate an increased liberality as to forms, where sub- 
stance has been regarded; that is, where the vital point in the 
transaction is beyond controversy, namely, that payment has 
clearly been demanded and not made. Such a course would 
accord, also, in spirit, with what was laid down by this court 
in 1 Peters, 583, that rules as to commercial paper ought to 
be formed and construed so as to be reasonable and founded 
in general convenience and with a view to clog as little as pos- 
sible, consistently with the safety of parties, the circulation of 
paper of this description. 

There is nothing in the nature of protests and present- 
ments which on principle requires any increased strictness in 
the proof of them, but, on the contrary, much to justify every 
reasonable presumption in their favor. Any holder would be 
anxious to get his money at once of the drawee, and not neg- 
lect to have the note with him so as to give it up on pay- 
ment and prevent delay. So would he wish to be paid and 



360 MUSSON V. LAKE. [CHAP. 12, 

excused entirely from making protest, rather than resort to 
that and notice, and suffer the delay of recovering it of a 
drawer or indorser. 

Both of these considerations strengthen the inference that 
he and his agent would present the note, or have it with them, 
when demanding payment, and render it reasonable, after 
slight proof of presentment, to leave it to the opposite party 
to rebut that inference, so natural, by stronger proof that the 
note was not present, if the facts would warrant such proof. 

Another consideration against requiring great or greater 
rigidity in the evidence of a presentment and form of protest 
is the fact, that a protest is of less materiality than notice. 

As an illustration, that the notice is deemed more mater- 
ial than the protest, " omitting to allege in the declaration a 
protest of a bill is only form, not to be taken advantage of on 
a general demurrer." 1 

But, omitting to state a demand or notice is bad after 
verdict. 2 

Dane, in his Abridgment, 8 says, — '• Notice is very mater- 
ial. Protests are mere matter of form." Yet notice may be 
very loose, and it answers in all cases, if it disclose merely the 
fact of demand, and a reliance on the person notified for pay- 
ment.* 

• ' The notice, however, should inform the party to whom 
it is addressed, either in express terms or by necessary impli- 
cation, or, at all events, by reasonable intendment, what the 
bill or note is, that it has become due, that it has been duly 
presented to the drawer or maker, and that payment has been 
refused." 6 

But it has again and again been held, that the notice 
need not state a presentment in express terms, and that it will 

l i Dane's Abr., Bills of Exchange, ch. 20, art. 11, § 9; Lill. 
Ent., 55; 3 Johns. R., 202; Solomons v. Staveley, Doug., 684, in 
note to Rushton v. Aspinall. 

2 Doug., 684. 

8 Vol. 1, p. 395, ch. 20, art. 10, § 1. 

*Shed v. Brett, 1 Pick., 401; Miller v. Bank of United States, 
11 Wheat., 4313 Gilbert v. Dennis, 3 Mete, 495; 2 Johns. Ch. R., 
337; 12 Mass. R., 6; 4 Wash. C. C. Rep., 464. 

5 Chitty on Bills (9th Lond. & 10th Amer. edit.), 469. 



SEC. 52.] MUSSON V. LAKE. 361 

be implied from stating a demand and non-payment, and a 
looking to the indorser. ' So, * • Your note has been returned 
dishonored," is enough from which to intend all. 2 

It may be a letter, — merely to that effect, — and need not 
be a copy of the protest? And it has been adjudged, that the 
notice need not state, in express terms, that the note was 
present, or if present was exhibited, if it only contained mat- • 
ter from which, by reasonable intendment, this can be in- 
ferred. 4 

It not being necessary, then, to inform the indorser of 
the presentment of the note itself, in so many words, there 
seems to be no use in having the fact stated at length in the 
protest, if enough appear to render the fact probable. 

It would be difficult to find a reason, in the absence of 
positive law, why the form of the protest should not be dealt 
by as liberally as that of notice; and if, 1 like the other, it dis- 
close a demand, allow the jury to infer from that, as in the 
case of notice, that the note was present. Indeed, a protest 
is not required to be in writing at all except in case of foreign 
bills, drawn on persons abroad. 5 

The Purpose of a Protest.— A nd then it doubtless orig- 
inated in a rule merely allowing it to be done to save the 
expense and trouble of bringing a witness from abroad to 
prove the fact \ rather than making it imperative. 

Instead of a written protest being better evidence than a 
witness of the presentment and demand in case of inland bills 
or promissory notes, or even foreign bills drawn on persons 
here, it is inferior evidence to witnesses for proving present- 

*9 Peters, 33; 3 Kent's Comm., 108; 10 Mass. R., 1; 4 Mason, 
336; 1 Johns. Cas., 107. 

'See various other illustrations, 6 Adolph. & Ellis, 499; 5 
Dowl., 771; 2 Chit. R., 364; 2 Mees. & Welsb., 109. 

' 1 Chit. (2d Eng. & 1st Amer. edit.), 363, 364, 498, 499; 3 
Camp. R., 334; 2 Starkie, 232; Goodwin v. Harley, 4 Adolph. & 
Ellis, 520, 870; 4 Eq. R., 48. See 8 Mass. R., 386. 

*Chitty on Bills (last edit.), 469; 2 Peters, 254; 9 Peters, 33. 

6 Chitty on Bills, 643; Rogers v. Stevens, 2 D. & E., 713; 2 
Starkey on Ev., 232; 6 Wheat., 572; 8 Wheat., 333; 3 Wend., 
173; 2 Peters, 179; 1 Cranch, 205. 



362 MUSSON V. LAKE. [CHAP. 12, 

ment and demand, and is usually inadmissible, except by 
special statutes. 1 

Some seem to suppose that there is danger in allowing 
an informal written protest to go to the jury as evidence to 
be weighed in proving that the note was present. But there 
can be no more in that than allowing an informal notice to go 
to the jury. The jury must be satisfied, in both cases, and 
should so be instructed, that all has been done which the law 
in both requires. If there be any defense in either case, that 
all proper has not been done, it can probably be shown by 
counter evidence in one as well as the other. Why should it 
not be? and why is not that an ample security against being 
improperly charged? For the protest is not a written contract 
between the parties, or a sealed instrument not open to be 
contradicted by parol evidence. But it is a mere certificate 
of a notary, a subordinate officer, admitted for convenience 
as prima facie evidence of certain facts, and allowed to that 
extent in order to save the expense of witnesses and delays, 
but ought to be always open to be impaired or disproved by 
the other party in interest, who has never been heard before 
him, and of course cannot reasonably be concluded forever 
by his acts. The notary is not required to swear to them, 
when they are admissible as evidence, as he would be to a 
deposition, because of his official obligations and standing. 
But the character and construction that properly belong to 
his certificate as evidence seem to be like those of a deposi- 
tion; and if it states, in so many words, that the note was 
presented, or states what justifies such an inference, there 
appears to be no good reason why the contrary may not be 
proved, if such was the fact, and the indorser be thus pro- 
tected against statements or inferences not well founded. And 
the absurdity of the contrary course is still more apparent as 
to protests, when one made by any respectable merchant, and 
attested by two witnesses, in the absence of a notary, has the 
same validity as his/ 

1 1 Chitty on Bills, 405; 3 Pick., 415; 6 Wheat., 572; 5 Johns. 
R-> 375; 4 Wash. C. C. Rep., 148; 4 Camp. R., 129; 2 Howard's 
U. S., Rep., 71; 8 Wheat., 146. 

2 Chitty on Bills, 303; Story on Bills, §276. 



SEC. 52.] MUSSON V. LAKE. 363 

In Nicholls v. Webb, 1 counter testimony was held to be 
admissible against the minutes of a notary offered to prove 
demand and notice. 

So it is admissible to show that the notary mistook the 
place, and did not demand the bill at the place of business 
of the drawee. 2 

In Vandewall v. Tyrrell, 8 counter evidence was offered, 
and avoided the protest, because the clerk of the notary, and 
not the notary himself, as stated in the protest, made the 
demand. 4 

This point thus being established on both principle and 
precedent, all the danger or difficulty as to the merits of the 
case, by admitting a protest like this, is obviated. But it is 
further urged against it, that presentment is averred in the 
declaration, and therefore must be proved. This we admit. 
And so is notice averred in the declaration and notice of a 
presentment, and so that it must be proved. 8 All we urge 
here is to let them be proved by similar general statements, 
from which the similar inferences may be drawn in one case 
as the other, that the note was present at the time of the de- 
mand, unless the contrary is shown, — as it may be, if true. 

Again, it is said that the forms of protest generally state, 
that the bill was present or exhibited. This is true. 7 

But we are aware of no case deciding that this fact must 
be stated, in so many words, in the protest itself, though we 
admit that the jury must be satisfied that the fact existed. 
Minutes in the book of a messenger deceased have been held 
to be proof to be submitted to a jury as evidence of due de- 
mand and notice. 8 Yet there does not appear to have been a 
presentment stated, eo nomine, or that there was any but 

'8 Wheat, 336. 

* Insurance Company v. Shamburg, 2 Martin's R. (N. S. ), 
513. 

8 Mood. & Malk , 87. 

*See Chitty on Bills, 495, note. 

6 Chitty on Bills, 643-647. 

6 1 Chit, 633; Doug., 65 4, 680. 

1 1 Chitty, 395, 396 (1st Amer. edit); Story on Bills of Ex- 
change, § 276, note. 

8 Welsh v. Barrett, 15 Mass. R., 380. 



364 MUSSON V. LAKE. [CHAP. 12, 

inferential evidence that he had the note with him. 1 And it 
is not a little remarkable, that the only statute in England, 9 
which prescribes the form of a protest, and which is in rela- 
tion to inland bills of five pounds and upwards, in order to 
recover damages and interest, the form does not state in so 
many words that the bill was present or was exhibited, but 
merely "at the usual place of abode of the said A. have de- 
manded payment of the bill," etc. 8 In such cases, precisely 
that, and that alone, must be done which is contended for 
here, namely, leave it to the jury to infer the presence of the 
bill from its payment being demanded, and any other facts 
stated, unless the contrary is shown. Look at another anal- 
ogy. It is necessary that the exhibit of the note and the de- 
mand be made in the legal hours of business. 4 But, as in 
respect to the presence of the note, no case holds that this 
must appear by so many words in the protest. And it is not 
stated, in the common forms, that the demand was made in 
the usual hours of business. 6 On the contrary, the jury are 
allowed or instructed that they may infer, from the statement 
of the demand and non-payment, that they were made within 
the proper hours. And if it was not, the other party would 
doubtless be allowed to disprove it by counter evidence. 

How can such a case, then, be distinguished in principle 
from this? — except that there is much less in the usual form 
of protest from which to infer that the bill was presented in 
legal hours, than there is in this protest from which to infer 
that the bill was present when the demand was made. I am 
the more inclined, also, to the opinion, that this protest is 
competent evidence, because, under a special law in Louis- 
iana, passed March 13th, 1827, such protests have been ad- 
judged sufficient. Their law uses the word " demand" when 
describing what the protest shall contain, and such a protest 



^ee, also, North Bank v. Abbott, 13 Pick., 469. 

*9 and 10 Will., 3. 

8 Chitty on Bills, 465 (9th ed.). 

*Chitty on Bills, 349, 354; Reuben v. Bennet, 2 Taunt., 388; 
2 Camp., 537; Parker v. Gordon, 7 East, 385; 1 Maul. & Selw., 20. 

5 1 Chitty on Bills, 396. 



SEC. 52.] MUSSON V. LAKE. 365 

is there allowed to go to the jury as evidence from which to 
infer that the note was present. 1 

The bill now in dispute was on its face payable in Louis- 
iana; and hence the principles of commercial law require that 
the protest be made at the time and in the manner prescribed 
by that state. 2 

But whether the statute of Louisiana prescribing what 
protest shall be sufficient ought to be considered as affecting 
anything beyond the evidence of protest in its own courts, is 
not very clear on principle. 8 

Hence, in forming an opinion, I have placed it mainly on 
general considerations, though in the construction of a Louis- 
iana statute, which clearly affected the contract, and not the 
evidence; and where the judgment of its court clearly rested 
on the statute alone, about which some doubt exists, it ought 
unquestionably to control us in respect to contracts made or 
to be fulfilled there, even, if a departure from the general 
principles of commercial law. I wish, also, to avert some ser- 
ious consequences that I apprehend may result from the deci- 
sion of the majority of the court in several of the states of the 
Union. 

Bills of exchange drawn in one state on persons in an- 
other must be considered, under the previous decisions of this 
court, as foreign bills.* Demand of payment, then, cannot 
be proved in suits upon them out of the state where presented, 
unless by a written protest, according to the cases before 
-cited. 

Whenever the protest, then, in such case, does not state 
v in detail a presentment or presence of the bill, though stating 

a demand, refusal, and no objection, the protest must, as in 
this decision, be ruled out as incompetent evidence; and the 
same decision virtually implies, that no other evidence except 
the written protest is admissible to show that fact, or indeed 

l Nott's Executor v. Beard, 16 Louisiana R., 308. 

2 Story on Bills of Exchange, § 1763 1 Chitty on Bills, 193, 
506; Story's Conflict of Laws, § 369. 

•See cases, Story on Bills, § 172. 

*Townsley v. Sumrall, 2 Peters, 179, 586, 688; Lonsdale v. 
Brown, 4 Wash. C. C. R., 87, 153; 1 Hill, 44; 12 Pick., 283; 15 
Wend., 527; 5 Johns., 375; Dickins v. Beal, 10 Peters, 579. 



366 MUSSON V. LAKE. [CHAP. 12, 

any fact which may be omitted by accident or otherwise in the 
written protest, and that no inference can be admitted to be 
drawn from the protest as to presentment, when only a de- 
mand, refusal, and no objection are stated, as here. These 
consequences, with others before named, I would avoid, by 
making the protest competent evidence, and when it showed a 
demand, refusal, and no objection explicitly, as here, would 
leave it to the jury, from that and the other circumstances, to 
say whether they were or were not satisfied that the note was 
present. 

In this way it is easy to reconcile full action of the jury 
on the facts with that of the court on the law, and this, too, 
without any innovation or change in the rule as to commer- 
cial paper, or any violation of adjudged cases, but rather in 
conformity to them and to several strong analogies. 

This court have in other cases gone still farther, and held 
it proper even to expand or enlarge the rules of evidence in 
certain exigencies. In Nicholls v. Webb, 1 the principle laid 
down by Ld. Ellenborough, in Pritt v. Fairclough, 2 as to the 
rules of evidence, was adopted, namely, * * That they must ex- 
pand according to the exigencies of society. " And in the Bank 
of Columbia v. Lawrence,* speaking of a rule as to diligence, 

l S Wheat, 332. 

2 3 Camp. R., 305. 

3 1 Peters, 583. 

Protest Defined. — Protest may be defined to be a solemn 
declaration, written, by a notary public, under a fair copy of the 
bill, stating that the payment or acceptance has been demanded 
and refused, the reason, if any, given, and that the bill is, there- 
fore, protested. Dennistown v. Stewart, 21 Curtis, 722; 17 How- 
ard, 606; Cayuga, etc. Bk., v. Hunt, 2 Hill (N. Y. ), 635. 

In What Cases Necessary. — Under the lex tnercatoria, it 
was necessary to protest foreign bills of exchange only; but now 
by custom of merchants and bankers in many jurisdictions every 
commercial contract is protested. In Texas, protest and notice is 
rendered unnecessary by statute if suit is brought against the ac- 
ceptor or maker before the first term of the court to which grit can 
be brought after the right of action shall accrue, or at the second 
such term after, if good cause for the delay can be shown. Pro- 
test may also be waived by the parties to the contract, in which 
case, of course, it will not be necessary. Daniel on Neg. Inst., 
Sees. 926, 928; Wood's Byles on Bills and Notes, 260. 

When to be Made. — Presentment and demand should be 



SEC. 52.] MUSSON V. LAKE. 367 

Thompson, J., says, — '* For the sake of general convenience 
it has been found necessary to enlarge this rule." 

But all I ask here is to go as far as the existing rule of 

made on the day that the contract legally matures, unless they are 
excused or unless delay is justified. 

Notice of dishonor, or of protest, may be given as soon as the 
instrument is dishonored. If the parties reside in the same place 
it must be given before the close of the next day; if payable at a 
place of business, then before the close of business hours; if pay- 
able generally, then before the usual hours of rest of the next day. 
If, however, the parties reside at different places and notice must 
be sent by mail, then it must be deposited in the post- office in time 
for the first out-going mail, unless that it is at an unusually early 
hour. Lawson v. Farmer's Bank, 1 Ohio St., 206; Illustrative 
Cases, 203, and note. If where the parties reside at different places 
and notice is sent otherwise than by mail, then it must be sent at 
a time which will insure its receipt at the same time it would have 
been received if sent through the mails. Smith v. Poillon, 23 
Hun., 632; Howard v. Ives, 1 Hill, 263. 

If the requirements of presentment, demand, and notice of 
dishonor have been complied with properly, the certificate may be 
made at any time before an action is brought. 

Where Made. — Protest must be made according to the law 
of the place of dishonor, or the place where the bill is made pay- 
able. Chitty on Bills, 456; Geralupolo v. Wieler, 10 C. B., 690; 
Mitchell v. Baring, 10 C. B., 4; 4 C. & P., 35; Carter v. Union 
Bank, 7 Hum., 548. 

By Whom Made. — Protest should be made by a notary pub- 
lic. It may, however, be made by any respectable resident of the 
place where the bill is dishonored or is payable. In the latter case 
the presentment and demand should be attested by two witnesses. 
Daniel on Negotiable Instruments, Sec. 934a, Onondaga County 
Bank v. Bates, 3 Hill, 53; Wood's Byles on Bills and Notes, 394 j 
Tiedeman on Commercial Paper, 322; Chitty on Bills, 303; Story 
on Bills, 276. The clerk or deputy of a notary cannot protest un- 
less authorized by statute. Chitty on Bills, 495, and note. 

What the Certificate Must Show. — The certificate of pro- 
test must set forth: 

i. A copy of the contract or a fair description of it; 

2. The fact of presentment for acceptance or payment; 

3. The time and place of presentment and demand; 

4. The fact of dishonor with the reason therefor; 

5. The fact of protest; 

6. That notice of dishonor had been sent or given, together 
with the time of such notice; 

7. The signature of the notary; 

8. The seal of the notary. Dennistown v. Stewart, 21 Cur- 
tis, 722; 17 Howard, 606; Clough v. Holden, 115 Mo., 336; Tiede- 



368 MUSSEN V. LAKE. [CHAP. 12, 

evidence seem to justify, and let reasonable inferences and 
presumptions be made by the jury from all that is stated in 

man on Com. Paper, Sec. 317; Daniel on Neg. Inst., 600; Suls- 
bacher v. Bank, 86 Tenn., 201; Cox v. Bank, 100 U. S., 716; 
Wood River Bk., v. First Nat. Bk., 36 Neb., 744. 

The Form of the Certificate of Protest. — The following is 
a common form of the certificate of protest: — 
State of Michigan, ) 

r SS 

County of Washtenaw, j 

Be it Known, That on the first day of September, in the year 
of our Lord one thousand eight hundred and ninety-eight, at the 
request of John Doe, I, Joseph H. Vance, a Notary Public, duly 
commissioned and sworn, • residing in the city of Ann Arbor, County 
and State aforesaid, did present the original promissory (or bill of 
exchange) which is hereto attached, Richard Roe or [at the place of 
business of Richard Roe, naming it], and demanded payment (or 
acceptance) thereof, which was refused. 

Whereupon, I, the said Notary, at the request aforesaid, did 
Protest, and by these presents do solemnly protest, as well against 
the Drawers, Makers and Endorsers of the said promissory note 
(or bill of exchange) as against all others whom it doth or may 
concern for exchange, re-exchange, and all costs, charges, dam- 
ages and interest already incurred and to be incurred by reason of 
the non-payment (or non-acceptance) of the said promissory note 
(or bill of exchange.) 

And I, the said Notary, do hereby certify, that, on the same 
day and year aforesaid, due notice that said promissory note (or 
bill of exchange) had thus been presented for payment (or accep- 
tance) and that payment (or acceptance) thereof had been thus 
demanded and refused, and that the holders of the said promissory 
note (or bill of exchange) did and would look to the drawers, mak- 
ers and endorsers thereof for payment of the same, were put into 
the Post Office at Ann Arbor, Michigan, with the full legal postage 
paid thereon, and directed as follows, after diligent inquiry being 
made for the residence and place of business of the drawers and 
indorsers: 

Notice for John Smith, directed 10 15 Main Street, Detroit, 
Michigan. 

Notice for Henry Jones, directed 150 Washington Street, Chi- 
cago, Illinois. 

Each of the above named places being the reputed place of 
residence or business of the person to whom the notice was di- 
rected. 

In Witness Whereof, I have hereunto subscribed my name and 
affixed my seal of office. 



s : JOSEPH H. VANCE, 

" \ Notary Public in and for Washtenaw Co., Michigan. 



SEC. 52.] MUSSEN V. LAKE. 369 

the protest, and thus decide whether the note was not prob- 
ably present when the demand was made. 

The Form of the Notice of Protest. —The following is the 
usual form of the "notice of protest": — 

Ann Arbor, Mich., Sept. ist, 1898. 

Take Notice, that the promissory note for one thousand dol- 
lars, made by Richard Roe, dated July 29th, 1898, payable one 
month after date at Ann Arbor, Michigan, and endorsed by you, 
has this day been presented to the said Richard Roe and demand 
made for payment thereof, which has been refused; said promissory 
note has been duly protested for non-payment and the holders now 
look to you for payment of the same. 

Yours, &c, 

JOSEPH H. VANCE, 
Notary Public in and for Washtenaw County, Michigan. 

Protest Dispensed With — When. — Protest may be ex- 
cused or delayed whenever or under circumstances which would 
excuse or dispense with notice of dishonor. It will be excused, 
when prevented by circumstances beyond the control of the holder 
and not attributable to his negligence or misconduct. For in- 
stance, when the party to whom presentment is to be made is quar- 
antined or dead. But when the excuse or cause for delay has 
been removed, then the protest must be made with reasonable dili- 
gence. Daniel on Negotiable Instruments, 730; Hull v. Meyers, 
90 Ga., 674; Legg v. Thorpe, 12 East, 171. 

Protest for Better Security. — In case the drawee or accep- 
tor becomes bankrupt or makes an assignment for the benefit of 
creditors before the maturity of the bill, then the holder may 
cause the bill to be protested for better security against those 
whose liability is conditional. Daniel on Neg. Inst., Sec. 530. 



CHAPTER XIII. 
Presentment and Demand. 



SECTION 53. 

IN AN ACTION BY AN INDORSEE VERSUS AN INDORSER, 
THE FORMER MUST SHOW PRESENTMENT AND DE- 
MAND, OR DUE DILIGENCE TO GET THE MONEY, AT 
THE MATURITY, FROM THE PERSON WHO IS PRIMAR- 
ILY LIABLE UPON THE CONTRACT. 

HEYLYN v. ADAMSON. 1 

In the Court of King's Bench, Nov. 2oth, 1758. 

[Reported in 2 Burrows, 66p. ] 

The Form of the Action.— This was an action on the 
case, upon promises. And the first count in the declaration 
was upon an inland bill of exchange, drawn by Robert Carrick 
and directed to William Dods, dated the 1 3th day of March, 
1756; whereby the said Robert Carrick required the said Wil- 
liam Dods to pay to the defendant or his order 100/. at 40 
days after date, value received, as advised by the said Robert 
Carrick: which said bill was indorsed by the said defendant to 
the said plaintiffs, and was accepted by the said Dods, but not 
paid by him. 

Upon the trial of this cause, before Ld. Mansfield, at the 
sittings after the last Hilary term at Guildhall, it was proved 
on the part of the plaintiffs, that the said Robert Carrick 
made the bill; and that the defendant indorsed it to the plain- 
tiffs; and that the said William Dods accepted it, but after- 
wards refused payment; and that the plaintiffs thereupon, on 
the day it became payable, carried it to be protested for the 

^his case is cited in Daniel on Negotiable Instruments, 669a; 
Norton on Bills and Notes, 155, 325, 326; Story on Bills of Ex- 
change, 204, 381; Chitty on Bills, 520, 653, 241, 304, 339, 354, 
368, 497, 521; Tiedeman on Commercial Paper, 259. 



SEC - 53-] HEYLYN V. ADAMSON. 37 1 

non-payment; and soon afterwards brought their action 
thereon, against the defendant; but it did not appear, on the 
trials that the drawer of the bill had any notice of such non- 
payment; or that any demand of the money was ever made on 
him before the commencement of the suit. 

It was thereupon objected by the defendant's counsel, 
4 * That the action would not lie against the defendant (the in- 
dorser) until a demand of payment had been made upon the 
drawer: " and as no such demand was proved to have been 
made on the drawer, the plaintiffs ought therefore to be non- 
suited. 

Ld. Mansfield directed a verdict to be given upon the said 
first count, for the plaintiffs, for ioo/. damages and 40 shillings 
costs; subject to the opinion of the court, •• Whether, upon 
this case, the plaintiffs were entitled to recover." 

The only question was, Whether, in an action brought 
upon an inland bill of exchange, by the indorsee against an 
indorser, this objection, "that no evidence was given at the 
trial, of notice [that the bill had been dishonored] to the 
drawer of the bill, or even of making any inquiry after him," 
was a ground of non-suit? 

The Claim of the Plaintiff.— The plaintiff made a dis- 
tinction between inland bills of exchange, and notes of hand 
[promissory notes]. In the latter, the drawer is to be the 
payer: in the former, the drawee (the acceptor of the bill) is 
to pay it. So that upon a note of hand, the drawer [the 
maker] of the note is the first person to be resorted to, for 
payment: but upon an inland bill of exchange, the acceptor of 
the bill, not the drawer, is the first person to be resorted to, 
for payment; (though the drawer shall indeed stand as a col- 
lateral security for his so doing). Therefore cases upon 
promissory notes are not applicable to cases on inland bills of 
exchange. The bill holder can't come upon the drawer of the 
bill, till the person upon whom it is drawn shall either refuse 
to accept it, or refuse payment after he has once accepted it. 

Every indorsement of a bill of exchange is in the nature 
of a new bill of exchange: and if there are several indorsers, 
they all undertake "that the drawee (the acceptor of the bill) 
shall pay it." 



372 HEYLYN V. ADAMSON. [CHAP. 13, 

The indorsee is a stranger to the drawer of a bill of ex- 
change: he is only concerned with the acceptor. 

A bill of exchange may happen not to be dated from any 
certain place; or it may be dated from a place where the 
drawer does not reside; as where a traveler, calling at an inn, 
takes up money there, and gives a bill which is afterwards in- 
dorsed by his landlord. 

And it would be vastly inconvenient to all the parties, if 
it should be holden necessary for the indorsee to find out or 
even search for the drawer of an inland bill of exchange, to 
give him notice "that the acceptor has refused payment." 
For, the security may be lost, in the interim, whilst such 
search is making; the indorser may break, before the indorsee 
may be able to find the drawer. But the indorser may know 
where to find him, or how to apply to him. 

Six Chief Justices have been of different opinions on this 
point: three of them, of one opinion: three, of another. 

The 9 & 10 W., 3c, 17, was the first act that gives pro- 
tests for non-payment of inland bills of exchange: and the 3 
& 4 Ann. c. , 9, § 4, 5, extends the protest, to the case of non- 
acceptance. The words of both these acts are remarkable, 
viz. : * * That the protest shall be notified to the party from 
whom the bill was received; who shall repay the same with 
interest and charges." 

The inconvenience may be the same (as to this matter) 
upon an inland bill, as upon a foreign bill. Yet upon a foreign 
bill, it certainly is not necessary. 

These opinions seem to relate only to notes of hand; but 
upon a bill of exchange, the indorsers are all only promisors 
and undertakers for the payer (the acceptor) of the bill; and 
are not obliged to look after the original drawer. And fact 
and experience in business are agreeable to this position. 

The Claim of the Defendant. — The defendant insisted 
that upon an action brought by the indorsee against an in- 
dorser of an inland bill of exchange, the plaintiff ought, at the 
trial, to prove notice to and demand of payment from the 
drawer of the bill. 

The indorser is only a conditional undertaker for the 
drawer of the bill, who is the first contractor: he stands as a 



SEC. 53.] HEYLYN V. ADAMSON. 373 

surety only, and cannot be called upon; unless the drawer 
makes default. It is like the case of principal and accessory; 
where the accessory cannot be tried before the principal: so 
here the indorser cannot be liable till the original contractor 
has failed in performing his contract. 

And great inconveniences might follow, if this was other- 
wise. 

There are several authorities which fully prove that it is 
necessary. 1 Upon an action against the indorser of a prom- 
issory note, at Guildhall, C. B. Ld. Ch., J. Eyre's opinion 
was accordingly, " That the plaintiff must prove diligence to 
get the money of the drawer; the indorser only warranting 
on his default. " And for want of such proof, he directed the 
jury to find for the defendant. Collins v. Butler, at Guildhall, 
per Lee, Ch. J. It was ruled accordingly; who cited a case 
determined on great debate. Due diligence must be shown to 
have been used in inquiring after the drawer of the bill of ex- 
change, before the money can be recovered against the indorser. 

And there is no difference between a note of hand, and a 
bill of exchange; other than that the drawer of the note is the 
express promisor, and (as it were) both drawer and drawee; 
whereas on a bill of exchange, he is only an implied promisor. 
Indeed on a foreign bill of exchange this notice and demand is 
not necessary; because the foreign drawer is not amenable to 
justice here. 

As to the words of the statutes they do not exclude the 
necessity of giving notice to the drawer; though they add an 
additional caution, * 4 of giving notice to the person from whom 
the bill was received." 

The Reply of the Plaintiff. — Mr, Serjeant's case, whereini 
mention is made of the six Chief Justices differing in opinion,, 
seems to be taken from the 3d volume of the Abridgement of 
the Law. 2 

1 Cases in B. R. Temp. W., 3, 244, Lambert v. Oakes, at 
Guildhall; and 1 Ld. Raym., 443; Lambert v. Oakes, S. C, is 
directly in point. 1 Salk., 126 pi. 6 Anon, accordingly. Syder- 
bottom v. Smith, 1 Strange, 649, M. 12 G. 1, 2 Strange, 1087. 

2 See New Abridgement, vol. 3, title, Merchant and Merchan- 
dise, p. 608, note b. (which is undoubtedly the same case cited by 
the Sergeant). 

28 



374 HEYLYN V. ADAMSON. [CHAP. 13, 

The plaintiff said, ' * I agree that the drawer of a bill of 
exchange is only a conditional undertaker for the drawee; and 
so also is the indorser of a bill of exchange a conditional un- 
dertaker for the drawee. But it does not follow, that the 
indorser of a bill of exchange is only a conditional undertaker 
for the drawer. 

The case of Lambert v. Oakes was upon a note of hand 
(according to Ld. Raymond); and Ld. Ch. J. Holt's opinion 
upon a bill of exchange, was upon a case not before him. 

In the case of Hamerton v. Mackrell, Ld. Hardwicke 1 
held it not necessary. 

The drawee's place of abode is always known upon a bill 
of exchange, but not the drawer's. 

The court gave no opinion at the time of this argument; 
but postponed it, in order to settle the point with precision 
and certainty. 

Ld. Mansfield observed, That the confusion seemed to 
have arisen from its not being settled, ' ' who is the original 
debtor." 

Mr. Justice Denison said, The case of Hamerton v. Mack- 
rell, was upon a writ of error; and the judgment was affirmed, 
upon the allegation contained in the declaration, of a promise, 
made by the indorsee, which (upon a writ of error), they con- 
sidered as an express promise; but Ld. Hardwicke did not 
give his own opinion at all, upon what is now the present 
question. 

Decision. — Ld. Mansfield said, He could not persuade 
himself that there had really been such a variety of opinions 
upon this question, at nisi prius, as had been mentioned at 
the bar. But however that may be, it must now be deter- 
mined upon the nature of the transaction, general conven- 
ience, and the authority of deliberate resolutions in court. 

A bill of exchange is an order, or command, to the drawee 
who has, or is supposed to have, effects of the drawer in his 
hands, to pay. When the drawee has accepted, he is the 
original debtor; and due diligence must be used in applying 

*The Serjeant had been misinformed: for Ld. Hardwicke (as 
appears by my note of that case) did not give or even intimate his 
own opinion upon that point. 



SEC - 53-] HEYLYN V. ADAMSON. 375 

to him. The drawer is only liable in default of payment by 
him, due diligence having been used; and therefore if the 
acceptor is not called upon within a reasonable time after the 
bill is payable \ and happens to break, the drawer is not 
liable at all. 

Every man therefore who takes a bill of exchange, must 
know where to call upon the drawee; and undertakes to de- 
mand the money of him. 

The Liability of Drawer and Indorser, Compared. — 
When that bill of exchange is indorsed, by the person to 
whom it was made payable; as between the indorser and in- 
dorsee, it is a new bill of exchange; and the indorser stands in 
the place of the drawer ; the indorsee undertakes to demand 
the money of the drawee. If he neglects, and the drawee 
becomes insolvent, the loss falls upon himself. If the indor- 
see is diligent, and the drawee refuses payment, his imme- 
diate remedy is against the indorser; and it was very properly 
observed, that the act of 9, 10 W., 3, requires notice of the 
protest to be given • ' to the person from whom the bill was 
received." He may have another remedy against the first 
drawer, as assignee to, and standing in the place of the in- 
dorser. . 

The indorsee does not trust to the credit of the original 
drawer; he does not know whether such a person exists, or 
where he lives, or whether his name may have been forged. 
The indorser is his drawer; and the person to whom he origin- 
ally trusted, in case the drawee should not pay the money. 
There is no difference in this respect between foreign and in- 
land bills of exchange, except as to the degree of inconven- 
ience: all the arguments from law, and the nature of a tran- 
saction, are exactly the same in both cases. 

As to foreign bills of exchange, the question was solemnly 
determined by this court, upon very satisfactory grounds, in 
the case of Bromley v. Frazier. ! That was ' ' An action upon 
the case upon a foreign bill of exchange, by the indorsee 
against the indorser;" and on general demurrer it was objected, 
1 4 that they had not shown a demand upon the drawer, in 

1 1 Strange, 441, Tr. 7 G. 1 B. R. 



376 HEYLYN V. ADAMSON. [CHAP. 13, 

whose default only it is that the indorser warrants." And 
because " this was a point unsettled, and on which there are 
contradictory opinions in Salkeld, 131 and 133, the court took 
time to consider of it. And on second argument, they de- 
livered their opinions, That the declaration was well enough: 
for, the design of the law of merchants in distinguishing these 
from all other contracts, by making them assignable, was for 
the convenience of commerce, that they might pass from hand 
to hand in the way of trade, in the same manner as if they 
were specie. Now to require a demand upon the drawer, will 
be laying such a clog upon these bills, as will deter every body 
from taking them. The drawer lives abroad, perhaps in the 
Indies, where the indorsee has no correspondent to whom he 
can send the bill for a demand; or if he could, yet the delay 
would be so great that nobody would meddle with them. 
Suppose it was a case of several indorsements, must the last 
indorsee travel round the world, before he can fix his action 
upon the man from whom he received the bills ? 

In common experience, everybody knows that the more 
indorsements a bill has, the greater credit it bears: whereas if 
those demands are all necessary to be made, it must naturally 
diminish the value, by how much the more difficult it renders 
the calling in the money. And as to the notion that has pre- 
vailed, that the indorser warrants only in default of the 
drawer, there is no color for it; for every indorser is in the na- 
ture of a new drawer; and at nisi prius, the indorsee is never 
put to prove the hand of the first drawer, where the action is 
against an indorser. The requiring a protest for non-accept- 
ance, is not because a protest amounts to a demand: for it is 
no more than a giving notice to the drawer to get his effects 
out of the hands of the drawee, who, (by the other's drawing) 
is supposed to have sufficient wherewith to satisfy the bill. 
Upon the whole, they declared themselves to be of opinion 
"That in the case of a foreign bill of exchange, a demand 
upon the drawer is not necessary to make a charge upon the 
indorser; but the indorsee has his liberty to resort to either for 
the money: consequently the plaintiff (they said) must have 
judgment." 



SEC. 53.] HEYLYN V. ADAMSON. 377 

Every inconvenience here suggested holds to a great de- 
gree, and every other argument holds equally, in the case of 
inland bills of exchange. 

We are therefore all of opinion, "That to entitle the in- 
dorsee of an inland bill of exchange to bring an action against 
the indorser, upon failure of payment of the drawee, it is not 
necessary to make any demand of, or inquiry after, the first 
drawer. " 

Promissory Notes and Bills of Exchange, Campared. — 
The law is exactly the same, and fully settled upon the 
analogy of 'promissory notes to bills of exchange; which is 
very clear when the point of resemblance is once fixed. 

While a promissory note continues in its original shape 
of a promise from one man to pay to another, it bears no 
similitude to a bill of exchange. When it is indorsed, the re- 
semblance begins: for then it is an order by the indorser, 
upon the maker of the note (his debtor, by the note) to pay 
to the indorsee. This is the very definition of a bill of ex- 
change. 

The indorser is the drawer; the maker of the note is the 
acceptor; and the indorsee is the person to whom it is made 
payable. The indorser only undertakes, in case the maker 
of the note does not pay. 

The Duty of an Indorsee. — The indorsee is bound to 
apply to the maker of the note; he takes it upon that con- 
dition; and therefore must, in all cases, know who he is, and 
where he lives; and if after the note becomes payable, he is 
guilty of a neglect, and the maker becomes insolvent, he loses 
the money and cannot come upon the indorser at all. 

Therefore, before the indorsee of a promissory note 
brings an action against the indorser \ he must show a demand, 
or due diligence to get the money from the maker of the note; 
just as the person to whom the bill of exchange is made pay- 
able must show a demand, or due diligence to get the money 
from the acceptor, before he brings an action against the 
drawer. This was determined by the whole Court of Com- 
mon Pleas, upon great consideration, in Pasch., 4 G., 2; as 
cited by my Ld. Ch. J. Lee in the case of Collins v. Butler. 1 

l 2 Strange, 1087, 11 G., 2. 



37^ HEYLYN V. ADAMSON. [CHAP. 13, 

So that the rule is exactly the same upon promissory 
notes, as it is upon bills of exchange; and the confusion has, 
in part, arisen from the maker of a promissory note being 
called the drawer; whereas, by comparison to bills of ex- 
change, the indorser is the drawer. 

All the authorities, and particularly Ld, Hardwicke, in 
the case of Hamerton v. Mackrell, M., 10G., 2 (according to 
my brother Denison's statement of what his Lordship said), 
put promissory notes and inland bills of exchange just upon 
the same footing: 1 and the statute expressly refers to inland 
bills of exchange. 8 

But the same law must be applied to the same reason; to 
the substantial resemblance between promissory notes and bills 
of exchange; and not to the same sound, which is equally used 
to describe the makers of both. 

My Ld. Ch. J. Holt is quoted as being of opinion, "That 
in actions upon bills of exchange, it is necessary to prove a 
demand upon the drawer." For proof of this, the principal 
case referred to, is that of Lambert v. Oakes, reported in 
three books.* 

In 1 Ld. Raym., 443, it appears manifestly, that the 
question arose upon a promissory note. ' * R. signed a note 
under his hand, payable to Oakes, or his order; Oakes in- 
dorsed it to Lambert; upon which, Lambert brought the 
action for the money against Oakes. Per Holt, Ch. J. He 
ought to prove that he had demanded or done his endeavor to 
demand this money of R. before he can sue Oakes upon the 
indorsement. The same law, if the bill was drawn upon any 
other person, payable to Oakes or order;" that is, *'A de- 
mand must be made of the person upon whom the bill is 
drawn. " And other parts of the case manifestly show this to 
have been the meaning. For, my Ld. Ch. J. Holt is reported 
to have said, "The indorsement will subject the indorser to 
an action; because it makes a new contract, in case the per- 

l My own note of that case is exactly agreeable, viz.: "Prom- 
issory notes seem to me to be put upon the same footing as 
inland bills of exchange." 

2 V, 3, 4 Ann., c. 9. 

*i Ld. Raymond, 1 Salk. and 12 Mod. 



SEC. 53.] HEYLYN V. ADAMSON. 379 

son upon whom it is drawn does not pay it." Again, 1 "If the 
indorsee does not demand the money payable by the bill, of 
the person upon whom it is drawn, in convenient time, and 
afterwards he fails, the indorser is not liable. 

In Salkeld, 2 the case is confounded: it is stated to be a 
bill of exchange, and * * that the demand must be made upon 
the drawer, or him upon whom it was drawn." My Ld. Ch, 
J. Holt had said that a demand must be made of the maker 
of a promissory note, (calling him the drawer); and in the 
case of a bill of exchange, of him upon whom the bill is 
drawn. The report jumbles both together, as applied only to 
a bill of exchange; misled, I dare say, by the equivocal sound 
of the term drawer, and by the Chief Justice's reasoning in the 
case of a promissory note, from the law upon bills of ex- 
change.* 

In 1 2th Modern, 244, the case is mistaken, too; and stated 
as upon a bill of exchange, and as a determination ' ( that 



1 In p. 444. 

2 1 Salk., 127 (there called Lambert v. Pack), p. 9. 

"The report in 1 Salk., 126, p. 6, is much more strong and 
explicit; but it is short, anonymous, and a mere loose scrap, by the 
same reporter; who was manifestly unclear about the case (being 
S. C. with p. 9). 

Presentment for Acceptance — When Necessary. — 

Presentment for< acceptance is necessary as a general rule: 

1. Where the bill is payable after sight or where it is neces- 
sary to fix the maturity of the contract; 

2. Where it is made necessary by the terms of the contract. 

Presentment for acceptance need not be made, when the con- 
tract is payable on demand, at sight or at a time named. Bull v. 
Bank, 115 U. S., 373; Allen v. Suydam, 20 Wend., 321; Philpott 
v. Bryant, C. & P., 244. 

Presentment for Acceptance — How Made. — Present- 
ment for acceptance should be made: 

1 . By or on behalf of the holder (foreign bills by a notary); 

2. At the place named, if there be one, or at the place of 
business or residence of the drawee; 

3. Within a reasonable time after execution .and delivery 
and within business or reasonable hours; 

4. To the drawee or some person authorized to act for him. 
If the bill is drawn upon or addressed to two or more per- 
sons (not partners), then it must be presented to each, unless one 



380 HEYLYN V. ADAMSON. [CHAP. 13, 

there must be a demand upon the drawer of the bill of ex- 
change;" and yet the report itself shows demonstrably, that 
what was said by my Ld. Ch. J. Holt was applied to the 
marker of a promissory note (calling him the drawer). For 
the report makes him argue — "So if the bill was drawn on 

is authorized to accept or refuse acceptance for all, and then it is 
sufficient to present to him alone. 

If the bill is drawn upon a partnership, then presentment to 
any member of the firm will be sufficient. 

If the drawee is dead, then presentment may be made to his 
personal representatives. 

If the drawee has been pronounced a bankrupt or has made 
an assignment for the benefit of creditors, presentment for accept- 
ance may be made to him or to his assignee. Gates v. Beecher, 
60 N. Y., 578; Parker v. Gordon, 8 R. I., 646; Smith v. Bank of 
New South Wales, L. R. 4 P. C, 194, 205-208; Cheek v. Roper, 
5 Esp., 175. 

Presentment for Acceptance — Excused, When. — Pre- 
sentment for acceptance is excused, generally: 
Where the drawee is dead; 
When he has absconded; 

3. Where he is a fictitious person; 

4. Where he has no capacity to contract; 
Where the presentment is irregular, but acceptance is re- 
fused upon some other ground; and 

6. Where after reasonable diligence it cannot be made. 
Aymar v. Beers, 7 Cow., 705; Daniel on Negotiable Instruments, 
Sec. 478; U. S. v. Parker, 1 Paine, C. C, 156. 

Presentment for Acceptance May be Delayed — When. 
— Presentment for acceptance may be delayed where after due 
diligence it has been prevented at the proper time and place by 
reason of war, sickness, inevitable accident, or other circumstan- 
ces beyond the control of the holder. Aymar v. Beers, 7 Cow., 
705; U. S. v. Parker, 1 Paine, C. C, 156. But in these cases 
presentment must be made within a reasonable time after the 
cause for delay is removed. 

Rights of Holder When Acceptance is Refused — 
May Sue Immediately. — When a bill has been properly pre- 
sented for acceptance, and dishonored, the holder may sue the 
drawer and prior indorsers immediately upon giving notice of such 
dishonor, without waiting to present the bill for payment. Daniel 
on Negotiable Instruments, Sees. 449, 450; Whitehead v. Walker, 
11 L. J. Ex., 168; Lucas v. Ladew, 28 Mo., 342; Pilkinton v. 
Woods, 10 Ind., 432. 

Effect of Acceptance. — Before acceptance the drawee is 
under no liability whatever unless he has contracted to accept. 
But by acceptance he becomes liable upon the contract to pay it 



SEC. 53.] HEYLYN V. ADAMSON. 381 

any other person, payable to Oakes or order;" which shows 
that the case in judgment was not a bill drawn upon another 
person, but payable only to Oakes, by R. himself. 

It seems to me as if Ld. Ch. J. Holt, in that case, had 
considered the drawee of a bill of exchange in the same light 
as the maker of a promissory note: but loose and hasty notes, 
misled by identity of sound, have misapplied what was said of 

according to its terms. Daniel on Nego. Inst., Sec. 451. His 
liability after acceptance is the same as the maker of a promis- 
sory note. 

Presentment for Payment — When Necessary. — It may 
be stated as a general rule that presentment for payment to the 
drawee is a prerequisite condition to the liability of the following 
parties: (1) of drawers; (2) of indorsers; (3) of acceptors for 
honor. Lambert v. Oakes, 1 Ld. Ray., 443; Heylyn v. Adamson, 
2 Burrows, 669; Harry v. Perrit, 1 Salk., 134; Darrach v. Sav- 
age, 1 Shaw, 155; Red Oak Bank v. Orvis, 40 la., 332; Long v. 
Stephenson, 72 N. Car., 569; Borough v. Perkins, I Salk., 131; 
Meise v. Newman, 76 Hun., 341; Ranson v. Mack, 2 Hill, 587; 
Griffin v. Golf, 12 Johnson, 423. And if there is a failure to 
make presentment for payment properly ', these parties are relieved 
from all liability unless the presentment is excused. Presentment 
for payment is unnecessary in order to render the maker liable. 
His liability is absolute from the execution and delivery of the 
contract. 

Presentment of Checks — Necessity Of. — Demand of 
payment (unless excused) must be made upon a check in order to 
render the drawer or indorser liable; but he cannot complain, un- 
less by reason of the failure upon the part of the holder he has 
been injured and then only pro tanto. Syracuse, etc. Ry. Co. v. 
Collins, 1 Abb., N. C, 47; Murray v. Judah, 6 Cow., 484; 
Greenwich, etc. Co. v. Oregon Improvement Co., 76 Hun., 194. 

Presentment for Payment — How Made. — The present- 
ment for payment must be made: 

1. By or on behalf of the holder (if a foreign bill, by a 
notary); 

2. At the place named if there be one, or at the place of 
business or residence of the drawee or maker; 

3. On the day the contract legally matures; 

4. At a reasonable hour on that day; 

5. To the person who is primarily liable on the contract or 
to some one who is authorized to act for him; and 

6. By exhibiting the bill to the person from whom payment 
is demanded. Ocean Bank v. Williams, 102 Mass., 141; Lefty v. 
Mills, 4 T. R., 170; Sussex Bank v. Baldwin, 2 Harrison (N. J.), 
487; Bank of Utica v. Smith, 18 Johnson, 230. A custom allow- 



382 HEYLYN V. ADAMSON. [CHAP. 13, 

the drawer of a promissory note, to the drawer of a bill of ex- 
change; and to such a degree misapplied it, that two reports 
out of the three have stated the question as arising upon a bill 
of exchange; which is manifestly otherwise. 

But be this conjecture as it may, we are all of opinion, 
" That in actions upon inland bills of exchange, by an indor- 
see against an indorser, the plaintiff must prove a demand of, 
or due diligence to get the money from the drawee (or accep- 

ing presentment by a notary's clerk or deputy has been held suffi- 
cient. McClane v. Fitch, 4 B. Mon. (Ky.), 599; Miltenberger v. 
Spalding, 33 Mo., 421; Commercial Bank v. Varnum, 49 N. Y., 
269. 

(a) Where There are Several Drawees — Not Partners. — If 
there are several drawees or makers not partners, then presentment 
for payment must be made to each of them. Brit v. Lawson, 15 
Hun., 123; Arnold v. Dresser, 8 Allen (Mass. ), 435; Blake v. 
McMillen, 33 la., 150; Willis v. Green, 5 Hill, 232; Benedict v. 
Schmieg, 13 Wash., 476; 52 Am. St. Rep., 61; Shutts v. Fingar, 
100 N. Y., 539; 53 Am. Rep., 231; 24 Am. Rep., 161. 

(3) Where there are Several Drawees who are Partners. — 
If the drawees or makers are partners, presentment for payment 
may be made to any one of them, even though there has been a 
dissolution of the firm. Gates v. Beecher, 60 N. Y., 518; Brown 
v. Turner, 15 Ala., 832; Mt. Pleasant Bank v. McLaren, 26 la., 
306; Greatrake v. Brown, 2 Cranch C. C, 541; Fourth Bank v. 
Heuschen, 52 Mo., 207. The demand will also be sufficient if 
made on an agent of one of the firm. Brown v. Turner, supra. 

(*■) Where the Drawee or Maker is Dead. — If the drawee or 
maker is dead, and no place of payment is named, presentment 
for payment should be made to his personal representatives. "Ma- 
gruder v. Bank of Georgetown, 8 Curtis, 299; 3 Peters, 87; Groth 
v. Gyger, 31 Pa. St., 271. If there are no personal representa- 
tives, then presentment at the late residence of the drawee or 
maker. Some states permit a delay until they are appointed. 
Bank of Washington v. Reynolds, 2 Cranch C. C, 289; Laudry 
v. Stansbury, 10 La., 484. 

Presentment for Payment — When Excused. — Present- 
ment for payment to the drawee or maker is not necessary to 
charge a drawer or indorser: 

i. Where the latter has no right to expect or believe that the 
contract will be honored; 

2. Where the contract was made for his accommodation; 

3. Where after reasonable diligence it cannot be made; 

4. Where the drawee or maker is a fictitious person; and 

5. Where it is expressly waived by the parties. Coyle v. 
Smith, 1 E. D. Smith, 400; Beale v. Parish, 20 N. Y., 407; Little 



SEC. 53.] HEYLYN V. ADAMSON. 383 

tor); but need not prove any demand of the drawer; and that 
in actions upon promissory notes, by an indorsee against the 
indorser, the plaintiff must prove a demand of, or due negli- 
gence to get the money from the maker of the note." 

Accordingly, the rule was, That the postea be delivered 
to the plaintiff. 

v. Phoenix Bank, 2 Hill, 425; Brush v. Barrett, 82 N. Y., 400; 
Cady v. Bradshaw, 116 N. Y., 188; Daniel on Neg. Instruments, 
Sec. 1576. 

Presentment for Payment — May be Delayed When. — 
Presentment for payment may be delayed: 

1. Where the holder is too ill to make the presentment him- 
self or to appoint some one to do it for him; 

2. Where the contract is lost; 

3. Where the mail miscarries; 

4. Where by reason of war or pestilence presentment can- 
not be made promptly; 

5. Where the death of the holder occurs before maturity 
and before the appointment of a personal representative; and 

6. Generally whenever the delay is caused by circumstances 
beyond the control of the holder and not imputable to his negli- 
gence. 

But in all of these cases presentment must be made with rea- 
sonable diligence after the causes of delay cease to operate. Wil- 
son v. Senier, 14 Wis., 380; Aborn v. Bosworth, 1 R. I., 401; 
Smith v. Mullett, 2 Camp., 208; Bray v. Hadwen, 5 M. & S., 68; 
Tunno v. Lague, 2 Johnson Cas., 1; Woods v. Wilder, 43 N. Y., 
164; Morgan v. Bank of Louisville, 4 Bush. (Ky. ), 82; White v. 
Stoddard, n Gray, 258. 

Presentment for Payment — Effect. — When a commer- 
cial contract has been properly presented for payment and dis- 
honored, and notice of that fact given to the parties who are 
secondarily liable (drawers and indorsers), an immediate right of 
action accrues to the holder against them. 



CHAPTER XIV. 
Defenses to Commercial Contracts.* 



SECTION 54. 

A MATERIAL ALTERATION IN THE TERMS OF A COMMER- 
CIAL CONTRACT IS A REAL DEFENSE AND MAY BE 
INTERPOSED AGAINST EVERY HOLDER. 

MASTER v. MILLER. 1 

In the Court of King's Bench, July, 1791. 

[Reported in 4 Term Rep. , 320; 2 H. Bla. y 141.'] 

• 

The Form of the Action.— The first count in this declar- 
ation was in the usual form, by the indorsees of a bill of ex- 
change against the acceptor; it stated that Peel & Co. on the 
20th of March, 1788, drew a bill for 974/. 10s. on the de- 
fendant, payable three months after date to Wilkinson & 
Cooke, who indorsed to the plaintiffs. The second count 
stated the bill to have been drawn on the 26th of March. 
There were also four other counts; for money paid, laid out 
and expended; money lent and advanced; money had and re- 
ceived; and on an account stated. The defendant pleaded 
the general issue; on the trial of which a special verdict was 
found. 

*An alteration of the date of a bill of exchange, after accept- 
ance, whereby the payment would be accelerated, avoids the in- 
strument; and no action can be afterwards brought upon it, even 
by an innocent holder for a valuable consideration. 

'This case is cited in Daniel on Negotiable Instruments, 23, 
148, 1373, 1373a, 1376, 1379, 1410; Wood's Byles on Bills and 
Notes, 33, 476, 483; Chitty on Bills, 182, 317, 6, 7, 8, 148, 159, 
3°5> 560, 780; Story on Bills of Exchange, 17; Benjamin's Chal- 
mers on Bills, Notes and Checks, 254, 256; Norton on Bills and 
Notes, 234, 236; Randolph on Commercial Paper, 99, 288; Tiede- 
man on Commercial Paper, 194, 302, 394; Ames on Bills and 
Notes, 434. 



SEC. 54.] MASTER V. MILLER. 385 

It stated, that Peel & Co. on the 26th of March, 1788, 
drew their bill on the defendant, payable three months after 
date to Wilkinson & Cooke, for 974/. 10s. "Which said bill 
of exchange, made by the said Peel & Co. as the same hath 
been altered, accepted, and written upon, as hereafter men- 
tioned, is now produced, and read in evidence to the said 
jurors, and is now expressed in the words and figures follow- 
ing, to wit: 

' June* 23rd, P74l- 10s. 

'Manchester, March 20, 1788. 

4 Three months after date pay to the order of Messrs. 
Wilkinson & Cooke 97 4L 10s. received, as advised. 

'Peel, Yates & Co. 
1 To Mr. Cha. Miller. 

'23rd June, 1788.'" 

That Peel & Co: delivered the said bill to Wilkinson & 
Cooke, which the defendant afterwards, and before the alter- 
ation of the bill hereinafter mentioned, accepted. That Wil- 
kinson & Cooke afterwards indorsed the said bill to the plain- 
tiffs, for a valuable consideration before that time given and 
paid by them to Wilkinson & Cooke for the same. That the 
said bill of exchange at the time of making thereof, and at the 
time of the acceptance, and when it came to the hands of 
Wilkinson & Cooke as aforesaid, bore date on the 26th day of 
March, 1788, the day of making the same. And that after it 
so came to and whilst it remained in the hands of Wilkinson 
& Cooke, the said date of the said bill, without the authority 
or privity of the defendant, was altered by some person or 
persons to the jurors aforesaid unknown from the 26th day of 
March, 1788, to the 20th day of March, 1788. That the 
words "June 23rd," at the top of the bill, were there inserted 
to mark that it would become due and payable on the 23rd of 
June next after the date; and that the alteration hereinbefore 
mentioned, and the blot upon the date of the bill of exchange, 
now produced and read in evidence, were on the bill of ex- 
change, when it was carried to and came into the hands and 
possession of the plaintiffs. That the bill of exchange was on 
the 23rd of June and also on the 28th of June, 1788, pre- 
sented to the defendant for payment; on each of which days 



386 MASTER V. MILLER. [CHAP. 1 4, 

respectively he refused to pay. The verdict also stated that 
the bill so produced to the jury and read in evidence was the 
same bill, upon which the plaintiffs declared, etc. 

The Claim of Plaintiff.— For the plaintiffs it was con- 
tended, that they were entitled, notwithstanding the alteration 
in the bill of exchange, to recover according to the truth of 
the case, which is set forth in the second count of the declar- 
ation, namely, upon a bill dated the 26th of March; which the 
special verdict finds was in point of fact accepted by the de- 
fendant. More especially as it is clear that the plaintiffs are 
holders for a valuable consideration, and had no concern what- 
ever in the fraud that was meditated, supposing any such ap- 
peared. The only ground of objection which can be suggested 
is upon the rule of law relative to deeds, by which they are 
absolutely avoided, if altered even by a stranger in any ma- 
terial part; and upon a supposed analogy between those 
instruments and bills of exchange. But upon investigating 
the grounds on which the rule stands as applied to deeds, it 
will be found altogether inapplicable to bill's: and, if that be 
shown, the objection founded on the supposed analogy be- 
tween them must fall with it. 

The general rule respecting deeds is laid down in Pigot's 
case, 1 where most of the authorities are collected; from thence 
it appears that if a deed be altered in a material point even by 
a stranger without the privity of the obligee, it is thereby 
avoided; and if the alteration be made by the obligee, or with 
his privity, even in an immaterial part, it will also avoid the 
deed. Now that is confined merely to the case of deeds, and 
does not in the terms or principle of it apply to any other in- 
struments not executed with the same solemnity. There are 
many forms requisite to the validity of a deed, which were 
originally of great importance to mark the solemnity and 
notoriety of the transaction, and on that account the grantees 
always were, and still are, entitled to many privileges over the 
holders of other instruments. It was therefore reasonable 
enough that the party, in whose possession it was lodged, 
should on account of its superior authenticity be bound to 
preserve it entire with the strictest attention, and at the peril 

1 11 Co., 27. 



SEC. 54.] MASTER V. MILLER. 387 

of losing the benefit of it in the case of any material alteration 
even by a stranger. And that he is the better enabled to do 
from the nature of the instrument itself, which not being of a 
negotiable nature is not likely to meet with any mutilation- 
unless through the fraud or negligence of the owner; whereas 
bills of exchange are negotiable instruments, and are perpet- 
ually liable to accidents in the course of changing hands, from 
the inadvertance of those by whom they are negotiated, with- 
out any possibility of their being discovered by innocent in, 
dorsees, who are ignorant of the form in which they were 
originally drawn or accepted. And the present is a strong in- 
stance of that; for the plaintiffs cannot be said to be guilty of 
negligence in not inquiring how the blot came on the bill, 
which mere accident might have occasioned. 

That the same reasons, upon which the decisions of the 
courts upon deeds have been grounded, will not support such 
judgments upon bills, will best appear by referring to the au- 
thorities themselves. When a deed is pleaded, there must be 
a profert in curiam, unless as in Reed v. Brookman l it be 
lost or destroyed by accident, which must however be stated 
in the pleadings. The reason of which is, that anciently the 
deed was actually brought into court for the purpose of in- 
spection; and if, as is said in 10 Co., 92 b., the judges found 
that it had been rased or interlined in any material part, they 
adjudged it to be void. Now as that was the reason why a 
deed was required to be pleaded with a profert, and as it was 
never necessary to make a profert of a bill of exchange in 
pleading, it furnishes a strong argument that the reason ap- 
plied solely to the case of deeds. So deeds, in which were 
erasures, were held void, because they appeared on the face 
of them to be suspicious. 2 Nor could the supposition of fraud 
have been the ground on which that rule was founded with 
respect to deeds; for in Moor, 35, p. 116, a deed which had 
been erased was held void although the party himself who 
made it had made the erasure; which was permitting a party 
to avail himself of his own fraud. But it is impossible to con- 

1 3 Term. Rep., 151. 

9 13 Vin. Abr. tit. Faits, 37, 38; Bro. Abr. Faits, pi. 11, refer- 
ring to 44 Ed., 3, 42. 



388 MASTER V. MILLER. [CHAP. 14, 

tend that the rule can be carried to the same extent as to bills; 
nor is it denied but that if the blot here had been made by the 
acceptor himself, he would still have been bound. 

In Keilw., 162 it is said that if A. be bound to B. in 20/. 
and B. erase out 10/. all the bond is void, although it is for 
the advantage of the obligor, and even where an alteration in 
a deed was made with the consent of both the parties, still it 
was held to avoid it. 1 

Fraud could not be the principle on which those cases 
were determined; whereas it is the only principle on which the 
rule contended for can be held to extend to bills of exchange, 
but which is rebutted in the present case by the facts found in 
the special verdict. According to the same strictness, where 
a mere mistake was corrected in a deed, and not known by 
whom, it was held to avoid it. 2 And it does not abate the 
force of the argument, that the law is relaxed in these respects 
even as to deeds, for the question still remains, whether at 
any time bills of exchange were construed with the same rigor 
as deeds. The principle upon which all these cases relative 
to deeds was founded was, that nothing could work any alter- 
ation in a deed, except another deed of equal authenticity. 
And as the party, who had possession of the deed, was bound 
to keep it securely, it might well be presumed that any ma- 
terial alteration even by a stranger was with his connivance, 
or at least through his culpable neglect. 

In many of the cases upon the alteration of deeds, the 
form of the issue has weighed with the court; as in 1 Rol. 
Rep., 40, [which is also cited in Pigot's case,'] and Michael 
against Scockwith,* in both of which cases the alteration was 
after plea pleaded; and on that ground the court held that it 
was still to be considered as the deed of the party on non est 
factum. Now the form of the issue in actions upon deeds 
and those upon bills is very different; in the one case, the 
issue simply is, whether it is the deed of the party, which 

1 2 Rol. Abr., 29, letter U, pi. 5. 
2 2 Rol. Abr., 29, pi. 6. 
8 11 Co., 27. 
*Cro. EL, 120. 



SEC. 54.] MASTER V. MILLER. 389 

goes to the time of the plea pleaded, as appears from the 
case before cited, and from 5 Co., 119 b; but here the issue 
is whether the defendant promised at the time of the accept- 
ance to pay the contents. The form of the issue is upon his 
promise, arising by implication of law from the act of accept- 
ance, which is found as a fact by the special verdict agreeable 
to the bill declared on in the second count. And in no in- 
stance, where an agreement is proved merely as evidence of a 
promise, is the party precluded from showing the truth of the 
case. Not only therefore the forms of pleading are different 
in the two cases, but the decisions which have been made 
upon deeds, from whence the rule contended for as to eras- 
ures and alterations is extracted, are altogether inapplicable 
to bills. The reasons for such rigorous strictness in the one 
case do not exist in the other. On the contrary all the cases 
upon bills have proceeded upon the most liberal and equitable 
principles with respect to innocent holders for a valuable con- 
sideration. The case of Minet v. Gibson 1 goes much further 
than the present: for there this court, and afterwards the 
House of Lords, held that it was competent to inquire into 
circumstances extraneous to the bill, in order to arrive at the 
truth of the transaction between the parties; although such 
circumstances operated to establish a different contract from 
that which appeared upon the face of the bill itself. Whereas 
the evidence given in this case, and the facts found by the 
special verdict, are in order to show what the bill really was; 
which it is competent for these parties to do against whom no 
fraud can be imputed, if any exist. If the blot had fallen on 
the paper by mere accident, it cannot be pretended that it 
would have avoided the bill; and non constat upon this find- 
ing that it did not so happen. Even if felony were committed 
by a third person, through whose hands the bill passed, al- 
though that party could not recover upon it himself, yet his. 
crime shall not affect an innocent party, to whom the bill is. 
indorsed or delivered for a valuable consideration. 

In Miller v. Race, 2 where a bank note had been stolen,, 
and afterwards passed bona fide to the plaintiff, it was held 

x 3 Term. R., 481; in B. R., and 1 H. Bl., 569 in Dom. Proc. 
2 1 Burr., 452. 

24 



39° MASTER V. MILLER. [CHAP. 1 4, 

that he might recover in trover against the person who had 
stopped it for the real owner. And the same point was held 
in Peacock v. Rhodes, 1 where the bill was payable to order. 

Again in Price v. Neale," it was held that an acceptor, who 
had paid a forged bill to an innocent indorsee, could not re- 
cover back the money from him. Now if it be no answer to 
an action upon a bill against the acceptor to show that it was 
a forgery in its original making by a third person's having 
feigned the handwriting of the drawer, still less ought any 
subsequent attempt at forgery, even if that had been found 
which is not, to weigh against an innocent holder. But it 
would have been impossible to have recovered in any of these 
cases if the deed had been forged in any respect even by 
strangers to it; which shows that these several instruments 
cannot be governed by the same rules. And so little have 
the forms of bills of exchange and notes been observed, when 
put in opposition to the truth of the transaction, that in Rus- 
sell v. Langstaffe 8 the court held, in order to get at the justice 
of the case, that a person, who had indorsed his name on 
blank checks which he had entrusted to another, was liable to 
an indorsee for the sums for which the notes were afterwards 
drawn; and yet the form of pleading supposes the note to 
have been a perfect instrument, and drawn, before the in- 
dorsement. 

But the case which is most immediately in point to the 
present is that of Price v. Shute; 4 there a bill was drawn pay- 
able the 1st of January; the person upon whom it was drawn 
accepted it to be paid the ist of March; the holder, upon the 
bill's being brought back to him, perceiving this enlarged ac- 
ceptance, struck out the ist of March and put in the ist of 
January; and then sent the bill to be paid, which the acceptor 
refused. Whereupon the payee struck out the ist of January 
and put in the ist of March again. And in an action brought 
on this bill the question was, whether these alterations did 

'Dougl., 633. 

2 3 Burr., 1354. 

8 Dougl., 514. 

*E., 33 Car., 2, in B. R.; 2 Moll, c. 10, s. 28. 



SEC. 54.] MASTER V. MILLER. 39 1 

not destroy it ? And it was ruled they did not. This case 
therefore has settled the doubt; and never having been im- 
peached, but on the contrary recognized as far as general 
opinion goes, by having been inserted in every subsequent 
treatise upon the subject, it seems to have been acted on ever 
since. And it would be highly mischievous if the law were 
otherwise; for however negligent the owner of a deed may be 
supposed to be, who lets it out of his possession, the holder 
of a bill of exchange is by the ordinary course of such tran- 
sactions obliged to trust it even in the hands of those whose 
interest it is to avail themselves of this sort of objection. 
For it is most usual for the bill to be left for acceptance, and 
afterwards for payment, in the hands of the acceptor, who 
may be tempted to put such a blot on the date as may not be 
observed at the time, through the confidence of the parties. 
But even if the alteration should be considered as having de- 
stroyed the bill, why may not evidence be given of its contents 
upon the same principle as governed the case of Read v. 
Brookman, 1 where it was held that pleading that a deed is 
lost by time and accident supersedes the necessity of a profert. 
But at any rate the plaintiffs are entitled to recover on the 
general counts for money paid, and money had and received, 
on the authority of Tatlock v. Harris; 2 for though it is ex- 
pressly stated that so much money was received by the 
defendant, yet that is a necessary inference from the fact of 
acceptance which is found. 

The Claim of the Defendant. — For the defendant it was 
contended, that the broad principle of law was, that any alter- 
ation of a written instrument in a material part thereof 
avoided such instrument; and that the rule was not merely 
confined to deeds, though it happened that the illustration of 
it was to be found among the old cases upon deeds only, be- 
cause formerly most written undertakings and obligations were 
in that form. This principle of law was founded in sound 
sense; it was calculated to prevent fraud, and deter men from 
tampering with written securities: and it would be directly re- 

! 3 Term. R., 151. 
2 3 Term. R., 174. 



392 MASTER V, MILLER. [CHAP. 14, 

pugnant to the policy of such a law to permit the holder of a 
bill to attempt a fraud of this kind with impunity; which would 
be the case, if after being detected in the attempt, he were not 
to be in a worse situation than he was before. If any differ- 
ence were to be made between bills of exchange and deeds, it 
should rather be to enforce the rule with greater strictness as 
to the former; tor it would be strange that, because they were 
open to fraud from the circumstance of passing through many 
hands, the law should relax and open a wider door to it than 
in the case of deeds, where fraud was not so likely to be prac- 
ticed. The principle laid down in Pigot's case ! is not dis- 
puted, as applied to deeds. But the first answer attempted 
to be given is, that the rule as to deeds is sui generis, and 
does not extend to other instruments of an inferior nature, be- 
cause it arises from the solemn sanction attending the execu- 
tion of instruments under seal. As to this it is sufficient to 
say that, no such reason is suggested in any of the books: but 
the rule stands upon the broad ground of policy, which applies 
at least as strongly to bills as to deeds, for the reason above 
given. 

Then it is said that there is a material distinction between 
the several issues in the two cases. But the difference is 
more in words than in sense; the substance of the issue in 
both cases is, whether in point of law the party be liable to 
answer upon the instrument declared on; and therefore any 
matter which either avoids it ab initio^ or goes in discharge of 
it, may be shown as much in the one case as in the other. 
Upon non est factum the question is, whether in law the deed 
produced in evidence be the deed of the party; so on non 
assumpsit the question is, whether the bill given in evidence 
be in point of law the bill accepted by the defendant; because 
the promise only arises by implication of law upon proof of 
the acceptance of the identical bill accepted, and given in evi- 
dence. Now neither of the counts in the declaration was 
proved by the facts found. For in the first count the bill was 
dated the 20th of March; but as there is no evidence of the 
defendant's having accepted such a bill, of course the plain- 
tiffs are not entitled to recover on that count. Neither can 

1 11 Co., 27. 



SEC. 54.] MASTER V. MILLER. 393 

they recover on the second, because though it is found that he 
accepted a bill dated the 26th of March, as there stated, yet 
inasmuch as the bill stated to have been produced in evidence 
to the jury is dated the 20th, of course the evidence did not 
support the count. 

With respect to the cases cited of bills of exchange hav- 
ing been always construed by the most liberal principles, and 
particularly in the case of Minet v. Gibson, the same answer 
may be given to all of them, which is, that so far from the 
original contracts having been attempted to be altered, all 
those actions were brought in order to enforce the observance 
of them in their genuine meaning against the party, who, in 
the latter case particularly, endeavored by a trick to evade the 
contract. Whereas here the contract has been substantially 
altered by the parties who endeavor to enforce it; or at least 
by those whom they represent, and from whom they derive 
title. 

Then the case in Molloy of Price v. Shute is chiefly relied 
on by the plaintiffs, to which several answers may be given. 
First, the authenticity of it may be questioned; for it is not to 
be found in any reports, although there are several contem- 
poraneous reporters of that period. In the next place, the 
bill, as originally drawn, was not altered upon the face of it; 
and therefore, as against all other persons at least than the 
acceptor, it might still be enforced. But principally it does 
not appear but that the action was brought against the drawer, 
who, as the acceptor had not accepted it according to the 
tenor of the bill, was clearly liable; as the payee was not 
bound to abide by the enlarged acceptance, but might con- 
sider it as no acceptance at all. Then if this bill be void for 
this fraud, no evidence could be given to prove its contents, as 
in the case of a deed lost; because in that there is no fraud. 
But even if any other evidence might have been given, it is 
sufficient to say that in this case there was none. And as to 
the common counts, if the general principle of law contended 
for applies to bills of exchange, it will prevent the plaintiffs 
from recovering in any other shape. Besides which, it is not 
stated that the defendant has received any consideration, 



394 MASTER V. MILLER. [CHAP. 14, 

upon which ground the case of Tatlock v. Harris 1 was de- 
cided. 

In reply it was urged, that the issue was not whether the 
defendant had accepted this bill in the state in which it was 
shown to the jury; but whether he had promised to pay in 
consequence of having accepted a bill dated the 26th March, 
drawn by, etc., and those facts being found, the promise 
necessarily arises. It is said that the policy of the law will 
extend the same rule to the avoidance of bills of exchange, 
which have been altered, as to deeds; because there is even 
greater reason to guard against fraudulent alterations in the 
former than in the latter case. To which it may be answered, 
that the foundation of the rule fails in this case; for no fraud 
is found, and none can be presumed: and it is admitted, that 
if the blot had been made by accident, it would not have 
avoided the bill; and nothing is stated to show that it was not 
done by accident. Besides, the policy of the law is equally 
urgent in favor of the plaintiffs, it being equally politic to 
compel a performance of honest engagements. 

Here the defendant is only required to do that which in 
fact and in law he has promised to do. And if he be not 
liable on this contract, he will be protected in withholding 
payment of that money which he has received, and which by 
the nature of his engagement he undertook to repay. 

No answer has been given to the case cited from Molloy: 
for though the case is not reported in any other book, it bears 
every mark of authenticity, by noting the names of the parties, 
the court in which it was determined, and the time of the 
decision; and it has been adopted by subsequent writers on the 
same subject. Again, the alteration there was fully as im- 
portant as this, for it equally tended to accelerate the day of 
payment; and, lastly, it is not denied but that the action 
mighty have been maintained on the bill against any other 
person than the acceptor; which is an admission that the' 
policy of the law does not attach so as to avoid such instru- 
ments upon any alteration, for otherwise it would have 
avoided the bill against all parties. 



1 3 Term R., 174. 



SEC. 54.] MASTER V. MILLER. 395 

Decision. — The question is not whether or not another 
action may not be framed to give the plaintiffs some remedy, 
but whether this action can be sustained by these parties on 
this instrument. For the instrument is the only means by 
which they can derive a right of action. The right of action, 
which subsisted in favor of Wilkinson & Cooke, could not be 
transferred to the plaintiffs in any other mode than this, inas- 
much as a chose in action is not assignable at law. No case, 
it is true, has been cited on one side or the other, except that 
in Molloy, of which I shall take notice hereafter, that decides 
the question before us in the identical case of a bill of ex- 
change. But cases and principles have been cited at the bar, 
which, in point of law as well as policy, ought to be applied 
to this case. That the alteration in this instrument would 
have avoided it, if it had been a deed, no person can doubt. 
And why in point of policy would it have had that effect in a 
deed? Because no man shall be permitted to take the chance 
of committing a fraud, without running any risk of losing by 
the event, when it is detected. At the time when the cases 
cited, of deeds, were determined, forgery was only a misde- 
meanor: now the punishment of the law might well have been 
considered as too little, unless the deed also were avoided; 
and therefore the penalty for committing such an offense was 
compounded of those two circumstances, the punishment for 
the misdemeanor, and the avoidance of the deed. And 
though the punishment has been since increased, the principle 
still remains the same. I lay out of my consideration all the 
cases where the alteration was made by accident: for here it 
is stated that this alteration was made while the bill was in 
possession of Wilkinson & Cooke, who were then entitled to 
the amount of it, and from whom the plaintiffs derive title: 
and it was for their advantage (whether more or less is imma- 
terial here) to accelerate the day of payment, which in this 
commercial country is of the utmost importance. 

The cases cited, which were all of deeds, were decisions 
which applied to and embraced the simplicity of all the tran- 
sactions at that time; for at that time almost all written en- 
gagements were by deed only. Therefore those decisions, 
which were indeed confined to deeds, applied to the then state 



396 MASTER V. MILLER. [CHAP. 14, 

of affairs: but they establish this principle, that all written in- 
struments, which were altered or erased, should be thereby 
avoided. Then let us see whether the policy of the law, 
and some later cases, do not extend this doctrine farther than 
to the case of deeds. It is of the greatest importance that 
these instruments, which are circulated throughout Europe, 
should be kept with the utmost purity, and that the sanctions 
to preserve them from fraud should not be lessened. 

It was doubted so lately as in the reign of George the 
First, in Ward's case, 1 whether forgery could be committed in 
any instrument less than a deed, or other instrument of the 
like authentic nature; and it might equally have been decided 
there that, as none of the preceding determinations extended 
to that case, the policy of the law should not be extended to 
it. But it was there held that the principle extended to other 
instruments as well as to deeds; and that the law went as far 
as the policy. It is on the same reasoning that I have formed 
my opinion in the present case. The case cited from Molloy 
indeed at first made a different impression on my mind: but 
on looking over it with great attention, I think it is not ap- 
plicable to this case. No alteration was there made on the 
bill itself; but the party, to whom it was directed, accepted it 
as payable at a different time, and afterwards the payee struck 
out the enlarged acceptance; and, on the acceptor refusing to 
pay, it is said that an action was maintained on the bill. But 
it does not say against whom the action was brought; and it 
could not have been brought against the acceptor, whose ac- 
ceptance was struck out by the party himself who brought the 
action. Taking that case in the words of it, " that the alter- 
ations did not destroy the bill," it does not affect this case: not 
an iota of the bill itself was altered; but on the person, to 
whom the bill was directed, refusing to accept the bill as it 
was originally drawn, the holder resorted to the drawer. Then 
it was contended that no fraud was intended in this case; at 
least, that none is found: but I think that, if it had been done 
by accident, that should have been found, to excuse the party, 
as in one of the cases, where the seal of the deed was torn off 
by an infant. With respect to the argument drawn from the 

l 2 Str., 747; 2 Ld. Raym., 1461. 



SEC. 54.] MASTER V. MILLER. 397 

form of the plea, it goes the length of saying, that a defend- 
ant is liable, on non assumpsit, if at any time he has made a 
promise, notwithstanding a subsequent payment: but the ques- 
tion is, whether or not the defendant promised in the form 
stated in the declaration; and the substance of that plea is, 
that according to that form he is not bound by law to pay. 
On the whole, therefore, I am of opinion that this falsification 
of the instrument has avoided it; and that, whatever other 
remedy the plaintiffs may have, they cannot recover on this 
bill of exchange. 

The only question in this case is, whether there appears 
on the face of this special verdict a right of action in the 
plaintiffs on any of the counts. The first count is on a bill 
of exchange dated the 20th of March; but, tnere being no 
proof of any bill of that date, there is clearly an end of that 
count. The second is on a bill dated the 26th of March; but 
the defendant objects to the plaintiff's recovering on this 
count also, because, the bill having been altered while it was 
in the hands of Wilkinson & Cooke, it is not the same bill as 
that which was accepted; and that is the true and only ques- 
tion in the cause. My idea is that the plaintiff's right of 
action, as stated in this count, cannot be maintained at com- 
mon law, but is supported only on the custom of merchants, 
which permits these particular choses in action to be trans- 
ferred from one person to another. The plaintiffs, as indors- 
ees, in order to recover on this bill, must prove the accept- 
ance by the defendant, the indorsement from Wilkinson & 
Cooke to them, and that this was the bill which was presented 
when it became due. Now has all this been proved ? The 
bill was drawn on the 26th of March, payable at three months 
date; the defendant's engagement by his acceptance was, that 
it should be paid when it became due, according to that date; 
but afterwards the date was altered; the date I consider as a 
very material part of the bill, and by the alteration the time 
of payment is accelerated several days; according to that 
alteration, the payment was demanded on the 23d of June, 
which shows that the plaintiffs considered it as a bill drawn 
the 20th of March; then the bill which was produced in evi- 
dence to the jury was not the same bill which was drawn by 



398 MASTER V. MILLER. [CHAP. 1 4, 

Peel & Co. and accepted by the defendant; and here the 
cases which were cited at the bar apply. Piggott's is the 
leading case; from that I collect, that when a deed is erased, 
whereby it becomes void, the obligor may plead non est fac- 
turn, and give the matter in evidence, because at the time of 
plea pleaded it was not his deed; and, secondly, that when a 
deed is altered in a material point by himself, or even by a 
stranger, the deed thereby becomes void. Now the effect of 
that determination is, that a material alteration in a deed 
causes it no longer to be the same deed. Such is the law re- 
specting deeds: but it is said that that law does not extend to 
the case of a bill of exchange: whether it does or not must 
depend on the principle on which this law is founded. 

The policy of the law has been already stated, namely, 
that a man shall not take the chance of committing a fraud, 
and, when that fraud is detected, recover on the instrument 
as it was originally made. In such a case the law intervenes, 
and says, that the deed thus altered no longer continues the 
same deed, and that no person can maintain an action upon 
it. In reading that and the other cases cited, I observe that 



The General Classes of Defenses. — The defenses to 
commercial contracts have been divided into two general classes: 
— (1) real and (2) personal. 

A Real Defense — Defined. — The first or a real defense may 
be defined to be one which attaches to the contract and virtually 
destroys it so that it cannot be enforced against any of the parties 
to it nor in favor of any holder. Among the real defenses may be 
named: 

1. Incapacity of the parties, such as infancy, coverature, 
insanity; 

2. Illegality of the contract, as where it contravenes (1) the 
statute, or (2) the common law, or (3) public policy — such as usury, 
gaming or where notes or bills are given for the purchase of intox- 
icating liquors in jurisdictions where their sale is prohibited; 

3. Where by the acts of the parties the contract has either 
been cancelled, or altered in a material way; and 

4. Want of delivery. 

A Personal Defense — Defined.— A personal defense may 
be defined to be a defense which attaches not to the contract itself, 
but to the agreement or conduct of the parties in regard to the in- 
strument and which renders it inequitable for the holder to enforce 
it as between the immediate parties. It is called a personal de- 
fense because it is available as a defense only between the parties- 



SEC. 54.] MASTER V. MILLER. 399 

it is nowhere said that the deed is void merely because it is 
the case of a deed, but because it is not the same deed. A 
deed is nothing more than an instrument or agreement under 
seal: and the principle of those cases is, that any alteration 
in a material part of any instrument or agreement avoids it, 
because it thereby ceases to be the same instrument. And 
this principle is founded on great good sense, because it tends 
to prevent the party, in whose favor it is made, from attempt- 
ing to make any alteration in it. This principle too appears 
to me as applicable to one kind of instruments as to another. 
It has been contended that there is a difference between 
an alteration of bills of exchange and deeds; but I think that 
the reason of the rule affects the former more strongly, and 
the alteration of them should be more penal than in the latter 
case. Supposing a bill of exchange were drawn for no/., and 
after acceptance the sum was altered to 1,000/. : it is not pre- 
tended that the acceptor shall be liable to pay the 1,000/. ; 
and I say that he cannot be compelled to pay the ioo/. ac- 
cording to his acceptance of the bill, because it is not the 
same bill. So if the name of the payee had been altered, it 

and privies to the immediate contract. Parties are known as 
immediate and mediate. Immediate parties are the parties to the 
contract, as the maker and payee; the indorser and his indorsee. 
Mediate parties are parties between whom there are other parties, 
as maker and indorsee; first indorser and second indorsee. 

Among the personal defenses may be named: — (a) payment; 
(6) release; (c) accord and satisfaction; (</) failure of considera- 
tion; (e) fraud; (/) duress; (g) illegality, (whereby the statute, or 
common law or public policy, the act is pronounced illegal, but 
not void). 

Material Alteration — Defined. — A material alteration in a 
commercial contract is one which changes the legal relation of the 
parties or their obligations, or the legal effect of such contract. It 
is ''an alteration which causes the contract to speak a language 
different in legal effect from that which it originally spoke." 
Johnston v. May, 76 Ind., 293; Osborne v. Van Houton, 45 Mich., 
444; Burlingame v. Brewster, 79 111., 515; Rowley v. Jewett, 56 
la., 492; Bank v. Douglass, 31 Conn., 170, 181; Gardner v. 
Walsh, 5 El. & Bl., 83; Lunt v. Silver, 5 Mo. app., 186; Horn v. 
Newton City Bk., 32 Kan., 518; Gettysburg Bk. v. Chisolm, 169 
Pa. St., 564, 569; Wait v. Pomeroy, 20 Mich., 425; Sulivan v. 
Rudisill, 63 la., 158. An alteration to correct a mistake is not 
material; Evans v. Foreman, 60 Mo., 449; Derby v. Thrall, 44 



400 MASTER V. MILLER. . [CHAP. 1 4, 

would not have continued the same bill. And the alteration 
in every respect prevents the instrument's continuing the same, 
as well when applied to a bill as to a deed. It was said that 
Piggott's case only shows to what time the issue relates: but it 
goes further, and shows, that if the instrument be altered at 
any time before plea pleaded, it becomes void. It is true the 
court will inquire to what time the issue relates in both cases. 
Then to what does the issue relate here? The plaintiffs in 
this case undertook to prove everything that would support 
the assumpsit in law, otherwise the assumpsit did not arise. 
It was incumbent on them to prove that, before the action 
was brought, this identical bill, which was produced in evi- 
dence to the jury, was accepted by the defendant, presented, 
and refused: but if the bill, which was accepted by the de- 
fendant, were altered before it was presented for payment, 
then that identical bill, which was accepted by the defendant, 
was not presented for payment; the defendant's refusal'was a 
refusal to pay another instrument; and therefore the plaintiffs 
failed in proving a necessary averment in their declaration. 

If the bill had been presented and refused payment, and 
it had been altered after the action was brought, then it might 

Vt., 413; see contra, Newman v. King, 54 Ohio St., 273. Whether 
the alteration is material is a question of law. 

Material Alteration — Effect of. — "We understand the law 
to be well settled that a material alteration of a promissory note by 
any of the parties thereto discharges from liability thereon all other 
parties not consenting to or authorizing such alteration; and this 
without regard to whether the alteration is apparently or presum- 
ably to the benefit or detriment of the parties objecting. Courts 
cannot undertake to say that a party would have made the contract 
as altered, and thus make it for him, merely because its terms are 
more favorable to him than those embodied in the original instru- 
ment, any more than a like conclusion could be justified where the 
alteration imports additional liability. In the one case no le&s 
than in the other the altered paper is not the contract which the 
party has made; and in neither case can the courts declare it to be 
his contract, or enforce it a9 such. The law proceeds on the idea 
that the identity of the contract has been destroyed; that the con- 
tract made is not the contract before the court; that the party did 
not make the contract which is before the court; and, so adjudg- 
ing, it cannot go further, and hold him bound by it, on specula- 
tions, however probable and plausible, that he would or ought to 
have entered into the altered agreement because it involved less 



SEC. 54.] MASTER V. MILLER. 401 

have been like the case mentioned at the bar. It was con- 
tended at the bar, that the inquiry before a jury in an action 
like the present should be, whether or not the defendant 
promised to pay the bill at the time of his acceptance: but 
granting that he did so promise, that alone will not make him 
liable unless that same bill were afterwards presented to him. 
I will not repeat the observations which have already been 
made by my Lord on the case in Molloy: but the note of that 
case is a very short one; and the principle of it is not set forth 
in any other book, nor indeed do the facts of it sufficiently 
appear. I doubt also whether it was a determination of this 
court: it only appears that there was a point made at nisi 
prius, but not that it was afterwards argued here. But it has 
been said that a decision in favor of the plaintiffs will be the 
most convenient one for the commercial world: but that is 
much to be doubted; for if, after an alteration of this kind, it 
be competent to the court to inquire into the original date of 
the instrument, it will also be competent to inquire into the 
original sum and the original payee, after they have been 
altered, which would create much confusion, and open a door 
to fraud. 

liability than the original and only paper executed by him. There 
are some expressions in the books to the contrary." Montgomery 
v. Crossthwait, 90 Ala., 553; Illustrative Cases, 154; Masters v. 
Miller, supra. 

Material Alteration by a Stranger — Effect of. — Upon the 
question whether an alteration is ever material or not when made 
by a stranger, there is a different rule in the U. S. and England. 
In England a material alteration by a stranger destroys the title of 
the holder. Davidson v. Cooper, 11 M. & W., 778; 13 M. &W., 
343. While in the United States such an alteration is treated as a 
spoliation simply. Drum v. Drum, 133 Mass., 566; Colson v. 
Arnot, 57 N. Y., 253; Neff v. Horner, 63 Pa. St., 237; Piersol v. 
Grimes, 30 Ind., 129; Fullerton v. Sturges, 4 Ohio St., 529; Bige- 
low v. Stilphen, 35 Vt., 521. 

Material Alterations — Illustrations of. — The following 
changes in commercial contracts have been held to be material: 

1. Changing a joint to a joint and several contract; 

2. Changing the date or time of payment; 

3. Changing the place of payment; 

4. Changing the rate of interest; 

5 . Adding interest when it did not draw interest; 

6. Substituting a new payee; 



402 MASTER V. MILLER. [CHAP. 1 4, 

Great and mischievous neglects have already crept into 
these transactions; and I conceive, that keeping a strict hand 
over the holders of bills of exchange, to prevent any attempts 
to alter them, may be attended with good effects, and cannot 
be productive of any bad consequences, because the party who 
has a value for the bill may have recourse to the person who 
immediately received it from him. On these grounds, there- 
fore, I am of opinion that the plaintiffs cannot recover on the 
second count. Neither do I think that they can recover on 
the general counts, because it is not stated as a fact in the 
verdict that the defendant received the money, the value of 
the bill. 

Judgment for the defendant. 1 

^his judgment was afterwards affirmed in the Exchequer- 
Chamber. 5 Term Rep., 367. 

7. Adding a seal; 

8. Adding a subscribing witness; 

9. Adding or removing a signature; 

10. Adding words of negotiability when it was not negotiable; 

11. Adding a special consideration after "value received"; 

12. Adding a place of payment when none is named; 

13. Changing a material memorandum; 

14. Changing the medium of payment. Daniel on Neg. Inst., 
sees. 1373-1404 and cases cited; Cape Ann Nat. Bk. v. Burns, 129 
Mass., 596; Angle v. Northwestern Ins. Co., 92 U. S., 330. 

Immaterial Alterations — Illustrations. — The following 
changes or alterations in commercial contracts have been held to 
be immaterial: 

1. Changing a bill payable to "A" or bearer to "A" or 
order or bearer; 

2. Changing an indorsement in blank into a special in- 
dorsement; 

3. Adding the legal rate of interest where the note reads 
^'with interest " simply. 



CHAPTER XV. 
Defenses. — Alteration. — Negligence. 



SECTION 55. 

WHENEVER THE MAKER OF A COMMERCIAL CONTRACT, 
BY HIS OWN CARELESSNESS OR NEGLIGENCE, EXE- 
CUTES AND DELIVERS IT SO THAT MATERIAL AL- 
TERATIONS MAY BE MADE, IN A WAY WHICH DOES 
NOT EXCITE THE SUSPICION OF CAREFUL AND PRU- 
DENT BUSINESS MEN, HE WILL BE HELD LIABLE 
THEREON TO ANY BONA FIDE HOLDER. NEGLIGENCE, 
HOWEVER, IS A QUESTION OF FACT. 

BROWN v. REED. 1 

In the Supreme Court of Pennsylvania, Oct., 1875. 

{Reported in J 9 Pa. St., 370.] 

The Form of Action. — This was an action of assumpsit 
brought January 31st, 1873, by W. W. Reed against T. H. 
Brown, upon the following note: 

"North East, April 3rd, 1872. 
* * Six months after date I promise to pay to J. B. 
Smith or order two hundred and fifty dollars 
for value received, with legal interest, without defal- 
cation or stay of execution. T. H. Brown." 
Indorsed "J. B. Smith, without recourse" 

'This case is cited in Benjamin's Chalmers, on Bills, Notes 
and Checks, 257; Bigelow on Bills and Notes, 187, 195; Wood's 
Byles on Bills and Notes, 481, 589; Tiedeman on Commercial 
Paper, 397; Ames on Bills and Notes, 598; Daniel on Negotiable 
Instruments, 1405, 1409; Norton on Bills and Notes, 239. See 
leading cases upon this question: Young v. Grote, 4 Bing., 253; 
12 Moore, 484; Phelan v. Moss, 17 P. F. Smith (Pa.), 59; John- 
son Harvester Co. v. McLean, 57 Wis., 258; 46 Am. Rep., 39; 
Garrard v. Lewis, 47 L. T. Rep. (N. S. ), 408; Lowden v. Na- 
tional Bank, ^8 Kan., 533. 



404 BROWN V. REED. [CHAP. 1 5, 

The plaintiff gave the note in evidence, and testified that 
he had bought it from the payee for $220, which he paid in 
cash. He testified further that he had received the note bona 
fide> and rested. 

The defendant then offered to prove: 

1 * That the paper he signed has been altered since so 
signed, without his knowledge or consent, and that it was ob- 
tained from him by fraud of the payee; also, to show what 
took place between Smith, the payee, and himself at the time 
the note was made; also, to show that the paper in suit is but 
the part of an agreement entered into between himself and 
one J. B. Smith, purporting to constitute the defendant an 
agent to sell ' Hay and Harvest Grinders ' in North East and 
Harbor Creek townships, in the county of Erie, and that the 
paper making him such agent, has since it was signed by him, 
been cut in two without his knowledge or consent, so as to 
make the part in evidence read as a promissory note for $250, 
and that a large part of the original instrument was cut off, 
and that the paper in suit is not the whole of the paper signed 
by defendant, nor in the shape in which he signed it, but when 
signed by him was as follows, to wit: 



u 



North East, April 2d, 1872. 
Six months after date I promise to pay J. B. Smith or bearer fifty doUars when I sell by 
order TWO HUNDRED AND FIFTY DOLLARS worth of Hay and Harvest Grinders, 
for value received, with legal interest, without appeal, and also without 
defalcation or stay of execution. 

T.H.Brown, Agent for Hay A Harvest Grinders. 



11 



The plaintiff objected to the offer, because, admitting it 
all to be true, it did not constitute a defence to the note in 
the hands of an innocent purchaser for value, before maturity, 
and it was not alleged that the plaintiff is not such a pur- 
chaser; nor that there was any guilty knowledge on part of 
the plaintiff in this case before purchase of the paper. 

[The paper was divided by cutting through between where 
the asterisks are placed.] 

The offer was rejected and a bill of exceptions sealed for 
the defendant. 

The court charged:— 



SEC. 55.] BROWN V. REED. 405 

' ' There is no evidence impeaching this paper as a note 
in the hands of the plaintiff and your verdict therefore must 
be for the plaintiff for the amount of note and interest." 

The verdict was for the plaintiff for $280. 54. 

The defendant took a writ of error, and assigned the re- 
jection of his offer of evidence and the charge of the court, for 
error. 

The Claim of the Plaintiff in Error (Defendant below). 
— The defendant contended that a note once issued and then 
altered is void altogether. 1 Cutting the contract into two 
pieces rendered the whole contract, and hence the part held 
by the plaintiff, absolutely void as against maker. 2 

The Claim of the Defendant in Error (Plaintiff be- 
low. — The defendant in error, cited the following cases in 
support of the decision of the court below and closed: Phe- 
lan v. Moss, 8 and Garrard v. Haddan. 4 

Decision. — The learned counsel for the plaintiff in error 
has appealed to us to reconsider and overrule Phelan v. Moss. 6 
We mean, however, to adhere to those cases, as founded both 
on reason and authority, and as settling a principle of the 
utmost importance in the law of negotiable securities. That 
principle is that, if the maker of a bill, note or check issues 
it in such a condition that it may easily be altered without 
detection, he is liable to a bona fide holder who takes it in 
the usual course of business, before maturity. The maker 

1 Masters v. Miller, 4 Term Rep., 320, 346; Fay v. Smith, 1 
Allen, 477; Wade v. Wittington, Id., 561; Coch v Coxwell, 2 C, 
M. & R., 291; Smith's Lead. Cas., 934. 

2 2 Parsons Notes and Bills, 580-2; Chitty on Bills, 182; 
Wheelock v. Freeman, 13 Pick., 165; Wade v. Wittington, 1 
Allen, 561; Fay v. Smith, Id., 477; Bruce v. Barber, 3 Barb., 
374; Deny v. Reed, 40 Id., 16; Nazro v. Fuller, 24 Wend., 37; 
Warring v. Early, 2 El. & B., 763; Stephens v. Graham, 7 S. & 
R., 505; Jardine v. Payne, 1 B. & Ad., 671; Benedict v. Cowden, 
49 N. Y., 396; Story on Notes, Sec. 408; Byles on Bills, Sees. 

254, 25 6 - 

8 17 P. F. Smith (Pa.), 59. 

*Id., 82; Zimmerman v. Rote, 25 P. F. Smith (Pa.), 188. 

5 17 P. F. Smith (Pa.), 59; and Garrard v. Haddan, Id., 82; 
since followed in Zimmerman v. Rote, 25 P. F. Smith (Pa.), 188. 

26 



406 BROWN V. REED. [CHAP. 1 5, 

ought surely not to be discharged from his obligation by rea- 
son or on account of his own negligence in executing and 
issuing a note that invited tampering with. These cases did 
not decide that the maker would be bound to a bona fide 
holder on a note fraudulently altered, however skillful that 
alteration might be provided that he had himself used ordin- 
ary care and precaution. He would no more be responsible 
upon such an altered instrument than he would upon a skill- 
ful forgery of his handwriting. The principle to which I have 
adverted is well expressed in the opinion of the court in Zim- 
merman v. Rote. 1 "It is the duty of the maker of the note 
to guard not only himself but the public against frauds and 
alterations by refusing to sign negotiable paper made in such 
a form as to admit of fraudulent practices upon them, with 
ease and without ready detection." 

But would the facts offered to be given in evidence and 
rejected by the court below, have brought this case within 
the line of their decisions? We think not. In Phelan v. 
Moss and in Zimmerman v. Rote, the party signed a perfect 
promissory note, on the margin or underneath which was 
written a condition which as between the parties was a part 
of the contract and destroyed its negotiability. But it could 
easily be separated, leaving the note perfect, and no one 
would have any reason to suspect that it had ever existed. In 
Garrard v. Haddan the note was executed with a blank, by 
which the amount might be increased, without any score to 
guard against such an alteration. In all these cases the de- 
fendants put their names to what were on their face promis- 
sory negotiable notes. In the case before us on the defend- 
ant's offer, he did not sign a promissory note, but a contract 
by which he was to become an agent for the sale of a wash- 
ing machine. It was indeed so cunningly framed that it 
might be cut in two parts, one of which with the maker's 
name would then be a perfect negotiable note. Whether 
there was negligence in the maker was clearly a question of 
fact for the jury. The line of demarcation between the two 
parts might have been so clear and distinct and given the in- 
strument so unusual an appearance as ought to have arrested 

x 25 P. F. Smith (Pa.), 191. 



SEC. 55.] BROWN V. REED. 407 

the attention of any prudent man. But it may have been 
otherwise. If there was no negligence in the maker, the 
good faith and absence of negligence on the part of the 
holder cannot avail him. The alteration was a forgery, and 
there was nothing to estop the maker from alleging and prov- 
ing it. The ink of a writing may be extracted by a chemical 
process, so that it is impossible for any but an expert to de- 
tect it, but surely in such a case it cannot be pretended that 
the holder can rely upon his good faith and diligence. We 
think then that the evidence offered by the defendant below 
should have been received. 

Judgment reversed and venire facia de novo awarded. 

Alterations — Negligence of Maker. — If the maker, by 
his negligence, should execute a commercial contract as follows: 

"$ 50.00. "Ann Arbor, Mich., Aug. 25, 1898. 

" Two months after date without grace I promise to pay to 

the order of John Doe Fifty 

Dollars at the Ann Arbor Savings Bank, for value re- 
ceived, with eight per cent annual interest after due. 

Richard Roe.* 9 

And a subsequent holder should write "10" in the margin before 
"50 " and "Ten hundred and" before "fifty" in the body of the 
note in a way which would not excite the suspicion of careful 
men, he would be liable to any bona fide holder for the sum of Ten 
hundred and fifty dollars. Garrard v. Haddan, 67 Pa. St., 82; 
Johnson Harvester Co. v. McLean, 57 Wis., 258; Yocum v. 
Smith, 63 111., 321; Vischer v. Webster, 8 Cal., 109. 

This doctrine however is denied in some jurisdictions. Green- 
field Savings Bank v. Stowell, 123 Mass., 203. In this case the 
figure "4" was inserted before "67" in the margin, and the 
phrase "four hundred and" before "sixty seven" in the body of 
the contract. In this case however the " alteration " was made by 
the principal party to the contract which no doubt had much to 
do with the opinion. See also Holmes v. Trumper, 22 Mich., 
427; Washington, etc. Bank v. Ekey, 51 Mo., 273; Cape Ann 
Nat. Bk. v. Burns, 129 Mass., 596; Angle v. Northwestern Ins. 
Co., 92 U. S., 330; McGrath v. Clark, 56 N. Y., 34; Noll v. 
Smith, 64 Ind., 511. See also Scofield v. Ford, 56 la., 370; 
Stephens v. Davis, 85 Tenn., 271; Seibel v. Vaughn, 69 111., 257. 



CHAPTER XVI. 
Defenses — Fraud. 



SECTION 56. 

FRAUD MAY BE EITHER A REAL OR A PERSONAL DEFENSE. 
IT MAY ALWAYS BE INTERPOSED BETWEEN IMMEDI- 
ATE PARTIES, AND IF IT CAUSED THE PARTIES TO EN- 
TER INTO THE CONTRACTUAL RELATIONS UNDER A 
MISAPPREHENSION OF THE REAL NATURE OF THE 
CONTRACT, WITH THE EXERCISE OE DUE DILIGENCE, 
THEN IT IS A REAL DEFENSE AND MAY BE INTERPOSED 
AGAINST ANY HOLDER. 

FOSTER v. MACKINNON, i 

In the Court of Common Pleas, July, 1869. 

[Reported in 4 Common Pleas, 704.] 

The Form of Action. — Action by indorsee against indor- 
ser on a bill of exchange for 3000/. drawn on the 6th of No- 
vember, 1867, by one Cooper upon and accepted by one Cal- 
low, 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 payment 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. 

1 This case is cited in Daniel on Negotiable Instruments, 850; 
Benjamin's Chalmers, on Bills, Notes and Checks, 58, 220; Nor- 
ton on Bills and Notes, 253; Wood's Byles, on Bills and Notes, 
487, 589; Randolph on Commercial Paper, 284; Bigelow on Bills 
and Notes, 37, 176, 180; Ames on Bills and Notes, 540. 



SEC. 56.] FOSTER V. MACKINNON. 409 

The cause was tried before Bovill, C. J., at the last 
spring assizes at Guildford. The defendant, who was a gen- 
tleman far advanced in years, swore that the indorsement was 
not in his hand-writing, 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 circumstances: 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 de- 
fendant had some time previously, at Callow's request, signed 
a guarantee for 3000/. , in order to enable the company to ob- 
tain 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, telling 
him that it was a guarantee; whereupon the defendant, in the 
belief that he was signing a guarantee 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, however, 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 representation 
that it was a guarantee, and the defendant signed it without 
knowing that it was a bill, and under the belief that it was a 
guarantee, and if the defendant was not guilty of any negli- 
gence in so signing the paper, he was entitled to the verdict. 

The jury returned a verdict for the defendant. 

The Claim of Defendant. — Two questions arise here: — 

1. Whether there was any negligence on the part of the 
defendant in signing the document as he did; and 

2. Whether, assuming Callow's evidence to be true, the 
defendant can be responsible upon an indorsement so fraudu- 
lently obtained. 



4IO FOSTER V. MACKINNON. [CHAP. l6, 

In considering the first of these questions, regard must 
be had to the age and condition of the party. What would 
be negligence in a merchant or a banker would not necessarily 
be negligence on the part of a gentleman of great age and im- 
paired physical powers. Negligence must in all cases be a 
relative term. 1 Then, as to the second question. It is essen- 
tial to every contract that there be volition. A man cannot 
be said to contract when he signs a paper upon a representa- 
tion and under a belief that he is signing something different 
from that which it turns out to be; to make a valid and bind- 
ing contract, the mind must go with the act. This arises 
upon the traverse of the indorsement. Upon the facts proved, 
the defendant cannot be said to have indorsed the bill at all. 

Where a man puts his name as acceptor or indorser on a 
blank stamp, he becomes responsible, if the bill is afterwards 
filled up and gets into the hands of a bona fide holder for 
value, to the full amount which the stamp will cover, 2 but in 
such case he intends to become a party to the bill. All the 
cases in which one who has been defrauded has been held 
liable upon the bill or note are explainable on the ground of 
agency.* Young v. Grote,* may be sustained on that ground. 5 
But the fact of agency must be first established. 6 In Ingham 
v. Primrose, 7 the defendant had once made a complete bill, 
and the ground of the decision was that he had negligently 
omitted to cancel or destroy it effectually. 

The Claim of Plaintiff.— The fact that the defendant's 
indorsement on the bill was obtained by a fraudulent repre- 

1 LyDch v. Nurdin, i Q. B., 29 (E. C. L. R., vol. 41). 

'Russell v. Langstaffe, Montague v. Perkins, 2 Doug., 514; 
22 L. J. C. P., 187; Byles on Bills, 9th ed., 181. 

"Byles on Bills, 9th ed., 131. 

4 4 Bing., 253 (E. C. L. R., vol. 13), 12 Mo., 484. 

5 See the observations upon that case of Parke, B., in Robarts 
v. Tucker, 16 Q. B., 560 (E. C. L. R., vol. 71); of Williams, J., 
in Ex parte Swan, 7 C. B. N. S. , 445 (E. C. L. R., vol. 97); and 
of Blackburn, J., in Gum v. Tyrie, 4 B. & S., 680, 713 (E. C. L., 
vol. 116). 

8 Awde v. Dixon, 6 Ex., 869; Kingsford v. Merry, 11 Ex., 577, 
in error, 1 H. & N., 503. 

7 7 C. B. N. S., 82 (E. C. L. R., vol. 97), 28 L. J. C. P., 294. 



SEC. 56.] FOSTER V. MACKINNON. 411 

sentation that he was signing something else, is no answer to 
the claim of a bona fide holder for value, without notice of the 
fraud. No doubt, as a general rule, fraud vitiates all con- 
tracts. But a bill of exchange is not in the ordinary sense 
of the word a contract at all. The law-merchant imposes 
certain obligations on parties who put their names on bills of 
exchange, — obligations altogether apart from the ordinary 
obligations arising out of other contracts. Bills of exchange 
now form an important part of the currency of the country. 
No matter how a bill or note may be tainted with fraud, or 
even if it had been obtained by duress or by felony, that is no 
answer to an action at the suit of a bona fide holder for value: 1 
Parsons on Bills, ed. 1865, pp. 109-115, citing amongst other 
cases, Putnam v. Sullivan, 2 where Parsons, C. J., says: **The 
counsel for the defendants agree that generally an endorse- 
ment obtained by fraud shall hold the indorsers according to 
the terms of it; but they make a distinction between the cases 
where the indorser through fraudulent pretences has been in- 
duced to indorse the note he is called on to pay, and where he 
never intended to indorse a note of that description, but a 
different note and for a different purpose. Perhaps there may 
be cases in which the distinction ought to prevail; as, where a 
blind man had a note falsely and fraudulently read to him, 
and he indorsed it, supposing it to be the note read to him. 
But we are satisfied that an indorser cannot avail himself of 
this distinction but in cases where he is not chargeable with 
any laches or neglect or misplaced confidence in others." 

In Rex v. Hales, 8 the prisoner had got from a member of 
parliament named Gibson a blank frank, which he subse- 
quently, by writing over the signature and altering the word 
" free" into "for" and adding " myself and partners" turned 
into a promissory note for 2,600/.; and, though the most 
eminent counsel of the day were retained to defend him, it 

*Bayley on Bills, 472, 473, 534; Chitty on Bills, 10th ed., 50, 
53, 178; Byles on Bills, 8th ed., 57; Duncan v. Scott, 1 Camp., 
100; Marston v. Allen, 8 M. & W., 494; Harvey v. Towers, 6 Ex., 
656. 

2 4 Massachusetts Rep., 45. 

8 17 How. St. Tr., 161. 



412 FOSTER V. MACKINNON. [CHAP. 1 6, 

did not occur to any of them that the then necessary allega- 
tion in the indictment of the intent to defraud Gibson failed 
in proof, which it would have done if the argument urged here 
is well founded, viz. , that Gibson was not liable on the note, 
and therefore could not be defrauded. So, in Rex v. Revett, 
Byles on Bills, 1 A. by false representations induced B. to sign 
his name to a blank stamped paper, which A. afterwards 
secretly filled up as a promissory note for ioo/. upon it. A. 
was indicted for defrauding C. ; and it was held that C. had 
his remedy against B. on the note, and that the fraud there- 
fore not being upon C. but upon B., the indictment was not 
sustained by the evidence. Wherever there is consideration, 
fraud may be disregarded. If a stolen bill gets into circula- 
tion, the acceptor is liable at the suit of a bona fide holder for 
value. 1 This was not a case of forgery: it was a mere frau- 
dulent procurement of the defendant's signature to a genuine 
and a complete bill. Thoroughgood's Case,' is peculiar, and 
not very intelligible; and in the case cited from Keilway, 76b, 
the deed was fraudulently read by the grantee himself. 

Decision. — Nance v. Lary,* also cited in Parsons 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; whereupon 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 
Langford, under the impression that it had been or would be 
destroyed. Subsequently, Langford caused the note upon 

^th ed., 124. 

'Ingham v. Primrose, 7 C. B. N. S., 82, 85 (E. C. L. R., 
vol. 97), 28 L. J. C. P., 294. Awde v. Dixon, 6 Ex., 869, is like 
Stagg v. Elliott, 12 C. B. N. S., 373 (E. C. L. R., vol. 104). 

•2 Co. Rep., 9b. 

4 5 Alabama Rep., 370. 



SEC. 56.] FOSTER V. MACKINNON. 413 

which the present suit was brought to be written over the 
blank signature of the defendant retained by him, and nego- 
tiated it to the plaintiff. Collier, C. J., said: " The making 
of the note by Langford was not a mere fraud upon the de- 
fendant; it was something more. It was quite as much a for- 
gery as if he had found the blank, or purloined it from the de- 
fendant'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 bank- 
rupt by having promises to pay money written over his signa- 
ture. Such a decision would be alarming to the community, 
has no warrant in law, and cannot receive our sanction." 

In that case the defendant never intended to sign the in- 
strument at all. Byles, J., in his judgment in Swan v. North 
British Australasian Company, 1 in the Exchequer Chamber 
says: "The object of the law merchant as to bills and notes 
made or become payable to bearer is, to secure their circula- 
tion as money; therefore honest acquisition confers title. To 
this despotic but necessary principle, the ordinary rules of the 
common law are made to bend. The misapplication of a 
genuine signature written across a slip of stamped paper 
(which transaction, being a forgery, would in ordinary cases 
convey no title), may give us a good title to any sum fraudu- 
lently inscribed, within the limits of the stamp, and in 
America, where there are no stamp-laws, to any sum what- 
ever. Negligence in the maker of an instrument payable to 
bearer makes no difference in his liability to an honest holder 
for value: the instrument may be lost by the maker without 
his negligence, or stolen from him, still he must pay." 

If that be right, it can only be with reference to the case 
of a complete instrument; 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. 

Then, the verdict was clearly against the weight of evi- 
dence upon the question of negligence. Can it be said that it 
was any other than gross negligence on the part of the de- 

x 2 H. & C, 184. 



414 FOSTER 0. MACKINNON. [CHAP. l6, 

fendant to put his name upon the back of a document such as 
that described, without even looking at the face of it. If any 
one is to suffer from his misplaced confidence in Callow, it 
surely must be the defendant himself. 

Byles, J., said: "This was an action by the plaintiff as 
indorsee of a bill of exchange for 3000/. , against the defend- 
ant, 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 in- 
dorsement was the defendant's signature at all; but, 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, Cal- 
low not saying that it was a bill, and telling the defendant 
that the instrument was a guarantee. The defendant did not 
see the face of the bill at all. But the bill was of the usual 
shape, 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 guarantee only. 

The Lord Chief Justice told the jury that, if the indorse- 
ment was not the defendant's signature, or if, being his signa- 
ture, it was obtained upon a fraudulent representation that it 
was a guarantee, and the defendant signed it without know- 
ing that it was a bill, and under the belief that it was a guar- 
antee, 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 new trial was obtained, first, on the ground of misdi- 
rection 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 



SEC. 56.] FOSTER V. MACKINNON. 415 

contract declared on; that he never saw the face of the bill; 
that the purport of the contract was fraudulently misdescribed 
to him; that, when he signed one thing, he was told and be- 
lieved 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 rea- 
son (not implying negligence) forbears to read, has a written 
contract falsely read over to him, the reader misreading to 
such a degree that the written contract is of a nature alto- 
gether 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, the signature so ob- 
tained 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 accompany 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 ' 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, in Fraser 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 Keilway's Reports 2 is cited in support of this observa- 
tion. On reference to that case, it appears that one of the 
judges did there observe that it made no difference whether 
the grantor was 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. Fait (B. 2), and is recognized by Bayley, B., and the 
Court of Exchequer, in the case of Edwards v. Brown. 8 Ac- 

1 Case 2 Co. Rep., 9 b. 
2 Keilw., 70, p. 6. 
8 i C. & J., 312. 



41 6 FOSTER V. MACKINNON. [CHAP. 1 6* 

cordingly, 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. 1 

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 to 
protect innocent transferees for value. If, therefore, a man 
write his name across the back of a blank bill, stamps and 
parts 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 

1 2 H. & C, 175. 

Fraud — Personal Defense, Generally. — As a general rule 
fraud is a personal defense and can therefore be interposed be- 
tween immediate parties only. Jackson v. Henry, 10 Johnson, 
184. If the bill or note gets into the hands of a subsequent party 
for value without notice, he can recover. A contract affected by 
fraud is voidable not void. The party making a negotiable con- 
tract induced by fraud may rescind it and treat it as though it had 
never been made; but he must do this before it comes into the 
hands of a bona fide holder. Page v. Krekey, 137 N. Y., 313; Na- 
tional Bk. v. Veneman, 43 Hun., 241; Clark v. Pease, 41 N. H., 
414; Soudheim v. Gilbert, 117 Ind., 71; Walker v. Ebert, 29 Wis., 
194; Chapman v. Rose, 56 N. Y., 137; Douglas v. Matting, 291a., 
498; Lewis v. Clay, 42 Solicitor's Journal, 151. 

Fraud. — "Bohemian Oats" Notes. — "Bohemian Oats " 
or " Red Line " wheat, contracts have been enforced in some 
states while in others they have not. In Ohio and Iowa they have 
been enforced when in the hands of subsequent bona fide holders. 
In Michigan the right of the holder to recover was denied upon 
the ground of public policy. Sutton v. Beckwith, 68 Mich., 303 
(1888); McNamarav. Gargett, 68 Mich., 454; Hanks v. Brown, 



SEC. 56.] FOSTER V. MACKINNON. 417 

intended to accept, a bill of exchange to be thereafter filled 
up, leaving the amount, the date, the maturity, and the other 
parties to the bill undetermined. 

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 instrument 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 of admission to the Tem- 
ple Church, or on the fly-leaf of a book, and there had already 
been, without his knowledge, a bill of exchange or a promis- 
sory 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 writ- 
ten at a time subsequent to the signature, then the fraudulent 
misapplication of that genuine signature to a different pur- 
pose would ^have been a counterfeit alteration of a writing 
with intent to defraud, and would therefore have amounted to 

79 la., 560; Merrill v. Packer, 80 la., 542; Payne v. Raubinek, 82 
la., 587; Kitchen v. Loudenback, 48 Ohio St., 177; Jacobs v. 
Mitchell, 46 Ohio St.; 22 Ohio Law J., 388; Hess v. Culver, 
(Mich.), 43 N. W. Rep., 994; Davis v. Seely, 71 Mich. 

Fraud — Rights of Bona Fide Holder. — The general rule is 
well settled that one who acquires a commercial contract, without 
notice of existing equities, in the usual course of business, for a 
valuable consideration and before maturity, takes it unaffected by 
fraud in its origin. Swift v. Tyson, 16 Pet., 1; Selser v. Brock, 3 
Ohio St., 302; Gridley v. Bane, 57 111., 529; Clapp v. County of 
Cedar, 5 la., 15; 68 Am. Dec, 678; Wayne Agricultural Co. v. 
Cardwell, 73 Ind., 535; Brown v. Spofford, 95 U. S., 474; Burrill 
v. Parsons, 71 Me., 282. 

Fraud— Statutory Provisions Relating to. — The question, 
whether fraud shall effect the validity of a negotiable contract has 
been the subject of statutory regulations in some of the states. In 
Georgia it is provided that a bona fide holder shall be protected 
from the defenses of fraud. Merritt v. Bagwell, 70 Ga., 578. 

In Illinois, however, it is provided by statute that " if any 
fraud or circumvention be used in obtaining the making or execu- 
ting of any note it shall be void (not voidable). Hewitt v. Jones, 
72 111., 218. It is well to observe here that the " fraud " used "in 



41 8 FOSTER V. MACKINNON. [CHAP. 1 6, 

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 
the second 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 instru- 
ment. 

We are not aware of any case in which the precise ques- 
tion now before us has arisen on bills of exchange or prom- 
issory notes, or been judicially discussed. In the case of Ing- 
ham v. Primrose, 1 and the case of Nance v. Lary, 2 cited in I 
Parsons on Bills 1 1 1 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. 

"7 C. B. N. S., &3 (E. C. L. R., vol. 97), 28 L. J. C. P., 294. 

2 5 Alabama, 370. 

obtaining the making or executing " does not apply to the consid- 
eration upon which the note was given. Culver v. Hide and 
Leather Bank, 78 111., 625; Taylor v. Thompson, 3 111. App., 109; 
Anten v. Gruner, 90 111., 300. " It must be borne in mind " says 
Walker, C. J., "that the fraud or covin must relate to the obtain- 
ing of the instrument itself, and not to the consideration upon 
which it is based. It is not fraud which relates to the quality, 
quantity, value, or character of the consideration that moves the 
contract, but it is such a trick or device as induces the giving of 
one character of instrument under the belief that it is an other of 
a different character; such as giving a note or other agreement for 
one sum or thing, when it is for another sum or thing; or as giving 
a note under the belief that it is a receipt. " Latham v. Smith, 45 
111., 25, 27. 

Where the Delivery of the Contract is Obtained 
Through Fraud. — Delivery of a bill or note is a prerequisite to 
its existence as a contract. If therefore its possession is obtained 
through fraud the payee cannot maintain any action thereon. 
Burson v. Huntington, 21 Mich., 415; 4 Am. Dec, 407; Kinyon 
v. Wohlford, 17 Minn., 239; 10 Am. Rep., 165; Clarke v. Johnson, 
54 111., 296; Hall v. Wilson, 16 Barb., 548; Cline v. Guthrie, 42 
Ind., 227; 13 Am. Rep., 357. In this last case a man signed his 
name upon a blank piece of paper, and subsequently a promissory 



SEC. 56.] FOSTER V. MACKINNON. 419 

Sullivan, an American case, 1 and cited in Parsons on Bills of 
Exchange, 2 a distinction is taken by Ch. J. 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. 

For 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 the case should undergo further inves- 
tigation. We abstain from giving our reasons 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. 

! 4 Mass., 45. 
2 Vol. i., p. inn. 

note was written over it. It was held that he was not liable thereon 
for the reason that no delivery of a note was ever made. See also 
Ingram v. Primrose, 7 Conn. (N. S.), 82; Nance v. Lary, 5 Ala., 
370; Caulkins v. Whisler, 29 Iowa, 495; 4 Am. Rep., 236. 

Notes Obtained in Blank and Wrongfully Filled up. — 
The rule is well settled that where a person executes a commercial 
contract in blank, and entrusts it to an other that the former is 
liable according to its completed terms, if the same gets into the 
hands of a dona fide holder. Russell v. Langs taffe, 2 Doug., 514; 
Bank of Pittsburgh v. Neal, 22 How. Pa., 107; Erchelberger v. 
Old Nat. Bank, 103 Ind., 401; Fuller ton v. Sturgis, 4 Ohio St., 
529. Ld. Mansfield said "that an indorsement on a blank note is 
a letter of credit for an indefinite sum. As between the original 
parties of course no recovery can be had contrary to the agree- 
ment. " McCoy v. Lockwood, 71 Ind., 319; Bedell v. Herring, 11 
Am. St. Rep., 307; 77 Cal., 572. 



CHAPTER XVII. 
Defenses. — Illegality.* 



SECTION 57. 

A WANT OR FAILURE OF CONSIDERATION IN A COMMER- 
CIAL CONTRACT IS A PERSONAL DEFENSE AND AVOIDS 
THE CONTRACT ONLY PRO TANTO. ILLEGALITY OF 
CONSIDERATION IS USUALLY A REAL DEFENSE AND 
AVOIDS THE CONTRACT IN TOTO. WHERE A PART OF 
THE CONSIDERATION IS LEGAL AND A PART IS ILLEGAL 
THE WHOLE CONTRACT IS VOID. 

WIDOE v. WEBB. 1 

In the Supreme Court of Ohio, Dec, 1870. 

\Reported in 20 Ohio St. ,*4Ji; 5 Am. Rep. % 664.] 

The Form of Action. — The original action out of which 
the present proceeding in error arises, was brought by the 
present plaintiff against the defendant before a justice of the 
peace, and, by appeal from his judgment, came into the court 
of common pleas of Morrow county. The suit was upon a 
promissory note, made and delivered by the defendant to the 
plaintiff for $50AVt and the petition was in the usual form. 

The defendant answered that the sole consideration of 
said note was spirituous liquors sold by the plaintiff to the de- 
fendant, which had not been inspected according to law, and 

*See upon the principal proposition as to the effect of illegal 
consideration: Hay v. Ayling, 16 Q. B., 431; Fareira v. Gabell, 
89 Pa. St., 89; Shirley v. Howard, 53 111., 455; Scollans v. Flynn, 
120 Mass., 271; Eagle v. Kohn, 84 111., 292; Aurora v. West, 22 
Ind., 88; Cowing v. Altman, 71 N. Y., 435. 

1 This case is cited in Benjamin's Chalmers on Bills, Notes 
and Checks, 111; Daniel on Negotiable Instruments, 204; Wood's- 
Byles on Bills and Notes, 241, 243; Tiedeman on Commercial 
Contracts, 179. I 



SEC. 57.] WIDOE V. WEBB. 42 1 

which were so sold to be drank on the premises where sold, in 
violation of law. 

The subject-matter of this defence was traversed by re- 
ply, in which the plaintiff averred that the note was given for 
goods, groceries, and provisions sold by plaintiff to defendant 
before the date of the note. 

The issue made by these pleadings was tried by a jury 
and a verdict found for the defendant, which the plaintiff 
moved to set aside and grant him a new trial, on the ground 
of error in the charge of the court to the jury, and that the 
finding of the jury was against the law, and against the mani- 
fest weight of the evidence. 

This motion was overruled, and judgment entered on the 
verdict, to which plaintiff excepted. 

From a bill of exceptions taken by the plaintiff, it is 
shown that the defendant testified upon the trial that the note 
in suit was given for a balance of an account that had been 
running for a year and a half preceding the date of the note;, 
that not less than three-fourths of the account was for spirit- 
uous liquors bought and drank by him from time to time at 
plaintiff's grocery, including therein, however, ale and beer; 
and that part of the account was for cigars, tobacco, and 
lunches. Other witnesses called by the defendant testified 
that they had seen defendant purchase and drink spirituous 
liquors at plaintiffs grocery and get the same charged in his 
account, and that they had frequently seen him purchase at 
plaintiffs grocery and have charged to his account all kinds of 
groceries for family use. 

On plaintiff's behalf, both he and his clerk testified that 
the account which formed the consideration of the note was 
for groceries purchased out of the plaintiffs store, and that no 
part of the consideration was for spirituous liquors, to their 
knowledge. 

Thereupon counsel for plaintiff asked the court to charge 
the jury " that if the consideration of the note in controversy 
was an account for spirituous liquors in part, sold by plaintiff 
to defendant, the plaintiff would be entitled to recover so 
much in this action as the price and value of the groceries so 
sold." 

26 



42 2 WIDOE V. WEBB. [CHAP. 1 7, 

This charge the court refused to give, and instructed the 
jury that if any part of the consideration for the note was in- 
toxicating liquors sold to defendant by the plaintiff in violation 
of the statute prohibiting the sale of intoxicating liquor to be 
drank on the premises where sold, the plaintiff could not re- 
cover; the law being, that when any part of the entire con- 
sideration of a promise is illegal, the whole contract is void. 

To which charge of the court and refusal to charge as re- 
quested, the plaintiff excepted. 

The plaintiff subsequently filed his petition in error in the 
district court, asking for a reversal of the judgment of the 
court of common pleas, on the grounds of error in the refusal 
to charge as requested, and in the charge given to the jury, 
and in overruling the motion to set aside the verdict and grant 
him a new trial. The district court affirmed the judgment of 
the common pleas. And to reverse that judgment of affirm- 
ance the present petition in error is prosecuted. 

The Claim of the Plaintiff in Error. — The common pleas 
erred in refusing to charge the jury as requested by the plain- 
tiff, and in the charge given. 

1. The consideration of the note was several. It was 
an account that had been accruing some eighteen months, 
and consisted of items that, from the nature of the transac- 
tion, must have been sold at divers times and on different 
days. In such dealings between parties, every item must 
have constituted a separate contract, as one was in no way 
dependent upon another, and the items had no necessary con- 
nection with each other. In such case the items purchased 
that were valid in law and constituted a good consideration 
are not to be affected by those that were illegal and for that 
reason void. The purchase of each item of the account was 
a several contract, is illustrated by the case of Robinson v. 
Green. 1 

2. If the different items composing the account consti- 

*3 Mete, 159. See also Mayor v. Pyne, 3 Bing., 285; Per- 
kins v. Hart, 11 Wheat., 237, 251; Sickles v. Patterson, 14 Wend., 
257; Robinson v. Snyder, 25 Penn. St., 203; Parsons on Contr., 

495- 



SEC. 57.] WIDOE V. WEBB. 423 

tuted each a several contract, the plaintiff was entitled to re- 
cover to the extent of the valid consideration. 1 

3. The verdict was against the weight of the evidence as 
well as against the law. 

The Claim of Defendant in Error. — The consideration 
of the note being a book account made up in part for intoxi- 
cating liquors sold in violation of law, the note is void. Being 
tainted with .that illegal consideration, destroys the obligation 
entirely. 8 

Decision. — The evidence in this case tended to show that 
the consideration of the note sued upon was an existing in- 
debtedness of the defendant to the plaintiff on account for 
goods, etc. , sold and delivered by the plaintiff to the defend- 
ant, the items of which had accrued at various times during 
the period of eighteen months preceding the date of the note. 
Some of these items were for necessary family groceries and 
some for spirituous liquors, sold to be drank at the place 
where sold; in violation of the statute. The court instructed 

*The State v. Findley, 10 Ohio, 51; Morris v. Way, 16 Ohio, 
469; Doty v. The Knox County Bank, 16 Ohio St., 133; Parish v. 
Stone, 14 Pick., 198; Robinson v. Green, 3 Mete, 159; 2 Kent's 
Com., 467, 468; 1 Parsons on Contr., 457. 

*S. & C, 729, 1431; Collins v. Merrill, 2 Mete. (Ky. ), 163; 
3 Bibb., 500; 6 Dana, 91; 8 B. Monr., 98; 9 lb., 90; Deering v. 
Chapman, 22 Maine, 488; Hunt v. Knickerbocker, 5 Johns., 327; 
Greenaugh v. Balch, 7 Greenl. Rep., 462; Wheeler v. Russell, 17 
Mass., 258; 5 B. & C., 406; Kepner v. Kelfer, 6 Watts, 231; 
Wright v. Gear, 1 Root, 474; Mitchell v. Smith, 4 Dall., 269; 
Roby v. West, 4 N. H., 287; 1 Taunt., 136; Bliss v. Negus, 8 
Mass., 51; 5 N. H., 196; 6 N. H., 225; Cro. Eliz., 199; 3 Taunt., 
226; 1 T. R., 227, 359; Cqmyn's Dig. — Assumpsit, B. B.; 11 East, 
502; 7 T. R., 200; 2 Ventr., 223; 8 Johns., 253; Loomis v. New- 
hall, 15 Pick., 167; Parsons on Contr.; Chitty on Contr. (5th Am. 
ed. ), 417, 427, 692, 694; Mete, on Contr. — Amer. Jurist (No. 43), 
45; Higgins v. Pitt, 4 Exch., 324; Trovinger v. McBurney, 5 
Cowen, 253; Baldwin v. Palmer, 10 N. Y., 232; Jones v. Waite, 
35 E. C. L., 130; Woodruff v. Hinman, 11 Verm., 592; Gamble 
v. Grimes, 2 Carter (Ind.), 392; 9 Verm., 23, 310; Amstrong v. 
Toler, 11 Wheat, 258; Perkins v. Cummings, 2 Gray, 258; Adams 
v. Bowen, 8 S. & M., 624; Arr v. Lacey, 2 Doug. (Mich.) Rep., 
230; Miller v. Harden, 32 Ala., 30; Stanley v. Nelson, 28 Ala., 
514; Bates v. Watson, 1 Sneed, 376; Nutter v. S toner, 48 Maine, 
163. 



424 WIDOE V. WEBB. [CHAP. 1 7, 

the jury that, if any of the items for spirituous liquors thus 
illegally sold entered into and formed part of the consideration 
of the note, then the plaintiff could not recover; the law being 
that when any part of the entire consideration of a promise is 
illegal the whole contract is void. And the question before us 
is: Did the court err in so instructing the jury as to the law 
applicable to the case? 

The concurrent doctrine of the text-books on the law of 
contracts is, that if one of two considerations of a promise be 
void merely, the other will support the promise; but that if 
one of two considerations be unlawful, the promise is void. 
When, however, for a legal consideration, a party undertakes 
to do one or more acts, and some of them are unlawful, the 
contract is good for so much as is lawful, and void for the 
residue. Whenever the unlawful part of the contract can be 
separated from the rest it will be rejected, and the remainder 
established. But this cannot be done when one of two or 
more considerations is unlawful, whether the promise be to 
do one lawful act, or two or more acts, part of which are un- 
lawful; because the whole consideration is the basis of the 
whole promise. The parts are inseparable. l 

Whilst a partial want or failure of consideration avoids 
a bill or note only pro tanto y illegality in respect to a part of 
the consideration avoids it in toto. The reason of this dis- 
tinction is said to be founded, partly at least, on grounds of 
public policy, and partly on the technical notion that the se- 
curity is entire, and cannot be apportioned; and it has been 
said with much force, that where parties have woven a web 
of fraud or wrong, it is no part of the duty of courts of jus- 
tice to unravel the threads and separate the sound from the 
unsound. 2 

And, in general, it makes no difference as to the effect, 
whether the illegality be at common law. or by statute.' 

l Metcalf on Contr., 246; Addison on Contr., 905; Chitty on 
Contr., 730; 1 Parsons on Contr., 456; 1 Parsons on Notes and 
Bills, 217; Story on Prom. Notes, § 190; Byles on Bills, in; 
Chitty on Bills, 94. 

a Story on Prom. Notes, and Byles on Bills, supra. 

3 See authorities, supra. 



SEC. 57.] WIDOE V. WEBB. 425 

This doctrine is abundantly sustained by the whole cur- 
rent of the decisions on the subject, both in England and in 
this country. 1 

Quite a number of these cases cannot be distinguished 
from the case under consideration. 

Robinson v. Bland was the case of a suit on a bill of 
exchange given in part for money lost at play, and in part for 
money lent. The declaration contained special counts on the 
bill, and the common count for money lent, and it was held 
no recovery could be had on the bill, because part of its con- 
sideration was money lost at play, which was illegal; but as 
to the money lent, the plaintiff was allowed to recover on the 
common count. 

In Scott v. Gilmore, 2 the suit was also on a bill of ex- 
change, given by the drawer to the keeper of a coffee house, 
in payment for the balance of a debt, part of which was for 
small sums of money loaned, and part for spirits sold in vio- 
lation of the statute, and it was held by Ch. ]. Mansfield, 
that the security being entire could not be apportioned, and 
since it was given partly for a consideration not merely void, 
but illegal, the whole bill was void. Heath, J., said: "Per- 
haps it might he different if for part of the bill there were no 
consideration." 

The case of Deering v. Chapman, supra, was a suit on 
a promissory note in which part of the consideration was, as 
here, for spirituous liquors previously sold in violation of a 
statute, and several of the other cases cited are of the same 
character. In each of them the whole note was held to be 
tainted and utterly void. In none of them- does a distinction 

1 Featherstone v. Hutchinson, Crokes EL, 200; Robinson v. 
Bland, 2 Burr. R., 1077; Scott v. Gilmore, 3 Taunt., 226; Thomas 
v. Williams, 10 Barn. & Cress., 664; Jones v. Waite, 35 E. C. L. 
(5 Bing., N. C, 341); Armstrong v. Toler, 11 Wheat., 258; Bates 
v. Watson, 1 Sneed, 376; Orr v. Lacey, 2 Douglass, 230; 9 Verm., 
23; Deering v. Chapman, 22 Maine, 488; Careleton v. Woods, 8 
Foster (N. H.), 290; Hinds v. Chamberlain, 6 N. H., 225; Hin- 
manv. Woodruff, 11 Verm., 582; Perkins v. Cummings, 2 Gray, 
258; 8 Sm. & Marsh., 624; Loomis v. Newhall, 15 Pick., 159; 
Crawford v. Morrell, 8 Johns., 253. 

2 3 Taunt., 226. 



426 WIDOE V. WEBB. [CHAP. 1 7, 

appear to have been taken between the case where the note 
was given at the time the illegal transaction took place, which 
entered into the consideration of the note, and was the im- 
mediate inducement to its execution, and the case where the 
note was subsequently given for the purpose of carrying out 
or securing the performance of the original illegal contract. 
On the contrary, they clearly proceed on the principle, that 
whenever the subject-matter of the contract can be traced 
back, between privies, to an original illegal contract, the sub- 
stituted security is void. 1 

The application of these principles to the present case 
compels us to say, that the instruction given the jury by the 
court, upon the trial, was correct, and the judgment was 
properly affirmed by the district court. 

The suit was upon a promissory note alone — upon a 
single and entire promise. This note was given in settlement 
of an account embracing transactions between the parties for 
a period of eighteen months. The evidence tended to show 
that whilst some of these transactions were proper and legal, 
yet many of the items of the account were for intoxicating 
liquors sold by the plaintiff to the defendant in direct viola- 
tion of the provisions of a highly penal statute. The con- 
tract evidenced by the note was illegal and void, because 
these sales of liquors, which formed a part of its considera- 
tion, were clearly illegal. 

With respect to the items of the plaintiff's account which 
were unconnected with the illegal sales, he might well have 
maintained an ' action on the original contracts of sale, even 
after the giving of this note. For being utterly void it dis- 
charged none of the just indebtedness of the defendant. But 
he chose to sue upon the note which was prima facie evidence 
of indebtedness to the extent of the whole sum promised to 
be paid, and thus attempted to throw upon the defendant the 
burden of showing how much of it was given upon an illegal 
consideration, and upon the court the task of separating the 
sound from the unsound. If this effort should result in his 
losing what was justly due him, we can but repeat what was 
said in a similar case: "It is but a reasonable punishment for 

1 Adams et al. v. Rowan et al., 8 Smedes & Marsh., 624. 



SEC. 57.] WIDOE V. WEBB. 427 

including with his just due that which he had no right to take." 
We are not unaware of a seeming conflict between the 
conclusion at which we have arrived, and the third point in 
the syllabus of the case of Doty v. The Knox County Bank. l 
We are by no means satisfied that the judgment in that case 
was erroneous. The question there arose upon a petition to 
vacate a judgment which had been rendered at a previous term 
against Doty and in favor of the bank for upwards of $4,000, 
by confession on a warrant of attorney. The suit had been 
brought on a bill of exchange for $4,000, and it appeared upon 
the hearing of the petition for vacation, that a portion of a 
prior bill for $1,800 entered into and formed part of the con- 
sideration of the bill upon which judgment had been entered. 
And that, in the previous discounting of the $1,800 bill, some 
foreign bank bills of a less denomination than ten dollars had 
been paid out by the bank, contrary to the provisions of the 
statute upon that subject. The court below held that the bill 

1 16 O. St., 133. 

Illegality — When It Exists. — The defense of illegality 
may be interposed when by the terms, purpose, or consideration 
of a negotiable contract it contravenes: (a) some provision of the 
statutory law; (b) or the common law; (c) or public policy. 

The statute may avoid a contract in two ways: (a) where it 
declares the same to be void; and (b) where it fixes or inflicts a 
penalty for the violation of such provisions. This prohibitory 
penalty of the statute must be clear and unequivocal. Anson on 
Contracts, p. 172; Pollock on Contracts, 253, 254. If the pen- 
alty fixed by the statute for its violation is for administrative pur- 
poses only and not as a prohibition then the defense of illegality 
is but a personal defense and a bona fide holder may recover. 
Paton v. Coit, 5 Mich., 505. 

Illegality — Burden of Proof, When Statute Does Not 
Make Void. — Wherever the consideration of a commercial con- 
tract, between the original parties has been illegal, especially if in 
violation of a positive prohibition of statute, proof of such ille- 
gality throws upon the holder the burden of proving that he got it 
bona fide, and gave value for it. Harvey v. Towers, 6 Exch., 656; 
Smith v. Braine, 16 Q. B., 201; Bailey v. Bidwell, 13 Mees. & W., 
73. The same rule applies where it is shown that the paper was 
obtained by fraud, or duress, or stolen, or when put in circulation 
by fraud. Mills v. Barber, 1 Mees. & W., 425; Aldrich v. War- 
ren, 16 Me., 465. 

When a part of the consideration of a commercial contract is 
illegal, the whole contract is void. Coburn v. Odell, 30 N. H., 



428 WIDOE V. WEBB. [CHAP. 1 7, 

of $ i, 800, by reason of the premises, was wholly void, and 
the bank thereupon remitted upon its judgment so much of 
the $1,800 as had entered into the consideration of the bill on 
which judgment had been entered. The residue of this bill 
was found to have a good and valid consideration, to wit, 
other and previous bills of exchange on which Doty was justly 
indebted. The statute forbade the vacating of the judgment 
until it should be adjudged that there was a valid defence to 
the action; and the question was whether, after this remittitur, 
the judgment thus reduced should be wholly vacated, and the 
bank be required to bring its action on the valid bills, which 
had entered into the consideration of the bill in suit, and as to 
which there was no defense. The court refused to vacate the 
judgment in toto y and drive the parties into further litigation, 
which was required neither by considerations of justice, nor 

540; Carlton v. Whittier, 5 N. H., 196; Deering v. Chapman, 22 
Me., 488. 

Illegality — Effect of Part Payment. — Neither will the 
fact that there has been a partial payment of the note alter this 
rule, even though the amount of such payment is equal to the ille- 
gal consideration which entered into the note; for the reason that 
the law will apply such payment to the consideration of the note 
which was legal. Caldwell v. Wentworth, 14 N. H., 431. 

Effect of Illegality Upon the Contract, When Once 
Renewed. — If the consideration of a commercial contract is ille- 
gal, a renewal of it does not cure the defect. Neither will the 
substitution of a new contract. Preston v. Jackson, 2 Stark, 237; 
Chapman v. Block, 2 B. & Aid., 588. If, however, on the renewal 
or substitution the illegal part is excluded, the renewal or substi- 
tuted contract may be enforced. Hay v. Ayling, 20 L. J. Q. B. , 
171; 16 Q. B., 423; Boulton v. Coghlan, 1 Bing., 640. 

What Contracts are Tainted With Illegality. — It may 
be said as a general rule that the following commercial contracts 
may not be enforced because of illegality: 

1. Those made with alien enemies and in aid of rebellion 
(Harraner v. Doane, 12 Wall., 342; Critcher v. Holleway, 64 
N. C, 526, also 528; Kingsbury v. Fleming, 66 N. C, 524). 

2. Bribery, contracts (Parsons v. Thompson, 1 H. Bl., 322; 
Nichols v. Mudgett, 32 Vt., 546; Martin v. Wade, 37 Cal., 168; Ham 
v. Smith, 87 Pa. St., 63; Tool Company v. Norris, 2 Wall., 45); 

3. Lobbying contracts (Marshall v. B. & O. R. R. Co., 16 
How., 314; Rose v. Truax, 21 Barb., 361); 

4. Wagering contracts (Walpole v. Saunders, 16 Eng. C. L., 
276; Brown v. Leeson, 2 H. BL, 43); 



SEC. 57.] WIDOE V. WEBB. 429 

the provision of the statute, and would have left the parties 
where they then stood. 

It is not every defence which might be available when set 
up by answer, at the proper time, that will require a judgment 
to be vacated in order that it may be interposed. In the case 
referred to, the judgment of the court below was affirmed by 
this court. Whilst we think that judgment may well be up- 
held, yet as to the third point of the syllabus which holds 
that, in so far as the prior illegal bill entered into the consid- 
eration of the renewed bill, the latter was merely rendered 
void pro tanto for want of consideration, a majority of the 
court, upon full consideration, think it cannot be reconciled 
with the current of the authorities, and that, in so far as it 
conflicts with the present decision, it is untenable. 

The judgment of the district court is affirmed. 

Day, J. , concurred in the judgment of affirmance, but not in 
the modification of the case of Doty v. The Knox County Bank. 

5. Compounding of crimes (Galton v. Taylor, 7 T. Rep., 
475; Murphy v. Bottomer, 40 Mo., 67; Roll' v. Ragnet, 4 Ohio, 
400; Gardner v. Moxey, 9 B. Mon., 90); 

6. Contract in restraint of trade (Mitchell v. Reynolds, 1 P. 
Wm., 181; Ross v. Sadgleer, 21 Wend., t66; Beal v. Chase, 31 
Mich., 490); 

7. Contracts for the procurement of marriage and divorce 
(Adams v. Adams, 25 Minn., 72; Everhart v. Puckftt, 73 Ind., 
409; Adams v. Adams, 91 N. Y., 381; Phillips v. Meyer, 82 111. ,67); 

8. Contracts in restraint of marriage (Hartley v. Rice, 10 
East, 22); 

9. Contracts in relation to offenses against morality and 
religion, (Jackson v. Duchaire, 3 T. Rep., 551; Brown v. Kinsey, 
81 N. C, 245); 

10. Usury (Byles on Bills, 140). 

Illegality — Usury. — Usury is said to be an indictable mis- 
demeanor at common law. Byles, Bills & N., 312. To make a 
contract void on account of usury, there must be a loan of money 
as well as a corrupt intention. Again, it is said that at common 
law it was lawful to exact any rate of interest. Tied. Com. Paper, 
§ 196. No one can Decome a bona fide holder of a note or bill 
which the statute declares to be void for usury. Rodecker v. Lit- 
tauer, 8 C. C. A., 320; 59 Fed., 857; Claflin v. Boorum, 122 N. 
Y., 385, 25 N. E., 360; Tilden v. Blair, 21 Wall., 241; Colby v. 
Parker, 34 Neb., 510, 52 N. W., 693. The statutes of each state 
must be examined to know the effect of usury in each of the juris- 
dictions. 



CHAPTER XVIII. 

Defenses — Infancy. * 



SECTION 58. 

MINORS MAY ALWAYS PLEAD INFANCY IN BAR OF AC- 
TIONS UPON THEIR COMMERCIAL CONTRACTS UNLESS 
THE SAME WERE EXECUTED AND DELIVERED Fo3: 
(a) NECESSARIES, OR (b) IN SATISFACTION OF A TORT. 

WILLIAMSON v. WATTS. 1 
In the Court op King's Bench, Dec, 1808. 

[Reported in 1 Campbell, 552.] 

The Form of Action. — Assumpsit on a bill of exchange. 
Plea, infancy. Replication, that the bill was accepted for 
necessaries, and issue thereupon. 

^his case is cited in, Daniel on Negotiable Instruments, 225; 
Wood's Byles on Bills and Notes, 117, 120; Randolph on Com- 
mercial Paper, 393; Story on Bills, 84, 85; Chitty on Bills, 18, 19; 
Ames on Bills and Notes, 463; Benjamin's Chalmers, on Bills, 
Notes and Checks, 73; Norton on Bills and Notes, 208, 210. 

*An infant cannot accept a bill of exchange for necessaries. 

Incapacity — Infants — Liability for Necessaries and 
Torts. — Infants are not liable upon their contracts as a general 
rule, unless the same have been duly ratified. If, however, the 
contracts are executed for necessaries, or given in satisfaction of 
damages growing out of a tort, his infancy is no bar to a recovery. 
Guthrie v. Murphy, 4 Watts (Pa.), 80; Angel v. McClellan, 16 
Mass., 28; Bradl