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1 875. 

Entered according to Act of Congress, in the year 1SG2, by 


In the Clerk's Office of the District Court of the District of Massaeliusetta. 

Entered according to Act of Congress, in tlie year 1874, by 

In the Ofiice of the Librarian of Congress, at Washington. 




What Indorsement is 1 

Who may indorse 2 

To whom Indorsement may be made 8 

At what Time Indorsement may be made 9 

Of the Manner of Indorsement 14 


Of the Relations, Rights, and Obligations of the Indorser and 

Indorsee 23 



What Bills or Notes are transferable by Delivery 33 


The Obligations of the Transferrer by Delivery 87 



The Rights of the Transferee by Delivery .42 

Transfer by A:?signinent * . . 44 

Donatio Causa Mortis 54 









What Guaranty is 117 

The Negotiability of a Guaranty 13'2 

Other collateral Agreements 144 



Presumption of Law 15Q 


Discharge of Equitable and Mai'itime Liens by taking Bill or Note 164 


DischiU'ge of Statutory and. Mechanics' Liens by Bill or Note . . 175 


Loss of the Right of Stoppage in transitu by Receipt of Bill or 
Note 177 

Payment by the Bill or Note of one Part Owner 179 

Payment by Bills of Strangers 180 

Payment by Bank-Bills 187 

Payment of a Partnership Debt by the Bill or Note of one Partner 199 

Payment of Bills or Notes by Renewal 203 

Frauds 206 



Tu whom and when Payment should be made 208 

Rights arising from Payment 215 


Appropriation of Payment 222 

Satisfaction • . 232 

Release 237 

What Indulgence discharges Indorsers 241 

Contribution 253 

Presumption of Payment from mere Lapse of Time 254 



Notice to be given, and its Effect 255 

Demand of Payment 260 


Rights and Liabilities of Finder 263 



General Principles of the Law of Place 317 


Application of tbe Law of Place to the United States .... 322 


General Rules of the Law of Place in its Application to Bills and 
Notes 324 

Foreign and Inland Bills 328 

Presumptions as to Bills and Notes 333 


Law of Place as applicable to the various Parties to Notes and 
Bills 334 

Law of Place as applicable to the Maker or Drawer 335 

Law of Place as applicable to the Acceptor or Indorsers .... 339 

Law of Place as applicable to Infants and Married Women . . . 349 


Law of Place as applicable to the Domicil of Parties to Bills and 
Notes 350 

Law of Place as applicable to the Transfer of Bills and Notes . . 352 

Law of Place as applicable to the Discharge of Bills and Notes . 359 


Law of Place as applicable to the Remedies by Action on Bills 
and Notes 366 



Law of Place of BiUs and Notes as applicable to Interest and 
Usury 375 

Law of Place as applicable to the Statute of Limitations .... 381 

Law of Place as applicable to the Garnishee or Trustee Process . 386 





What constitutes Usury 400 

Compound Interest 423 

Sale of Notes and Bills 426 

Sale of Credit 432 




Who may maintain an Action on a Note or Bill 436 


Ag^alnst whom the Action may be brought 457 

When the Action may be brought 460 






Defence of a ditferent Bargain 501 

1. Contemporaneous Oral Agreements 501 

2. Such Agreements as to the Time of Payment 503 

3. Such Agreements as to the Amount . 505 

4. Such Agreements as to the Manner of Payment 506 

5. Such Agreements as to Payment on a Contingency .... iiUH 

6. Such Agreements as supply Defects or correct Errors in a Bill 

or Note 514 

7. Such Agreements in Explanation of a Bill or Note . . . . 516 

8. Such Agreements in Respect to the Consideration of a BiU or 

Note 521 


Subsequent Oral Bargains 526 

1. Necessity of Consideration 527 

2. Where new Agreement is to extend Time of Payment . . . 528 

Collateral written Contracts 534 


Defence of Alterations 544 

1. Whether Alterations are material, or immaterial 544 

2. Bindinsr material Alterations •"j6o 


Effects of Alteration . . .571 


Forgery 583 

1. What are not Forgeries 583 

2. What are Forgeries 584 

3. Indorsement and Payment of Forged Paper 588 


Set-Off 602 

Tender 620 

The Statute of Limitations 6S€ 







Literally, this word means only that one thing is on the bach 
of another, (a) As apphed to legal documents, it means a writ- 
ing on the back of a written instrument ; and it is frequently 
used in this last sense in relation to documents of various kinds. 
Thus it is said that conditions, agreements, or information given 
are indorsed upon a policy of insurance, or that a discharge is 
indorsed upon a mortgage deed. But in relation to notes and 
bills this word has a limited and technical meaning. Indeed, its 
exact and legal, as well as mercantile sense, is the transfer of a 
negotiable note or bill by the indorsement of some person who 
has a right to indorse. Nor can there be an indorsement in this 
sense of the word except by the payee of the bill ; but he may be 
the original payee, or he may have become by previous indorse- 
ment a second or subsequent payee. 

An indorsement may be said to operate both as an assignment 
and as a guaranty. But it differs from an assignment, in that 
an indorsee may bring the action in his- own name, and an as- 
signee cannot ; or if he can by statute, as in some States, he 

(a) An odd use of the word occurs in Milton's Paradise Regained, where he speaks 
t(" elephants indorsed with towers." Book III. line 329. 
Vol. XL— a 1 


is still subject to the defences which might be made against the 

So an indorsement differs from a guaranty, in that a guarantor 
is not generally discharged by the absence of delay in demanding 
payment or in giving him notice of non-payment, without some 
evidence that he has been injured thereby. 

So an iadorser may be regarded as in some sense a surety ; 
but one who is technically a surety on promissory paper is 
generally an original promisor, and primarily liable, which an 
indorser never is. 

The indorsement by a payee makes a transfer of the note to 
the indorsee, so far that the common language of the law and of 
merchants is, that such a note or bill was indorsed to A, and it 
is seldom said was transferred by indorsement, unless there be 
some especial reason for this language, because the transfer is 
implied in the indorsement. 

The questions which this subject of indorsement presents are 
BO numerous and so various that they might seem to involve the 
whole law of negotiable paper. Many of these questions are 
considered elsewhere in connection with other topics. In this 
chapter, having stated what indorsement is, it is now proposed to 
consider, secondly, who may indorse ; thirdly, to whom indorse- 
ment may be made ; fourthly, at what time the indorsement may 
be made ; fifthly, the manner of the indorsement ; sixthly, the 
relations, rights, and obligations of the indorser and the indorsee. 

In treating of these topics, reference will not be made to the 
questions or rules considered elsewhere ; or if made, it will be 
such only as to preserve the connection and show the meaning 
of what is said. 



Although only he can indorse who is originally payee, or has 
been made payee by indorsement to him, yet the owner of a note 
may obtain, as an accommodation or otherwise, any number of 
indorsements by persons who have as yet no connection with 
the paper, but are willing to add their credit to it. But, in the 
theory of the law, each one of these indorsers held t)\e note by 


a previous indorsement to him. And this theory must be car- 
ried out where either of these indorsers is sued. It is carried 
out, in practice, by means of the rule, that every holder of a 
note having on it a blank indorsement, or a name with nothing 
attached to it, may write over this name anything not incon- 
sistent with what he knew to be the purpose of such indorse- 
ment. This subject will be considered more fully in the section 
on the manner of indorsement. 

Indorsements, however, are not unfrequently made by per- 
sons who are not payees or indorsees. And such indorsement 
will make one a maker, or a guarantor, according to the 
circumstances of the case and the law of the place where it 
is made. This subject will be considered in the chapter on 

An indorsement may be made by one who is, if we may so 
speak, partially incapacitated. Thus it seems to be the better 
rule, that an infant may indorse a bill, and the indorsement will 
have the effect of transferring the paper, so far that title may be 
made through the infant. But such indorsement will not hold 
him liable, nor will it pass the property in the note out of him, 
as against his interest. (6) 

A married woman is more completely incapacitated. Her 
indorsement neither transfers the paper nor makes her liable, 
because the property in the note is in the husband, whether it 
was given to her before or after marriage. The effect of indorse- 
ment by a married woman, under various circumstances, is con- 
sidered elsewhere, in connection with other topics. Here, we 
will only say, that the husband alone can indorse, (c) but may 
employ her as his agent ; and her authority may be inferred 
from his promise to pay it, or from any competent evidence of 
custom ; (d) and if she have such authority, it seems to be a 
sufficient execution of it if she indorses the note with her own 
name.(e) If the husband has not reduced the note to his pos- 
session, on his death the property in it reverts to his wife. 

(6) Nightingale v. Withington, 15 Mass. 272 ; Taylor v. Croker, 4 Esp. 187 ; Jeune 
V. Ward, 2 Stark. 326 ; Grey v. Cooper, 3 Doug. 65. See ante, Vol. I. p. 70, note m. 

(c) Connor v. Martin, 1 Stra. 516 ; Miles v. Williams, 10 Mod. 243. 

{d) Lord V. Hall, 8 C. B. 627; Lindus v. Bradwell, 5 C. B. 583; Prestwich u. 
Marshall, 4 C. & P. 594 ; Cotes v. Davis, 1 Camp. 485. 

(e) See cases cited in preceding note. 


If the note be payable to A for the use of B, only A has the 
legal title, and only he can indorse. (/) If it be payable to A, to 
the order of B and C, only B and C can indorse it ; but if they 
do, A may sustain an action against them as indorsers.(g') 

If a note be indorsed by a person who is not the payee, but 
bears the same name, such indorsement, if not innocent, is a 
forgery ; and, whether innocent or not, passes no property even 
to an innocent indorsee. (A) 

If it be doubtful which of the two persons is in fact the payee, 
it may be otherwise, and evidence may be admissible to deter- 
mine this question. Thus where a father and a son bear the 
same name, and it is the name of the payee, there may be a gen- 
eral presumption that the father is the payee. But the presump- 
tion must be slight, and may be rebutted by proof that the son 
brought the action on the note, or by any sufficient evidence of 
possession or control on his part.(i) 

If the parties bear two names which are quite similar, but not 
the same, it seems to be held that no evidence is admissible to 
show that any person was payee with the right of indorsement, 
excepting him who bore that very name. (7) 

If several persons who are not partners are payees, the in- 
dorsement must be made by all of them. (A;) Nor will tlie fact 
that a party is a joint payee with another constitute any evidence 
of authority to indorse for his joint payee. It would seem that 
an opinion was entertained at one time, that the mere fact that 
two or more persons were joint payees of negotiable paper 

(/) Evans v. Cramlington, Carth. .5, Skinner, 264, affirmed in Exchequer Chamber, 
in 2 Vent. 307; Smith v. Kendall, 6 T. R. 123. But see Marchington v. Vernon, 1 
B. &P. 101, notec. 

(g) Willis V Green, 10 Wend. 517. 

(A) Mead v. Young, 4 T. R. 28; Gibson r. Minet, 1 H. Bl. ."JGg, et seq. 

(i) Sweeting v. Fowler. 1 Stark. 106; Stebbing v. Spicer, 8 C 6.^27. 

(;■) BoUes v. Stearns, U Cush. 320, was an action by the indorsee of a note payable 
to John P. Reed, and indorsed by Joseph P. Reed. It'was admitted that a man by the 
name of John P. Reed was living in the same town with Joseph P. Reed, and' the 
action was not sustained, although it appeared by the auditor's report, that the note 
was given to Joseph P. Read for money loaned by him, and a receipt of part payment 
was indorsed upon by Joseph P. Read. In Edwards on Bills and Notes, 251. it is said 
(citing Cowen's Treatise, 186), that, " although a note or bill be dra^vn payable to a 
person by a wrong name, the error will not affect his title nor destroy ^i's right to 
transfer the paper." 

{k) Carvick v. Vickery, 2 Doug. 653, note ; Smith r. Whiting, 9 Mass. 334 ; Sneed 
•;. Mitchell, 1 Hayw. 289 ; Jones v. Radford, 1 Camp. 83, note. 


raised a presumption that they were partners as to tliat paper, so 
far at least as to give a part of them a right to indorse for all. 
But this view cannot now be considered as law, if it ever was 
so.(/) Either one of joint payees may of course authorize the 
other to indorse for him ; and he may assign his interest in the 
paper to the other, and such assignment would carry with it 
this authority. (m) 

By the insolvency of the payee, the property and control of 
the note pass to his assignees, who generally have the right to 
indorse \t.{n) And it would seem that the insolvent could con- 
vey no right by his indorsement, (o) But if he liolds the paper 
not in his own right, but as trustee, it does not pass by his 
insolvency to his assignees. And if an indorsement be necessary 
to carry into effect a contract previously made by the insolvent, 
it seems that he should indorse it.{p) But questions of this 
kind are frequently provided for in our statutes of insolvency. 

On the death of a payee, and the appointment of executors by 
the will or of administrators by the court, they have the exclu- 
sive right to indorse the paper of the deceased. (<7) If they do 
so in payment of their personal debt, it would of course be a 
fraud, and if the indorsee has knowledge of the fraud, he de- 
rives no title by the indorsement. 

If the note were indorsed by the deceased, but not delivered, 
the executors or administrators of the deceased cannot, it is 
held, deliver the note without a new indorsement by tliem.(r) 
If he delivered the note without indorsement for value, it would 
undoubtedly be their duty to indorse it. 

If there be more than one executor or administrator, it may 
be doubted whether one only can make a sufficient indorsement ; 

(/) See Wood v. Wood, 1 Harrison, 428, and cases cited in preceding note. 

(m) Russell v. Swan, 16 Mass. 314 ; Goddard v. Lyman, 14 Pick. 268. 

(n) Ex parte Mowbray, 1 Jac. & W. 428; Ex parte Brown, 1 Glyn & J. 407 ; Ex 
parte Hall, 1 Rose, 13; Ex parte Rowton, id. 15. 

(o) Smith V. De Witts, 6 Dowl & R. 120. s. c. nom. Smith v. De Wrnitz, Ryan & 
M. 212. See, however, dicta in Ashurst v. Royal Bank of Australia, Q. B. 1856, 37 
Eng. L. & Eq. 195. 

(p) Ex parte Greening, 13 Ves. 206 ; Watkins v. Maule, 2 Jac. & W. 237 ; Smith 
r. Pickering, Peake, 50 ; Wallace v. Hardacre, 1 Camp 46. 

(q) Rawlinson v. Stone, 3 Wilson, 1 ; Watkins v. Maule, 2 Jac. & W. 237 ; Rand v. 
Hubbard, 4 Met. 252; Malbon v. Southard, 36 Maine, 147; Dwight v Nswcll, IS 

ni. 333: 

(r) Bromage v. Lloyd, 1 Exch. 32; Gough v. Findon, 7 Exch. 48. 
1 * 


but lliere is American authority which would seem to, be in favor 
of the vahdity of an indorsement by one of them.(s) But if a 
note be given expressly to two or more persons, as executors or 
administrators, although given on account of the estate, it must 
be indorsed by all.(^) 

Because an indorser can only give what power he has, and an 
executor or administrator can maintain an action only within the 
limits of the State which appoints him, it is said that his indorsee 
cannot bring an action in another State. (i^) We should have 
some doubt whether this may Ije regarded as a universal rule. 

An executor or administrator, like any other trustee, will be 
held by his indorsement personally, although he add to his name 
the word " executor " or " administrator," unless he say expressly 
that recourse is to be had, not to him, but only to the estate of 
the deceased. (i;) 

All contracts made by persons who have not sufficient mind to 
contract are, on general principles, void. And if a holder of a 
note becomes insane, and while insane indorses it, we should say 
that his indorsement was wbolly void in the hands of any subse- 
quent holder, whether he knew of the insanity or not. And that 
the same rule should apply to any person under such guai'dian- 
ship as implies an incapacity to contract. (i^;) 

Either partner may indorse for the partnership, with the part- 
nership name, and his indorsement will bind the partnership, if 
made in good faith and in the business of the firm. If made 
fraudulently, or outside of the business of the firm, it will still 

(s) Wheeler v. Wheeler, 9 Cowen, 34. Both in England and in America this has 
been held so fiir an indorsement in fact, that an indictment may be sustained for the 
forgery of it. Reg. v. Winterbottom, 1 Den. C. C. 41, 51, 2 Car. & K. 37; Smith r 
Whiting, 9 Mass. 334. 

U) Smith V. Whiting, 9 Mass. 334. 

(u) Thompson v. Wilson, 2 N. H. 291 ; Stearns v. Bumham, 5 Greenl. 261. 

(v) Childs 17. Monins, 2 Brod. & B. 460, 5 J. B. Moore, 280 ; King v. Thorn, I T. R. 
487 ; Ridout v. Bristow, 1 Tyrw. 84, 1 Cromp & J. 231 ; Serle v. Watcrworth, 4 M. & 
W. 9, 6 Dowl. 684 ; Nelson v. Serle, 4 M. & W. 79.i ; Seaver v. Phelps, 11 Pick. 304 ; 
Beals V. See, 10 Bair, 56. 

{w) See Peaslee v. Robbing, 3 Met. 164; Burke v. Allen, 9 Fost. 106; Johnson v 
Chadwell, 8 Humph. 145; Putnam v. Sullivan, 4 Mass. 45. There are EnHish cases 
which seem to reqnire that a defendant cannot show his ins.anity for the avoidance of 
his contract, unless the plaintiff knew it, and fraudulently availed himself of it. Browna 
V. Joddrell, Moody & M 105, 3 C & P. 30 ; Levy v. Baker, Moodv & M. 106, note h. 
But see Gore v. Gibson, 13 M. & W. 623 ; Alcoc4 v. Alcock, 3 Blan. & G. 268. 


bind the partnership in favor of a holder for value who had no 
knowledge of the fraud, and whose want of knowledge was not 
his own fault. Questions of this kind arise under a great variety 
of circumstances, and are elsewhere fully considered. 

Of the authority of one partner after dissolution to transfer by 
indorsement a note which is the property of the firm, we have 
spoken elsewhere, (.r) and merely add here, that the cases gen- 
erally are opposed to the exercise of this power. But if after 
any dissolution a partner indorses the name of the firm without 
authority, it is said that he therel^y transfers his own interest in 
the note.{y) It was doubted by Lord Kenyon whether, if a bill 
were indorsed before the dissolution, but not issued or negotiated 
until afterwards, the indorsement would be valid, unless author- 
ity to make it was shown. (2^) 

A payee may indorse by an agent. The authority need not be 
in writing ; it may, indeed, be given orally by the payee to a 
maker for whose accommodation the note is drawn. (a) An 
authority to indorse for sixty or ninety days is an authority to 
indorse for any intermediate period, but not for one less than the 
shortest or longer than the longest. (&) 

An authority to indorse a note is not an authority to indorse 
for the same principal a new note, when the principal has been 
discharged on the former note by want of demand or of notice. (c) 
An authority to sign and indorse notes at a certain bank giveg 
no authority to sign or indorse notes at any other bank,(c?) An 
authority to draw is not an authority to indorse. (e) 

A corporation may authorize an agent to indorse by vote, or a 
vote of the directors, if it falls within their duty, and a cashier 
of a bank or similar corporation would be presumed to have this 
power. (/) 

(x) See mite, Vol. I. p. 145, note /, and p. 146, notes t to w. 

(y) Jones V. Thorn, 14 Mart. La. 463. 

(2) Abel I'. Sutton, 3 Esp. 108. 

(a) TurnbuU v. Trout, 1 Hall, 336. 

(6) So held under a power to renew a note. Bank of South Carolina v. Herbert. 
4 McCord, 89. See also Batty v. Carswell, 2 Johns. 48. 

(r) Bank of the State v. Croft, 3 McCord, 522, and Ward v. Bank of Kentucky, 7 
T. B. Mon. 93. 

(d) Morrison v. Taylor, 6 T. B. Mon. 82. 

(e) Robinson v. Yarrow, 7 Taunt. 455. 

(/) Fleckner v. Bank of United States, 8 Wheat. 338. See as to the indorsement 


Aliens at peace may make a valid indorsement ; but in general 
the indorsement of an alien enemy would not be regarded, (^) 
unless it were a ransom bill, or something equally exceptional. 
Thus, where a bill was drawn by an alien at war with England 
on an English subject resident in England, and indorsed to an 
English subject resident in France, it could not be enforced in 
England, even after the war had terminated! (A) But where an 
English prisoner in France drew a bill on an English subject in 
England, payable to another English prisoner in France, and it 
was indorsed to an alien enemy, the indorsee was allowed to 
recover the amount from the acceptor after peace. (i) So a 
promise after peace to pay such a bill would be valid. (y) And 
a neutral has been permitted to recover in England on a noto 
given him by an English subject in an enemy's country for goods 
sold there. (A:) 



Negotiable paper may be indorsed to any one but an alien 
enemy, and, as we have seen, even to him under special circum- 
stances. But a question may then arise as to the effect of the 

If to a married woman, it gives the husband the right to elect 
whether to treat it as payable to himself or to his wife, or per- 
haps to himself and his wife jointly, or to treat it as altogether 
hers, which it becomes on his death, if he have not reduced it 
into his own possession. 

If it be indorsed to an infant, or to one non compos, it might 
still be valid, if it were a mere gift or payment to him. 

If to a trustee, or to any one who holds an office of trust, as 

by the president of a bank, Spear v. Ladd, 1 1 Mass. 94. and also Northampton Bank 
p. Pepoon, id. 288. 

(g) Willison v. Patteson, 7 Taunt. 439 ; Brandon ». Nesbitt, 6 T. R. 23. 

{h) Willison v. Patteson, 7 Taunt. 439. 

(t) Antoine v. Morshead, 6 Taunt. 237 ; Daubuz i;. Morshead, id. 332. 

\J) Duhammel v. Pickerinfj, 2 Stark. 90. 

(k) Houriet v. Morris, 3 Camp. 303. 


executor or guardian, the legal interest will be in him, subject to 
the beneficiary interest created by the trust. 

If to an agent, tlie legal interest vests in the principal, who 
may claim it in any way he pleases. But as to every one but 
the owner, the agent is the holder, and only the agent can indorse 
it over, if the principal be no party to the paper. 



It is a general presumption of law in favor of a bona fide holder 
(not of the original payee),(Z;^) that indorsed paper was indorsed 
before maturity. And a party who denies this, and alleges that it 
was indorsed when overdue, must prove it; nor without this proof 
can he avail himself of the equities of defence.(Z) But then the 
question may arise, how far this necessity of proof extends, or, in 
other words, what evidence will discharge this burden of proof and 
rebut this presumption. 

In some cases it is held that the indorsement is presumed to have 
been made at the day the note was made •,{m) and it has also been 
lield, that if the defendant proves that the note was not indorsed on 
that day, the whole basis of the presumption, and the whole pre- 
sumption itself, fails, and the plaintiff must show that the indorse- 
ment is genuine, and was made before suit.(7i) 

It is, however, somewhat difficult to see sufficient ground for 
any more definite presumption than that the indorsement was 

{kl) :^IcComb V. Thompson, 2 Wmn. 139. 

(/) Lewis V. Parker, 4 A. & E. 838, 6 Nev. & M. 294, 2 Har. & W. 46 ; Parkin v. 
Moon, 7 Car. & P. 408 ; Masters v. Barrets, 2 Car. & K. 715 ; Cripps v. Davis, 12 M. 
& W. 159. See Webster v. Lee, 5 Mass. 334; Burnham v. Wood, 8 N. H. 334; 
Washburn v. Ramsdell, 17 Vt. 299; Leland v. Farnham, 25 id 553 ; Hendricks v. Ju- 
dah, 1 Johns. 319; Pinkcrton v. Bailey, 8 Wend. 600; Andrews v. Chadbourne, 19 
Barb. 147 ; McDowell v. Goldsmith, 6 Md. 319, 338 ; Pettis v. Westlake, 3 Scam. 53.'i ; 
Mobley o. Ryan, 14 111. 51 ; Canticld v. Gibson, 13 Mart. La. 143 ; Davie v. Stevens, 
10 La. Ann. 496; Watson v. Flanagan, 14 Texas, 354; Livingston, J., Stuart v 
Greenleaf, 3 Day, 311. Contra, Edwards, J., id. 

(m) Hutchinson v. Moody, 18 Maine, 393 ; Burnham v. Webster, 19 id. 232; Par- 
ker i;. Tuttle, 41 id 349 ; Ewiii>; v. Sills, 1 Smith, Ind. 46 ; Bates v. Pricket, 5 Ind. 
22. See Pinkerton v. Bailey, 8 Wend 600 ; McDowell v. Goldsmith, 6 Md. 319, 338 . 
Watson i;. Hanagan, 14 Texas, 354. 

hi) Parker v. Tuttle, 41 Maine, 349. 


made before maturity. For ])aper may circulate as an instrument 
of business if indorsed at any time before maturity; and tlie only 
reason for any presumption -whatever as to the time of indorsement 
is, that the paper may so circulate without obstruction, (o) 

If the time of indorsement is material to the plaintiff's case in 
any other respect, we should say that the burden of proof of the 
precise time was on him. And it may be w'ell to remark, that the 
presumption of time is a presumption of fact; and the question of 
time is a question of fact; and the jury should determine these 
questions, aided by the presumptions of law in connection with the 
circumstances attending the transfer.( j>) 

If a note on which the payee cannot maintain an action, be 
transferred by him before maturity, but indorsed after maturity, 
the indorsee has no better title than the indorser.(pj:*) And if a 
note be payable by instalments, it is an overdue note when one 
instalment is due and unpaid, and the taker holds it subject to 
equities between the original parties. (pg) 

The presumption may be rebutted by evidence that the note re- 
mained the property of the payee after its maturity ; and any acts 
or declarations of the payee in regard to his ownership are admis- 
sible evidence to prove this fact.(^) And this presumption does not 
exist where it is negatived by the declaration ; as where there is an 
allegation that the note was transferred on a certain day, which day 
was subsequent to the day of maturity. (r) 

It seems, however, to make no difference, as to this presumption, 
whether the note is offered in evidence under a general count for 
money had and received, (s) or is used by way of set-ofF.(^) 

An indorsement may certainly be made, as we have seen that 
an acceptance may,{u) before the bill or note is made, upon a 
blank slip of paper; and the indorser Avill be estopped from set- 
ting up this fact in defence.(t;) Such a paper is indeed a letter 

(o) In Burnham v. Wood, 8 N. II. 334, 336, Upfinm. J. said : "The presumption is 
that the note was indorsed within a reasonable time after its date." 

(p) Anderson v. Weston, 6 Bing. X. C. 296. 

(pp) Lancaster Bank v. Taylor, 100 Mass. 18. 

(pq) Vinton V. King, 4 Allen. 562 Jen. 

(q) Hutchinson v. Moody, 18 Maine. 393. 

(?•) Andrews v. Chadl)ourne, 19 Barb. 147. 

(«) Burnhani v. Wood, 8 N. H. 334. 

(0 Pettis V. Westlake, 3 Scam. 535. 

(n) Snpra^ Vol. I., chapter on Acceptance. 

{v) Violett V. Fatten, 5 Cranch. 142, a suit liv an indorsee against his immediate 
indorser. Kussel v. Langstaffe, 2 Doug. 514, a case on a check. Lord Ellenborough 
said, in reference to this case in Snaith v. Mingay, ] Maule & S. 87 : "In that case, at 
the time of the indorsement it was not a bill of exchange; but the moment the other 
parts were filled up by an authorized agent, then it became the bill of the partv, and 
was considered as fit to be declared on as such. I remember the case at Durham, and 
afterwards in this court. It was asked upon that occasion how the allc<:ation in the 
declaration, 'that the defendant nfteru-ards iyidorsed the said bill,' could'be sustained. 
But the court resolved that they would so adjust the acts of the party as to give effect 


of CFG' lit lor an indefinite sum; and the indorser will be bound 
for the payment of the sum, and at the time, subsequently 
written, (z^) although the blanks were filled up fraudulently, 
provided the holder was ignorant of the fraud. (.?;) Nor is it 
necessary, to make the holder's claim valid, that he should be 
ignorant that the blanks were left, unless he also knew that the 
agent's authority to fill the blanks was limited. Without such 
knowledge, he may, acting in good faith, fill them himself. (y) 

In England, there is a limit to the amount by means of the 
excise stamp ; and now the indorsement of bills and notes for 
less than X5 is prohibited by statute. (2) 

to the intention, and for that purpose lield, that an indorsement which was prior in 
point of time to the drawinj; was to be considered in law as posterior." Putnam v. 
Sullivan, 4 Mass 45. In Mitchell v. Culver, 7 Cowen, 336, the indorser gave the note 
to the maker with his name on the back, and a blank for the date. The plaintiff, at the 
maker's direction, inserted a date, so that the note had more than twenty davs less to 
run than if it had been dated at the time of indorsement. The indorser was held. 
So Mechanics', &c. Bank v. Schuyler, 7 Cowen, 337, note a. But the blank in this 
case was tilled before it came to the plaintitF's hands, and he was not aware of the 
fact. Michigan Ins. Co. r. Leavenworth, 30 Vt. 11. In CoUis i;. Emett, 1 H. Bl. 
313, a party signed his name at the foot of a blank paper, duly stamped, and deliv- 
ered it to another party to draw such a bill upon it as he should see fit. The party 
drew it payable to a fictitious payee, and indorsed for value. Held that the last party 
could sue the drawer as on a bill payable to bearer. In Usher v. Dauncey, 4 Camp. 
97, one partner signed and indorsed a similar blank with the firm name, and the firm 
were held. In Cruchley v. Clarance, 2 Maule & S. 90, a party drew a bill with a 
blank for the payee's name. The holder filled it up with his own name, and the 
drawer was held. 

(u') Lord Mansfield, C. J., Russel v. Langstaffe, 2 Doug. 514 ; Bailer, J., Lickbarrow 
V. Mason, 6 East, 21, note; Lord EUenhorough, C. J., Cruchley v. Clarance, 2 Maule 
& S. 90 ; Sutherland, J., Mechanics', &c. Bank v. Schuyler, 7 Cowen, 337, note a ; 
Bennett, J., Michigan Ins. Co. v. Leavenworth, 30 Vt. 11. 

(x) Putnam v. Sullivan, 4 Mass. 45. In this case, the defendants left with their clerk 
several blanks, some of which were to be filled up by him so as to make the firm prom- 
isors, and others so as to make them indorsers. The clerk was instructed to deliver 
one of the blanks to the promisor of the note in suit, to put his name upon as promisor, 
in order that he might renew a certain note. The promisor, after having obtained one 
blank for the purpose, pretended that it had become useless, and, after having feigned 
to burn it, in the clerk's presence, procured another blank, and by a similar pretension 
obtained a third and fourth. The last blank was used for the purpose originally in- 
tended. The note upon which the defendants were sued as indorsers was on one of 
the prior blanks which had been negotiated to the plaintiffs. The promisors had ab- 
sconded, and the defendants were held. See also Griggs v. Howe, 31 Barb. 100, 
affirmed, Van Duzer v. Howe, 21 N. Y. 531. 

(y) Cruchley v. Clarance, 2 Maule & S. 90 ; Putnam r. Sullivan, 4 Mass. 45, 
tiipra, note v ; Mitchell v. Culver, 7 Cowen, 336. See Michigan Ins. Co. v. Leaven 
worth, 30 Vt. 1 1. 

(«) 17 Geo. III. c. 30, § 1. 


In this ojuixtry there would seem to be uo limit to the amount ; 
uut where there is a blank for the amount in the body of tlie 
note, and the amount is given in figures in the margin, it would 
seem that a holder for value can have no right to fill up the blank 
with a larger sum than is indicated in the margin, so as to give 
him a claim for a larger sum against the indorser.(a) 

If a question arises as to the time when, or within which, the 
blanks were or should be filled, there are cases in which it ap- 
pears to be regarded as a question for the jury. (6) But in one 
case it was held, as a matter of law, that an iudorser was liable, 
altliough the blanks were not filled until twelve years after the 
time the paper was indorsed ; and that the statute of limitations 
begau to run from the time as shown on the face of the note, and 
not from the time of the indorsement. (c) 

When such blanks in a bill are filled, and the question arises 
whether the bill is a foreign bill or an inland bill, it has been held 
that the bill takes effect by relation to the time and place of fill- 
ing the blanks. {</) 

Death must operate as a revocation of the authority to fill the 
blanks, unless this authority is coupled with an interest. Thus, 
where a bill, with tlie date and time of payment left blank, was 
indorsed by A to B, and B after A's death presented the bill to 
the plaintiffs for discount, and they discounted the bill for B. re- 
lying upon the indorsement and in ignorance of the death of A, 
and filled the blanks at B's request, it was held that A was to 
be regarded as an accommodation indorser, that the death of A, 
before any act had been done under the authority given by his 

(a) Williams, C J., Norwich Bank v. Hyde, 13 Conn. 279. 

(6) In Mulhall v. Neville, 8 Exch. 391, note, the drawer signed and indorsed a blank 
dated a year after it wa.s signed. Five years afterwards the blank was filled up, and 
made a bill payable in five years. Evidence of these facts was rejected at Nisi Prius, 
and a verdict rendered for the plaintiff". A new trial was granted, to see whether, 
nnder the circumstances, there was any reasonable limitation in point of time for filling 
up the blanks. See Temple v. PuUen, 8 Exch. 389, an action against the maker of 
a note, in which the blanks had been filled five years sub>equent to tiie signing. Held, 
that it was properly left to the jury to say whether it was tilled up within a reasonable 
lime, and they found for the plaintiff". 

(c) See Montague v. Perkins, C. B. 1853, 22 Eng. L. &, Eq. 516, an action against 
an acceptor. The jury found that the blank acceptance had not been filled up within 
u reasonable time, and found for the defendant. Verdict set a»ide, and jud^jment eu- 
lered for the plaintiff". 

{(I) Snaith v. Mingay, 1 Maule & S. 8" ; Barker r. Sterne, 9 Exch. 684. 


signature, was an absolute revocation of the authority, and con 
sequentlv that the plaintiffs could not recover from A's repre- 
sentatives, (e) 

After dishonor the utility of the paper as an instrument of busi- 
ness has passed away to a great extent, and the reasons for giv- 
ing it tlie protection of the peculiar rules of the law of negotiable 
paper have also to the same extent passed away. Then the com- 
mon rules of the law of contracts come into force. But it is 
nevertheless true tliat these rules are somewhat modified by the 
principles of the law of negotiable paper ; for the instrument is 
still a promissory note or a bill of exchange, although it is a dis- 
honored one. Thus it has been held that the indorsement of a 
negotiable note after dishonor is itself negotiable, without writ- 
ing the words " or order," and that the maker may sue in his 
own name.(/) And a note indorsed and delivered after dishonor 
is between indorser and indorsee a note on demand, and subject as 
such to the rules as to demand and not\ce.(ff) 

This subject is fully considered elsewhere, and the various ques- 
tions which it presents are considered in connection with the vari- 
ous circumstances under which they have arisen. 

It seems to have been sometimes thought that a note indorsed 
and transferred after it is due and unpaid is like an indorsed note 
on demand. It is so in some respects. And the indorser will un- 
doubtedly then be held to the indorsee or subsequent holder, if the 
requirements respecting demand and notice proper to notes on 
demand are all complied with. 

It is also true, that if, upon the maturity and non-payment of a 
note or bill, or presentment for acceptance of a bill and refusal, 
there has been due demand and notice, so as to fix the rights and 
obligations of all or of any of the parties in favor of the holder, 

(«) Michigan Ins. Co. i'. Leavenworth, 30 Vt. 11. In Usher j/.Danncey, 4 Camp. 97, 
a member of a firm signed and indorsed a blank with the partnership name, and gaye 
it to the clerk to nse. The latter, after the member's death, drew the bill, dating it 
prior to the death, and negotiated it. The surviving partners, who had formed a new 
partnership, were held, althoiiuh they had received no value for the bill. Lord Ellen- 
borough, C. J. said: ""That the power mast be considered to emanate from the part- 
nership, not from the individual partner, and that therefore after his death the bill 
might still be filled np so as to bind the snr%-ivors.'" See snp7-a^ Vol. I. pp. 144-147. 

(/) Leavitt v. Putnam, 3 Comst. 494, overruling the decision of the Superior G^urt, 
reported 1 Sand£ 199. In this case the note was indorsed by the payee, who was the 
defendant, after maturity, in the following words: '"Pay the within to A. Thatcher, 
valne received." Thatcher indorsed it in blank without reconrse. Held, that the holder 
might sue in his own name. See supra. Vol. I. p. 227. 

i.fy) Goodwin V. Davenport, 47 Me. 112. 

Vol. 1L 2 


that holder, or any indorser paying the note and having in him 
a right to look to prior parties, may indorse and transfer the note; 
and by such transfer he gives to his indorsee all his rights or 
claims against other parties. 

But it does not seem to be quite settled what is the contract or 
obligation of the indorser himself, when he transfers the paper 
by indorsement to another party, after its dishonor, and after the 
proper steps have been taken to charge him. 

In one case such a transaction was held to be equivalent to 
drawing a new bill at sight (or on demand), and presentment 
and demand and notice were necessary. But a dissenting opin- 
ion was delivered, on the ground that the indorser, under the 
circumstances, had no right to expect that the bill would be hon- 
ored, and consequently was not entitled to demand and notice. (^) 

There certainly would seem to be some ground for contending 
that, where a party transfers by indorsement a note to which the 
liability has become fixed, he should be considered as having sub- 
jected himself also to a primary liability thereon. 



A NEGOTIABLE note may be transferred without indorsement, 
and this subject will be considered elsewhere, under the head of 

Although it is generally true that no particular and precise form 
of words is necessary to constitute a note or bill or an indorse- 
ment,(/<) yet this principle must be regarded as subject to some 
qualification. So far as the matter of transfer is concerned, the 
proposition is almost absolutely true. But as to the obligations 
cast upon the indorser by the act of indorsement, it is clear that 

(9) Huntr.Wadleigh, 26 Maine, 271. Shepleij, J. delivered the opinion of the court; 
Whilman, J. dissented. 

(h) In Partridge v. Davis, 20 Vt. 499, Davis, J. said: "No prescribed formula 
need be observed to constitute an indorsement. It is governed, like the instrument on 
which it is made, by those liberal principles of construction which pervade all mer 
cantile contracts ; paying little attention to mere technical rules, but endeavoring tc 
ascertain and carry into effect the real intentions of the parties to them." 


these may vary in accordance with the form of the indorsement. 
Thus, under the topic of Excuses for Non-Notice, we have already 
considered such phrases as " eventually accountable," " holder," 
" backer," " surety," and some others, where they were written in 
connection with the indorser's name.(^) And hereafter we shall 
inquire when one whose name is on the back of a bill or note is to 
be regarded as a guarantor, and not as an indorser.(«") 

It is quite certain, that a person cannot be held as indorser by a 
mere promise to indorse, or unless his name is written in some way 
on the paper.(j) If the promise is made on a sufficient considera- 
tion, an action may be maintained for the breach. (Z;) 

If on the face of the note a party appears to be responsible only 
as second indorser, the place of his name does not affect his position 
or his obligations. (/i;A;) 

If a note is delivered without indorsement, the transferrer may 

(i) Snpra, Vol. I. p. 579. 

(ti) Post, pp. 119-125. 

(j) In Fenn v. Harrison, 3 T. R. 757, a party gave a note to A to get it discounted, 
but refused to indorse it. A delivered it to B for the same purpose, and B, finding 
that he could not otherwise negotiate it, indorsed it, A promising to indemnify him. 
The party who took it endeavored to hold the original party, who had promised to pay 
the bill ; but it was held that no action would lie, because A was a special agent, with 
limited authority, and the subsequent promise was void because without a considera- 
tion. This case came before the court on its third trial, 4 T. R. 177. The same evi- 
dence was given as on the former trials, with this difference, that when the defendants 
desired F. Huet to get the bill discounted, they did not say that they would not indorse it. 
The jury found for the plaintiifs, and the court refused to set the verdict aside, on the 
ground that, as the defendant had authorized their agent to get the bill discounted, 
without restraining his authority as to the mode of doing it, they were bound by iiis 
acts. It was remarked by the justices, that, unless the evidence had varied from that 
given before, they should have continued to entertain the same opinion wliicli they de- 
livered on the former occasion. In Vincent v. Horlock, 1 Camp. 442, a bill had been 
indorsed in blank by the payee, and delivered to A, who wrote over the indorsement, 
"Pay the contents to B." Held, that A was not liable as indorser. Park, for the 
plaintiffs, contended tliat this was an indorsement by A, and that any words written on 
the bill, showing an intent of the party to transfer, were sufficient, without the addition 
of the name. But Lord EUetiborough said : " I am clearly of opinion that this is not 
an indorsement by the defendant. For such a purpose, the name of the party must ap- 
pear written with intent to indorse. We see these words : ' Pay the contents to such a 
one ' written over a blank indorsement every day, without any thought of contracting 
an obligation ; and no obligation is thereby contracted. When a bill is indorsed by 
the payee in blank, a power is given to the indorsee of specially appointing the pay- 
ment to be made to a particular individual, and what he does in the exercise of this 
power is only expressio eorum, (ju<e tacite instmt. This is a sufficient indorsement to the 
plaintiffs, but not hy the dtfendnntsP In Moxon i-. Pulling, 4 Camp. 51, it was held 
that a promise to indorse was not an indorsement, so as to render the party liai)le as 
indorser, though he might be li.ible for refusing to perform his promise. 

(k) See Moxon v. Pulling, 4 Camp. 51. 

{kk) liacon v. Burnham, 37 N. Y, 614. 


indorse it after he has become a bankrupt, (/) and equity will 
compel the assignees to make the indorsement, (w) 

We have seen that the decisions have been so lax as to regard 
almost any kind of mark on the paper as a signature, (w) and 
have expressed our opinion that such views indicate a forgetful- 
ness of the character and function of negotiable paper.(o) 

The signature need not be in tlie writing of the indorser ; but 
if it be not, there must be proof that he had authorized the 
signature. Even if the indorsement be in the handwriting of 
the maker, if the indorser receives notice, is sued, suffers default, 
but makes neither defence nor denial until after the maker 
absconds, he cannot deny his signature ; or if he does, proof 
that he had assumed other paper similarly indorsed would be 
conclusive against him.{p) 

So we have seen that a married woman may wTite either her 
own name or her husband's ; and if she have his authority, he 
will be held as indorser. (</) 

{I) Smith V. Pickering, Peake, N. P. 50. So in Watkins ». Manle, 2 Jac. & W. 
237, where the note was indorsed after the bankruptcy and decease of the payee, by 
his administrator. 

(m) Ex parte Greening, 13 Ves. 206; Ex parte Rhodes, 3 Mont. & A. 217. See 
Anonymous, 1 Camp. 492, note. 

(n) In Brown v Butchers', &c. Bank, 6 Hill, 443, Nelson, C. J. said: " The cases 
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 intends to 
bind himself" Geary v. Physic, 5 B. & C. 234, where Lord Tenlerden said : " The law 
of merchants requiring only that an indorsement of bills of exchange should be in writ- 
ing, without specifying the manner with which the writing is to be made." Closson v. 
Stearns, 4 Vt. 11, a suit by the indorsee of the payee, whose indorsement was in pen- 
cil. Partridge v. Davis, Davis, J., 20 Vt. 499, 503 ; so the maker's signature may be 
in pencil. Supra, p. 22. In Merchant's Bank v. Spicer. 6 Wend. 443, a check was 
indorsed first by the jiayee, and afterwards by the defendant, by the initials "P. W. S," 
and this indorsement was regarded as sufficient. In Brown c. Butchers', &c. Bank, 6 
Hill, 443, the figures 1,2, and 8 were written in pencil in the handwritingof the defend 
ant, and, tliough it appeared that he could write, the indorsement was held to be suffi- 
cient. It would be somewhat difficult to see how, if this transaction was an honest one, 
the defendant could, under the circumstances, have intended to transfer the note. If it 
was dishonest and fraudulent, he should have been, we think, responsible for his fraud ; 
but he could not have been entitled to the privileges of an indorser. In George r. 
Surrey, Moody & M. 516, supra, Vol. I. p. 23, note a, which was an action against the 
acceptor of a bill drawn by Ann Moore, payable to her order, and indorsed by her 
to the plaintiff, both the signatures as drawer and indorser were made by her mark. 

(o) See supra, Vol. I. p. 23. 

(p) Weed V. Carpenter, 10 Wend. 403. 

Iq) Supra, Vol. I. p. 80. 


So where a party carries on his own business on his own 
account, but in the name of a corporation, he may indorse a 
note payable to the corporation by writing his own name.(?-) In 
all such cases, the name used is supposed to have been adopted 
and appropriated by the indorser. 

A note may be payable to two or more persons by their sur- 
names ; and although they are not partners, evidence may be 
received to identify them, and give them the power of indorse- 
ment ; and if the same names were used in the indorsement. 
or the whole names of the parties, it would undoubtedly be 
valid. (5) 

The law always requires that the indorsement shall be made 
by the same parties to whom the paper was made payable. 
Therefore, in the instances above cited, the plaintiff was re- 
quired to prove, by evidence from without, that the payees and 
indorsees were the same persons. Nor can it be objected to 
such evidence, that it is inadmissible because it varies or controls 
a written instrument. 

We have already considered the cases where there were two 
persons of the same name, and wliere, by a mistake in the name, 
that of a person not intended was written. It is quite clear that 
mere misspelling does not vitiate an indorsement. (^) 

An indorsement is usually, as the word implies, written on 
the back of the instrument. It always should be written there ; 
and, although there is authority for saying that it may be writ- 

{r) Bryant v. Eastman, 7 Cush. Ill, where it was held, that a person who carries on 
business on his own account, in the name of a company which has been incorporated 
but not organized, and receives in payment of a debt contracted with him in such busi- 
ness a promissory note payable to order of the corporation, may transfer the note by 
indorsing it in his own name. 

(s) Rogers ??. Reed, 18 Maine, 257, an action against the maker of a note, payable 
to Messrs. Cutter & Rogers and George W. Drinkwater or order. Cutter & Rogers 
had been partners before the date of the note, and the judge, at Nisi Prius, instructed 
the jury to find for the defendant, unless they could infer from the evidence that the par- 
ties were in partnership at the date of the note, and that this inference could not be 
drawn from the fact that they were partners some ten months before the date. The 
instructions were held correct. 

{t) Leonard v. Wilson, 2 Cromp. & M. 589, 4 Tyrw. 415, where a note was indorsed 
to " Messrs. Terney & Farley," and indorsed by " Thomas Temey & Farelly." So 
Rogers v. Reed, 18 Maine, 257, where one of the payees was Geo. W. Drinkwater, and 
the note was declared on as payable to Geo. L. Drinkwater, by the name of Geo. W. 

Vou II.— B 2* 


ten on the face,(?/) we are quite sure that a circumstance so 
unusual would be regarded with suspicion, and would require 

Any number of persons may indorse successively ; and to do 
this conveniently, they may attach a piece of paper to the instru- 
ment. (r) On the continent of Europe, and sometimes in Eng- 
land, this added paper is called an " allonge " ; but we do not 
know that this French word has been adopted into mercantile 
usage in this country. 

Foreign bills are, as we have stated, drawn in sets, which con- 
stitute in law one bill. As a payment or cancellation of one 
copy is a discharge of all, the indorsee should require that all 
should be indorsed and given to him ; although, so far as the 
property in the bill is concerned, this might pass by indorsement 
of one copy, as against a person holding another copy by subse- 
quent indorsement, although the indorser would be held to such 
subsequent indorsee. 

An indorsement may be in blank, and is so called when it 
consists of nothing more than the indorser's name ; an indorse- 
ment is in full when the indorser writes over his name a direction 
to pay to a certain person or his order. It may also be qiuilitied 
in various ways, and made special, conditional, or restrictive. 

By far the most common way of indorsing in actual use is by 
blank indorsement ; this indeed may be considered the custom, 
and anything written besides the name may be taken as an ex- 
ception. For a blank indorsement is eifectual to pass the paper, 
and gives to the transferee unqualified power of disposition of 

(«) Partridge v. Davis, 20 Vt. 449. 503 ; Yonng v Glover, 21 Jur. 637. In Gihson 
t. Powell, 6 How. Miss. 60, the indorsement by the payee was directlv under the 
maker's name, at the foot of the note. The declaration contains two counts, one 
against the payee as a joint maker, and the other as maker of a note payable to hearer. 
Held, that the plaintiff could not recover in the action. In Rex i\ Bigg, 3 P. Wms. 
419, 428. I Stra. 18, the question was, whether a writing on the face of a bank-note wai 
properly described as an indorsement, in an indictment under a statute making it a 
felony to " alter or rase an indorsement on a bill or bank-note." A receipt for piirt 
payment had been written on the face of the note, and the defendant had expunged it 
by the use of lemon-juice. The majority of the judges, as reported in Peere- Williams, 
— all, according to the report in Strange, — held the description accurate, and the pris- 
oner was convicted and transported. See also the remarks of Lord ElUnhorough, in the 
case of Yarborough r. Bank of England, 16 East. 6, 12. 

(«;) Folger v. Chase, 18 Pick. 63 ; Partridge r. Davis, 20 Vt. 49», 503, per Z>oxi".<. J. 


the paper, and is therefore more convenient to him, while it 
lays no additional obligation on the indorser. 

The first efiFect of an indorsement in blank is to make the pa- 
per payable, not to the transferee as indorsee, but as bearer. (i<;) 

It is therefore payable to any other person who is bearer, or 
holder, or to any number of persons who may hold it jointly and 
sue upon it jointly. It is obvious, therefore, that the transferee 
by blank indorsement, whom we will call A, may transfer it 
merely by delivery, if he prefers to do so, and has then no re- 
sponsibility as indorser. Or, if he prefers, he may write over 
the name of the indorser, " Pay to A," and then he becomes 
indorsee, and cannot transfer the note without indorsing it 
himself as second indorser. And he may indorse it in full or 
in blank ; if in blank, the holder may again write his own name 
or not, and if he writes it, write over his name a special direc- 
tion or not, at his pleasure. 

In general, the holder of a note or bill upon which there is 
a blank indorsement — whether there be other indorsements 
which are in full or not — has the right to write over the name 
of the blank indorsement a direction to himself or to any other 
person, or any other words which do not enlarge the liability of 
the indorser. 

A holder cannot alter the directions already given by in- 
dorsers, and must make out the chain to himself through them, 
until there is a blank indorsement ; but he may fiU this payable 
to himself, and disregard or strike out those that follow. And it 
has been held, that if a holder makes an early blank indorse- 
ment payable to himself, without erasing subsequent names, he 
does not discharge subsequent indorsers. If a holder after six 
indorsements, for example, fills the first indorsement so as to 
make it payable to himself, and thereon sues the maker, this 
does not prevent his suing the later indorsers afterwards. And 
therefore if a later indorser pays the note, he may sue any par 
ties prior to himself. (.r) But we should think it might be said 

(w) In Peacock v. Rhodes, 2 Doug. 633, Lord Mansfield said : " I see no difference 
Oetween a note indorsed in blank and one payable to bearer. They both go by deliv- 
ery ; and possession proves property in both cases." 

(r) Cole r. Gushing, 8 Pick. 48. Tiie plaintiff in this case was second indorser. 
There w:\s a third indorser, and his indorsee filled the first indorsement payable to him- 
self, and sued the maker, and failed to get payment. Then the plaintiff paid the note 


ill such a case, that, when the holder made the note payable to 
hiraseli" by the first indorser, he made himself indorsee of that 
indorser, and thereby discharged all subsequent indorsers. 

The principal practical advantage of an indorsement in blank 
is, that it permits the holder (wliether he hold it in his own 
right, or only as agent of the indorser or owner) to transfer \i 
without, on the one hand, indorsing it himself so as to be liable 
on it, or, on the other, indorsing it in such a way as expressly to 
refuse liability, and thus to cast suspicion on the note, or, at all 
events, to indicate through whose hands it had passed. Hence 
the practice, to which we have before alluded, of having notes 
made to the maker's own order, and indorsed by him. 

The holder of paper indorsed in blank may not only write 
directions to whom it shall be paid, but may, as we believe, write 
what else he will, consistent with the liability assumed by the 
indorser. He cannot, for example, write over the indorser's 
name, " demand and notice waived," for this would enlarge the 
liability of the indorser. But he might write over it " without 
recourse," or other words which would prevent resort to him, 
and such words would bind not only the writer, but his indorsee, 
and all subsequent indorsees. Indeed, we should say that a 
holder may orally limit the purpose to which a transferee may 
use a note, so as to bind the transferee. If, for example, tlie 
holder is first indorser, and there is a second indorser, and both 
indorsements are in blank, if the holder deliver it to a person 
expressly to be discounted for the use of tlie holder, that person 
would have no right to hold the note in payment or security of 
any claim he may have against the second indorser. (y) 

The only reason for which a transferee can in ordinary cases 
desire that the indorsement should be in full, is to guard against 
loss, by accident or theft. For negotiable paper, payable to 
bearer, and lost by or stolen from the owner, and transferred for 
value to an innocent holder, becomes his property. (c) To pre- 

to the third indorsee, and sued the maker and recovered. But we should think it 
might have been ohjected that the plaintiff had been discharged, and, beinji under no 
obligation to pay the third indorsee, by his voluntary payment acquired no claim 
against the maker. 

iy) Delauncy v. Mitchell, 1 Stark. 4.39. 

{z) Peacock v. Rhodes, 2 Doug. 6.33, and cases supra, Vol. I. p. 280. See also pout. 
chapter on Lost Note. 


vent this, tlie transferee may have the indorsement filled, — by him- 
self or by the indorser, — and the note made payable only to him, 
and then no one can acquire property in the paper without his 

An indorser gains nothing in ordinary cases by simply indicating 
to whom he indorses, and to whom the note is payable. But he may 
wish to lessen and limit his liability, or to put a condition upon it, 
or to preserve his property in the paper ; and anything of this kind 
he may do by the appropriate indorsement. 

If, for example, he is willing to transfer the paper, but is not 
willing to respond for it, he writes over his name "without re- 
course," or any equivalent words or phrases which distinctly express 
his purpose. So, if he sees fit to enlarge his liability, he may do so 
I) V saying, "demand and notice waived," or, "without protest," 
which last j)hrase is very unusual here, or by what else of the kind 
he chooses to write. The effect of such words is fully considered 
elsewhere. But an indorser "without recourse" is liable to the 
same extent as a transferrer by delivery of a note payable to bearer ; 
he warrants for example that the note is genuine, and has not been 
paid ; and if he knows that it is valueless, may be compelled to 
repay the price he I'eceives for it from a bona fide purchaser.(2;2) 
If an indorsement be in blank, its effect cannot be varied by evi- 
dence that when it was made it was agreed that it should be with- 
out recourse. (2a) 

The indorser may also affix a condition to his indorsement; and 
we have already seen that the negotiability of the paper is not 
thereby prevented, but the property in the paper is not transferred 
until that condition is performed ; and if the acceptor or maker pay 
the amount of it to the indorsee at maturity, the condition not 
having been performed, the indorser will recover it of the acceptor 
or maker.(<x) 

So the indorser may transfer it in trust; and this trust may be 
either for another or for himself; and if it be expressed with suf- 
ficient distinctness by the indorser, it is notice to everybody, and 
no one can take it except subject to that trust. Thus, if the in- 
dorsement be, " Pay to A for the use of (or on account of, or for 
the benefit of, or in trust for) B," A only can indorse; and if 
the circumstances attending a transfer by A's indorsement are 
such that his indorsee believes, and is justified in believing, that A 
indorses it over in execution of his trust, or for the benefit of B, 
he will hold it, althoug-h A defrauds B. But if A indorsed it in 
l)ayment of or as security for his {)rivate debt, the indorsee should 
have inferred that it was indorsed for A's own benefit, and then 
he is affected by the fraud, and cannot hold the paper or its pro- 

(22) Watsfjn 11. Cheshire, 18 Town, 202. 
(za) Cainpliell v. Hohhins, 29 Iiid. 271. 
(«) Kobeitson v. Kensinjjtori, 4 Taunt. 30, 


ce'jds.(Z)) So if he says, "Pay to A or order for my use," and 
A dis>covuits it at a bank with which he has an account, and the 
bank collects it, they cannot apply the proceeds to the balance 
due from A to them, but must pay them over to the indorser.(c) 
The words may be, " The proceeds must be credited to A. B.," 
or any other words which with sufficient distinctness point out a 
party otlier than the indorsee, for whose exclusive use and ben- 
efit the indorsement is made.((i) But if the direction is, "Pay 
to A. B.," and then it goes on to state the consideration on which 
the indorsement is made to A. B., this is not restrictive, and 
A. B., or any subsequent indorsee, has the full power of indorse- 

It has been held, that, even in an action against an indorser 
on a common indorsement, the defendant may qualify the effect 
of his indorsement by putting in evidence of an agreement, in 
writing, between him and the plaintiff. (/) It is obvious, how- 
ever, that no such agreement could affect the rights of an 
indorsee, without notice or knowledge of it. 

It seems that an indorsement may be made to an officer by 
words describing his office, and not by personal name ; and that 
a person holding the office when the indorsement was made 
acquires, by the indorsement and delivery to him, an inde- 
feasible interest in the paper, and may indorse it after he 
leaves the office. (g-) 

(6) Treuttel v. Barandon, 8 Taunt. 100, 1 J. B Moore, 543. 

(c) See supra, Vol. I. p. 119, note b. 

{d) Ancher v. Bank of En<;land, 2 Doujr. 637. 

(e) Potts V. Reed, 6 Esp. .57. See also Haussoullier r. Hartsinck, 7 T. R. 733. 

(/) Phelps V. Foot, 1 Conn. 387. 

(9) In Soares v. Glyn, 8 Q. B. 24, a bill of exchange was indorsed " to the Treasurer 
General of the Royal Treasury of Portugal." At the time of the indorsement, one 
Joaquim Conte held the office and received the bill. The government of Portuu'al 
then existing was afterwards subverted by an enemy, and Conte displaced. After this 
he indorsed the bill, and his indorsement was held to be sufficient. There are peculiar 
circumstances in the case which may perhaps qualify the legal inference to which it 
seems to lead. The bill was part of a loan raised by Don Miguel, whom Don Pedro 
drove away. Don Pedro obtained possession of the bill, and induced Conte to indorse 
it for his benefit. So that the bill, which was originally indorsed for the benefit of the 
government of Portugal, was in fact collected for the benefit of a subsequent govern, 
mint of the same country. See also cases supra. Vol. I. pp. 171-174. 

CH. l] relations, etc. of indorser and indorsee. 23 




Many topics which might be considered under this head have 
been already treated of, or will be in subsequent pages. 

The act of indorsement, either in blank or in full, without 
qualification, forms a new contract with the indorsee,(/?) which 
either constitutes or implies a promise that the paper is due and 
payable according to itrs tenor ; that the acceptor, maker, or pre- 
vious indorsers will pay the same at maturity, when duly called 
upon and notified, and that the indorser will pay the same if 
they do not ; and tliis promise is made, not only to the immediate 
indorsee, but to every subsequent indorsee. It is an original 
undertaking, and not a promise to pay the debt of another within 
the statute of frauds. (i) 

The law presumes this contract from the indorsement ; but 
how far this is a presumption jzo*w et de jure, or absolute, and as 
unrebuttable as if it were all written out, or only prima facie, it 
is not easy to say. That it is absolute between remote parties in 
many cases in which it is not so between immediate parties is 
quite certain ; but there may be some doubt how far it is so be- 
tween immediate parties. That the consideration, of which the 
indorsement is prima facie evidence, may be inquired into is cer- 
tain ; but so it would if the especial consideration were particu- 
larly set forth, because in relation to that the note would be only 
a receipt, and that may always be affected by evidence. 

The exact question is this : Suppose over an indorsement an 
agreement is written out in full, setting forth exactly tlie same 
promises which the law implies from a blank indorsement ; sup- 
pose, further, that, in an action by the indorsee upon this indorse- 
ment, evidence was offered by either party which was inadmissi- 
ble on the ground that it varied a written agreement ; would tlie 
same evidence be inadmissible in tlie same action, if the indorse- 
ment were in blank ? We are strongly disposed to say that it 

(A) See infra, p. 25, note o. 

(>■) Turnbull v. Trout, 1 Hall, 336 


would be so, as a general rule, and to consider those cases in 
which such evidence would seem to be admissible as exceptions. 

It is certain that, if one promises in writing to pay money at a 
certain time, evidence cannot be received that the actual agree- 
ment was for payment at another ; but it is also law, that if one 
promises to pay money, no time being specified, the law presumes 
that the money is to be paid on demand ; and this presumption is 
absolute, and no evidence of a fixed time can be received. Q) Nor 
can any evidence be admitted to prove how parties understood 
a written contract, unless fraud enter into the question. (^) 

Wliether the property passed by the indorsement, or what was 
the purpose of the indorsement, may undoubtedly be shown, as 
between the parties to the indorsement. As if the payee in- 
dorses it to his agent merely to enable him to collect it, and the 
agent, as indorsee, not only collects, but claims to retain the pro- 
ceeds as his property. There may be a case in which such agent 
claims the proceeds as a question of right, and not fraudulently ; 
but the indorser could doubtless show what the purpose of his 
indorsement was, if he did not seek to affect thereby a third 
party without notice. That is, he could give to his blank in- 
dorsement the effect of one with the words, " Pay to A, as my 
agent, and for my use." 

The same principle, perhaps, may be applied to those cases in 
which it is held that, if there be an agreement (written or 
oral) between the indorser and indorsee that the indorsee shall 
not sue the indorser, but only the acceptor or some other party, 
this agreement is a good defence to an action which violates it ; 
for here the agreement proves that the indorsement was intended 
only to transfer the paper, and give a right of action against 
other parties, without liability on the part of the indorser. (/) 
But it must be confessed that these cases are not easily recon- 
ciled with any absolute presumption as to the contract of in- 
dorsement, (w) And evidence to give to a blank indorsement the 

(j) Warren v. Wheeler, 8 Met. 97. 

(Ic) Bigelow V. CoUamore, 5 Cush. 226 ; Harper v. Gilbert, 5 Cush. 417. 

(/) Pike V. Street, Moody & M. 226 ; Wright v. Latham, 3 Murph. 298 ; Johnson 
i;. Martinus, 4 Halst. 144 ; M'Donough v. Goule, 8 La. 472. 

(?«) In Goupy v. Harden, 7 Taunt. 159, an agent who purchased foreign hills tor his 
principal, and indorsed them to him without qualification, was held liable to 6-4ch pri»- 
cipal on his indorsement 


effect of express waiver of demand and notice, by showing an 
oral agreement to that effect at the time of the indorsement, has 
been distinctly rejected. (w) 

An indorsement being a new and independent contract, every 
indorser of a bill makes a new contract, and will be considered 
by the law as the drawer of a new bill, if this be necessary in 
order to enforce the obligations he assumes, (o) The drawer of 
a bill is liable, as we have seen, only on default of the acceptor, 
but the maker of a note is liable in the first instance. Hence 
tlie indorser of a note does not stand m the situation of maker 
to his indorsee. (7?) 

An indorser may qualify the contract as it stood before his 
indorsement, by annexing such terms as he will ; (q) and not 
only so, if he indorses in blank, the contract he makes may be 
very different from that which he received. Thus, an indorse- 
ment admits the signature, and the capacity to sign, of every 
prior party. (r) And it admits the capacity to indorse of every 
former indorser, at that time, although he might be incapacitated 
by infancy or otherwise. If, for example, A makes a note to B 
or order, and B's name is forged and the note sold to C, C can- 
not sue B upon this indorsement, nor can he sue A. As to him 
the note is void, although B may sue A. But if C indorses it to 
D, either D, or any person to whom it is subsequently indorsed, 
may sue C. So if the payee and indorser were a married woman, 
and therefore incapacitated from making an indorsement, or an 
infant, who might avoid his indorsement and deny his liability, 

(n) Bariy v. Morse, 3 N. H. 132. But see contra, Fuller v. McDonald, 8 Greenl. 213. 

(o) Younj? V. Bryan, 6 Wheat. 146; Allen v. Walker, 2 M. & W. 317; 5 Dovvl. 
P. C. 460; Claxton v. Swift, 2 Show. 494, 501, Comb. 32, 3 Mod. 86, Skin 255; 
Anonymous, Skin. 343; Lake v. Hayes, 1 Atk. 281 ; Williams i-. Field, 3 Salk. 68. 
In Penny v. Innes, 1 Cromp. M. & R. 439, 5 Tyrw. 107, the payee of a bill of ex- 
change indorsed it specially to the plaintiffs, and immediately after the special indorse- 
ment the defendant indorsed the bill, and then the i)laiiitiffs indorsed it. Held, that 
the defendant's indorsement was equivalent to a new drawing by the defendant, and 
that he was liable to be sued upon the bill by the plaintiffs. In Eecles v. Ballard, 2 
McCord, 388, it was held that an indorser on a note payable to bearer was lial)le as 
upon a new bill to the hearer. See also Hodges v. Steward, 12 Mod. 36, 1 Salk. 125. 

(/>) Gwinnell v. Herbert, 5 A. & E. 436, 6 Nev. & M. 723. See Dean v. Hall, 17 
Wend. 214. 

(7) Smallwood v. "Vernon, 1 Stra. 478 

(r) Lambert v. Pack, 1 Salk. 127 ; Lambert v. Oakes, 1 Ld. Raym. 443, Holt, 117 
Critchlow L. Parry, <> Camp. 182; Woodward v. Harbin, 1 Ala. N. S. 104. 

VOL. II. 3 


if the indorsee indorsed it over he would be liable, and could not 
defend himself by showing that the note did not come properly 
to him, nor that the former indorser was not liable to him. (5) 
In general, an indorsee who sues his indorser is not obliged to 
prove the prior indorsements, because, even if forged, voidable, 
or void, he still may maintain his action. These principles 
attach to negotiable paper which was stolen or lost, and after- 
wards passed for value into the hands of a bona fide holder. (^) 

When the paper can be transferred only by indorsement, the 
taker of the paper takes with it the risk that the indorsements 
througli which he makes title were made by one who had no 
power to make the indorsement and transfer by it the paper ; 
but this is the whole of his risk.(2<) 

A note which has many indorsements in full, and one which 
is in blank, is still transferable by delivery, whether that in 
Ijlank be first or last or intermediate, because a holder may fill 
up that indorsement directly to himself. (i') And the rule of law 
applicable to paper transferable by delivery attaches to such z. 

The indorsee has all the rights of his immediate indorser, and 
sometimes more. If A makes a note to B for a consideration 
which wholly fails before its maturity, and B indorses this note 
to 0, and A gives C notice of this failure before the indorsement, 
C is subject to the same defence which A could have made 
against B. But if C indorses it for value to D, who has no 
notice, D is not subject to this defence. (;i;) And if A had not 
given notice to C, but had given notice to D, D would neverthe- 
less not be subject to this defence. For A was liable to pay the 

(s) See Erwin v. Downs, 15 N. Y. 57.5, cited supra. Vol. I. p. 277, note_;'. 

(t) Sec supra. Vol. I. p. 280, and /ws/, chapter on Lost Bill or Note 

(u) See supra, Vol. I. p. 277. 

(v) Smith V. Clarke, Peake, N. P. 295. 

(w) See supra, Sect. V. 

(x) See supra. Vol. I. pp. 203-211. In Wilson v. Lazier, 11 Grat. 477, a bill in 
equity was brought by the maker of a note against the payee, second indorser, and the 
holder for value, on the ground of a failure of consideration. It appeared that, as 
between the maker and the payee, the consideration had wholly failed, that the payee 
had transferred it without consideration to the second indorser as a gift, and that the 
latter had transferred it for value to the holder. It was held, that, though the maker 
was liable to the holder, yet he was entitled to recover the amount so paid from the 
payee, or, upon his inability to pay, to recover of the second indoi-ser the amount re- 
ceived by him on the note. 


note to C, and D takes all C's rights. The reason and equity of 
this are obvious; for as A was projierly obliged to pay the note to 
C, it is immaterial to him \Yhether the note remains in C's hands 
or passes to another. Hence, a holder whose own title might be 
defeated by various defences or equities may set up the better title 
of his indorser, and rely upon it.{i/) A note which is post-dated 
and negotiated before the day of its date is recoverable by the in- 
dorsee, its transfer before the day of its date affording no cause of 
suspicion so as to put the indorsee on inquiry, and subject him to 
equities existing between the original ])arties.(2:) 

If the holder discharges the maker in consideration of a part 
payment, this discharges the indorser. (s;r) 

In the case of accommodation paper, it is obvious that the in- 
dorsee takes more than the rights of his indorser. For one who 
indorses a note to at^commodate the payee cannot be sued by the 
payee, because no consideration passes ;(a) but he may by the 
payee's indorsee, even with notice of the absence of consideration, 
because the note was made for this very puri)ose.(6) 

The principle is a general one, that a person making{c) or in- 
dorsing(f/) a note, or drawing,(f') accepting,(/) or indorsing a bill, 
or becoming liable in any way on negotiable paper,(^) for the benefit 
of another person, is liable to a third person, even with notice of 
the want of consideration, but is not to the person for whose benefit 
the paper was signed. (/() 

Strictly speaking, accommodation paper is the loan of credit for 
the benefit of the borrower, without restriction as to the use.(M) 
And if there be no restriction or direction to the contrary, the bor- 
rower may use it for payment or security of an antecedent debt, or 
apply it to any mercantile use which operates to his advantage.(A/) 

If, however, the accommodation is given for a particular pur- 
pose, and that is known to the holder of the paper at the time he 
takes it, a misappropriation of the paper would release the party 
giving the accommodation from all responsibility. (i) And if the 

(y) See supra^ Vol. I. p. 261, note q. 

(2) Brewster v. ]\IcCar(lel, S Weml. 478. 

(zz) Farmers' Bank ". Blair, 44 Bark 641. 

(a) Thompson v. Clubley, 1 M. & W. 212; Whitwell v. Crehore, 8 La. 540. 

(&) Haly V. Lane, 2 Atk. 181 ; Brown v. Mott, 7 Johns. 361 ; Yeaton v. Bank of 
Alexandria, 5 Cranch, 49 ; Violett v. Batton, 5 Cranch, 142; Tliompson v. Shepherd, 
12 Met. 311 ; Molson v. Hawley, 1 Blatchf. C. C. 409. 

(c) Ix)rd V. Ocean Bank, 20 Fenn. State, 384; Montross v. Clark, 2 Sandf. 115. 

(d) See siqirn^ notes a and h. 

(e) Walwyn v. St. Qiiintin, 1 Bos. & P. 6.52. 

(/) Fentum v. Focock, 5 Taunt. 192; Kemp v. Balls, 10 Exch. 607; Smith v. 
Knox, 3 Esp. 46 ; Grant v. Ellicott, 7 Wend. 227. 

{g) As surety. Bank of Rutland v. Buck, 5 Wend. 66. 

01) See sjijjra, note a. 

(hh) Lenheim v. Witmardini:;, .55 Penn. 73. 

(hi) Sfhepp V. Cari)enter, 49 Barh. 542; Deems v. Crook, 1 Edm. Scl. Cas. 9.5. 

(i) Evans n. Kynier, 1 B. & .\(i. 528; Delaunev v. Mitchell, 1 Stark. 439 ; Roberts 
V. Eden, 1 Bos. & P. 398 ; Buchanan v. Findlav, 9 B. & C. 738 ; Key v. Flint, 8 


persons to whom a bill is indorsed for a special purpose do not 
nse it for this purpose, and become bankrupt, their assignees are 
bound to deliver it up.(y) 

But what amounts to a misappropriation is, as our notes 
show, a question of some difficulty. (A;) Generally, at least, the 
person giving the accommodation must show that he has been 
injured by the misappropriation. (/) And the mere fact that the 
note was intended to be discounted at a particular bank does 
not prevent the parties for whose benefit it was given from mak- 
ing other use of it.(w) If, however, the note was to be dis- 
counted for the purpose of taking up other paper of the person 
oivino; the accommodation, or was otherwise intended for his 
benefit, the failure to have it discounted would be a misappro- 
priation, (w) and if the bank refused to discount it, the holder 
should return it to the accommodation maker or indorser.(oj 
It is not, however, a misappropriation, on the bank's refusing to 
discount, to get it discounted by a private person, if the pro- 
ceeds are duly applied to the intended pur'pose.(7?) 

If the holder is a bona fide holder, and was ignorant of such 
misappropriation, he may of course recover ; {q) unless the per- 

Taunt. 21 ; Cartwright v. Williams, 2 Stark. 340 ; Brown v. Taber, 5 Wend. 56C ; 
WoodhuU V. Holmes, 10 Johns. 231 ; Small v. Smith, 1 Denio, 583. 

(j) Ex parte Frere, Mont. & M. 263. 

[k) In Bank of Rutland i'. Buck, 5 Wend. 66, a person signed a note as surety for 
the accommodation of other parties to it, the note to be discounted at a certain bank. 
The bank refused to discount, and the principals passed it oif as collateral security for 
the payment of a judgment. This was held not to be a misappropriation. In Wardell 
V. Howell, 9 Wend. 170, the law is accurately stated as follows: " Where a note has 
effected the substantial purpose for which it was designed by the parties, an accommo- 
dation indorser cannot object that it was not affected in the precise manner contem- 
plated at the time of its creation But where a note has been diverted from its 

original destination, and fraudulently put in circulation by the maker or his agent, the 
holder cannot recover upon it, against an accommodation indorser, without showing 
that he received it in good faith in the ordinary course of trade, and paid for it a val- 
uable consideration" See also Mohawk Bank v. Corey, 1 Hill, 513. 

(I) Crook V. Jadis, 5 B. & Ad. 909 ; Uther v. Rich, 10 A. & E. 784. 

(m) Bank of Rutland v. Buck, 5 Wend. 66; Mohawk Bank v. Corey, I Hill, 513; 
Grandin v. Le Roy, 2 Paige, 509. 

(n) Wardell v. Howell, 9 Wend. 170. 

(o) Kasson v. Smith, 8 Wend. 437 ; Dcnniston v. Bacon, 10 Johns. 198. 

[p) Powell V. Waters, 17 Johns. 176 ; Bank of Chenango v. Hyde, 4 Cowen, 567. 

[q) See sujwa, Vol. I. pp 279, 280, chapter on Holder. In Decker v. Mathews, 2 
Kern. 313, it was held that an accommodation maker of a negotiable promissory note 
can maintain an action for its conversion against a person who, before ;.t has aiiy 
legal inception, wrongfully negotiates it to a bona jide holder for value 


son from wliom he took the paper had no j)o\ver to pass any title 
in it bv indorsement.(r) But he cannot recover, if he took the 
paper with knowledge of the circumstances of the case.(.s) 

The fact that the jiaper was misappropriated can only be taken 
advantage of by the persons giving their names as accommodation 
parties. Thus the makers of a note indorsed by an accommodation 
indorser cannot, on being sued, defend on the ground that they 
negotiated the note contrary to its terms. (^) 

We have already seen that paper which is dishonored loses much 
of the character of negotiable paper. It was formerly held that a 
person wdio takes accommodation paper after its dishonor, in good 
faith and for value, may recover from the accommodation indorser 
or other party lending his name and credit. (?() But later cases, at 
least in Xew York and New^ England, hold that after maturity the 
defence of want of consideration may be made by an accommoda- 
tion indorser, w^hoever may be the holder of the note.(im) So, too, 
as we have seen, the holder of an accommodation note, without 
restriction as to the mode of using it, may transfer it either in pay- 
ment, or as collateral security for an antecedent debt ; and the fact 
that he did so will be no defence to the indorser.(t;) 

If the name of any party be erased by the holder by mere acci- 
dent or mistake, this does not discharge such party. (w) But 

(r) Smith v. De "Witts, 6 Dowl. & R. 120, s. c. worn. Smith v. De Wruitz, Kvan & 
M. 212. 

(.s) Treiittel v. Barandon. 8 Taunt. 100, 1 J. B. Moore, 543. In Brown v. Taher, 
5 Wend. 566, tlie holder did not have actual knowledge of the misapiiro])riation, but 
knew such facts and circumstances as should have put him on inquiry. Held that he 
could not recover. See .sujjva, Vol. I. pp. 258, 259. 

(t) Warden v. Hughes, 3 Wend. 418. 

(m) Chariest. Marsden, I Taunt. 224; Carruthers w. West, II Q. B. 143; Sturte- 
vant V. Ford, 4 Man. & G. 101; Kenwick v. Williams, 2 Md. 355; Thompson v. 
Shepherd, 12 Met. 311. 

(un) Chester v. Dorr, 41 N. Y. 279. In this case, the mle above stated is sustained 
by citations from Vermont, Maine, Massachusetts, and isew Hampshire. See also 
Whitwell -('. Crehore, 8 La. 540. 

(v) See Kiijira^ Vol. I. p. 226, note m. But where a note was indorsed for the accom- 
modation of the makers, who were then in good credit, but who became insolvent before 
the note was negotiated, and were directed by the indorser not to part with the note, 
and promised they would not. but afterwards passed it to the i)laintifT with full knowl- 
edge of tliese facts, in satihf.iction of a debt due from them to the i)laiiitifV, which 
covered part of the amount of the note, receiving from the jdaintiff the tmlauce in cash, 
it was held that the plaintiff could not recover from the indorser. 

(w) Kai)er V. Birkbcck, 15 East, 17 ; Novelli v. Rossi, 2 B. & Ad. 757. In Wilkin- 
son V. Johnson, 3 B. & C. 428, 5 I)(iwl. & R. 403, a bill of exdiange, bearing among 
others the supposed indorsement of H. & Co., bankers, at Manchester, was presented 
for payment in London, and dishonored. At the request of the notary who ])reseiited 
the bill, the London correspotideiit of H. Ik Co. took up tiie bill for their honor, but 
struck out tlic indorsements subse(|U(iit to that of H. & Co., and the money was paid 
to the holder of the bill. The same morning, the London agent, liaving discovered 
that the signatures of the drawer, the accci)tor, and H. & Co. were forgeries, sent 


an intentional striking ont of any name operates a full discharge 
of that party, and also of all those who could have looked to that 
party had they been compelled to pay the note. A holder has 
of course always the power of thus striking out wliat name he 
will, as he may all the names, or put the note in the fire if he 
will. But the rule above stated prevents his exercising this right 
of erasure to the injury of other persons. Thus the indorsee of 
a note with six indorsers in blank may sue the third indorser, 
and strike out the fourth and fifth and sixth, for the third could 
never look to them.(.^) But if he strikes out the name of the 
second or first at any time before or after action, this discharges 
the third, because it deprives him of his remedy against the party 
whose name is erased. (y) So if an indorser comes into posses- 
sion of the bill or note again, he is regarded, unless the contrary 
appears in evidence, as the bona fids holder and proprietor of 
such bill, and is entitled to recover, notwithstanding there may 
be on it one or more indorsements in full subsequent to the one 
to him, without producing any receipt or indorsement back from 
either of such indorsees, whose names he may strike from the 
bill or not as he may think proper. (2-) 

It is undoubtedly true, that when the indorser of a note be- 
comes again a holder of it, by a subsequent indorsement to him- 
self, and the question arises. What rights such indorsement gives 
to him, the authorities have undergone some change. That he 
may consider himself as in possession by his former title seems to 
be quite clear ; and the strongest American authority denies, as 
we have said, any necessity for his showing a receipt by tlie in- 
dorsers of payment from him, or any especial transfer to himself, 

notice thereof to the person to whom he had paid the money, and demanded it back ; 
and that notice was sent so early that notice of the dishonor might have been sent 
to the indorsers by the same day's post. The court held that the erasure of the 
indorsements did not deprive the holder of his remedy against the prior indors- 
ers, and that the agent, having paid the money by mistake, was entitled to recover 
it back. 

(x) Ritchie v. Moore, .5 Munf. 388. See also cases, infra, note z. 

(y) Curry v. Bank of MoUiie, 8 Port. Ala. 360. 

(z) Dugan I'. United States, 3 Wheat. 172. So in United States «. Barker, 1 Paine, 
C. C. l.'J6, it was held that, where the indorsee of a bill of exchange, whether as agent 
or owner, returns it after protest to the last indorser, the latter may sue upon it in his 
own name, and at the trial strike out the last indorsement, though it be in full. See 
Bell V. Morehead, 3 A. K. Marsh. 1.58, and cases supra, Vol. I. pp. 357, 3.t8, note tf 
Contra, Craig v. Brown, Pet. C. C. 171. 


more than is shown by the re-indorsement. He therefore stands 
as to tlie parties before him as if he had continued to be the 
holder, and had never indorsed it. But if he relies upon the 
subsequent indorsements as making those parties liable to him, 
he is in danger of the answer that he is liable to them. The 
earlier cases stood on this obvious ground. A makes a note to 
B, B indorses to 0, C to D, D to E, and E to C. If C sues E 
or D as indorsing to him, either of them acquires bj payment 
a riglit to sue him as their indorser, and therefore, to prevent 
such circuity of action, it was held that he could not sue tliem. 
But the later cases have greatly modified this rule. Without 
especial facts and circumstances, the case would stand as for- 
merly ; but where these facts exist, they may be shown, and 
would maintain C's action against E. If, for example, it could 
be proved that, by the original bargain, and for sufficient consid- 
eration, E indorsed it over to C for the purpose of being surety 
to him as indorser, without looking over to him for indemnity, 
this, although not specially stated in the declaration, would 
maintain an action by C, as indorsee, against E. Nor does it 
seem that this is anything more than a reasonable application of 
the rule, that every party to negotiable paper may be considered 
as drawing a new note or bill, if the merits of the case require. (a) 
If, however, he declares on liis original title, he will, it seems, be 
held to rely upon that alone, and will not be permitted to stand 
upon his subseqiient title, or upon any events which accrued 
after he had indorsed the note. (6) 

Whether, if a note be indorsed to A, but in fact, though not in 
form, to A as the agent of B, and for B's use, B can maintain an 
action in his own name, may not be quite settled. But we 
should apprehend that the principles of negotiable paper would 
require that the action should be in the name of A, althougli the 
contrary has been distinctly held by the Supreme Court of the 

(a) See cases cited in note z, supra, p. 30, and cases cited Vol. I. pp. .3.57, 3.58. In 
Hanks v. Dunlap, 10 Rich. Eq. 139, the payee indorsed the note in blank, and deliv- 
ered it to B., his aj,'ent, to be discounted in bank. B. owed W. for money lent to <;aine 
with, and, in consideration thereof, transferred the note to W., who, before it fell due, 
transferred it to D., one of the makers, for value and without notice. The payee 
brought a bill in equity against tlic iiolder to compel payment of the note. Held, that 
the maimer was entitled to retain pcsscsiion of it, and was not liable to the payee. 

(6) B.irtlett v. Benson, 14 M. & W. 733. 


United States, (c) where the principal was the United States, and 
the indorsee the Treasurer. This rested, in some degree at least, 
on the principle, that, as the Treasurer, who had indorsed his 
name, and afterwards, on dishonor, received back the note offi- 
cially, could not be sued, so neither ought he to sue. In general, 
we see no objection to requiring the action to be in the name of 
the agent, because the principal would not then be subject to any 
defences or equities, to which he had not subjected himself by 
his own fault, or at least his own act, in appointing and author- 
izing his agent to take the indorsement. 

If a transferee of a bill by indorsement sends it back to the 
indorser as worthless, this makes the indorsement invalid. And 
he acquires no new title to the note by merely getting possession 
of it without a new transfer to him ; but there need not be a new 
indorsement, (c?) because the former indorsement is capable of be- 
coming again valid, by ratification or confirmation. 

It is a universal rule, that every one who in any way becomes a 
surety for another is discharged from this secondary obligation, 
if the creditor does not hold the principal debtor to his primary 
obligation with proper strictness. He may give him what indul 
gences he will, but he does this at his own risk, and therefore if 
he chooses to give them, lie discharges the surety. This rule 
applies also to an indorser, who is in some degree a surety. And 
we shall treat of it more specifically in a subsequent chapter on 
Payment, Satisfaction, and Release. 

(c) Dugan v. United States, 3 Wheat. 172. See also United States v. Barkw. 1 
Paine, C. C. 156. 

id) Cartwrlght v. Williams, 2 Stark. 340. 






All bills and notes payable to bearer, or indorsed to bearei , or 
indorsed in blank so that a holder may add either his own name, 
or any other name, or the words " to bearer," are, as we have 
seen, transferable' by delivery. Bank-bills are the most familiar 
examples of this. The rule extends, however, to all negotiable 
paper. How much further it goes may not be so certain. We 
shall, in another connection, treat of the bonds of railroad 
companies or other corporations. These are continually bought 
and sold in the market, and pass by delivery only, like any 
goods or chattels. These, although usually called bonds, are not 
always sealed, and the coupons attached (which are promises or 
due-bills for interest) never are. Where the seal is absent, the 
words of negotiability may be as well inserted, and to tlie same 
effect as in ordinary notes. (a) 

(a) Gorgier v. Mieville, 3 B. & C. 45 ; Lang v Smyth, 7 Bing. 284 ; Wookcy v. 
Pole, 4 B. & Aid. 1 ; Glyn v. Baker, 13 East, .510 ; Carr v. Le Fevre, 27 Penn. State, 
413; Morris Canal & Banking Co. v. Fisher, 1 Stockt. Ch. 667 ; Mechanics' Bank r. 
N. Y. & N. H. H. Co., 3 Kern. 599; Craig v. City of Vicksburg, 31 Missis. 216 ; 
Maddox v. Graham, 2 Met. Ky. 56; Connecticut & I'assumpsic Rivers R. Co. v. New- 
ell, 31 Vt. 364, per liedjield, C. J. In Gorgier v. Mieville, 3 B. & O. 45, it was hclrl that 
a bond, which was an acknowledgment by the king of Prussia that lie and his succes- 
sors were bound to every person who should for the time being be the holder of the 
bond for the payment of the sum mentioned therein and interest, in a certain mode and 
at certain periods, was transferable by delivery. The same principle has been extended 
to excbequi^r hills, Wookey v. Pole, 4 B. & Aid. 1 ; to State bonds, Dclafield v. State of 
Illinois, 2 Hill, 1 59 ; to city and county bonds, Craig v. City of Vicksburg, 31 Missis. 216; 
Maddox v. Graham, 2 Met. Ky. 56 ; Clapp v County of Cedar, 5 Iowa, 15 ; to railroad 
bonds, Coimecticut & Passumjisic Rivers R. Co. v. Newell, 31 Vt. 364 : Carr v. Le Fevre, 
27 Penn. State, 413 ; and so, doubtless, to all bonds payable to bearer and intended to 
Vol. IL— C 


Although bonds and coupons made payable to bearer, as is 
usually the case, may not be commercial paper in the strict sense 
of the law merchant, yet they so far partake of the nature of ne- 
gotiable paper, that, when upon their face they bear evidence of 
genuineness, and there is nothing to excite suspicion, a bona fide 
purchaser for value, without notice of any prior defect in the title 
to them, may enforce them independent of all equities between 
the original parties, or even though they were not valid as be- 
tween them. (6) 

be negotiable. In California, a banker's certificate of deposit is held a negotiable 
security. Welton ». Adams, 4 Calif. 37. See Kilgore ti Bulkley, 14 Conn. 362. See 
also, as to dividend warrants, Partridge v. Bank of England, 9 Q. B. 396 ; as to dock 
warrants, Zwinger v. Samuda, 7 Taunt. 265 ; Lucas v. Dorrien, id. 278 ; as to bills of 
lading, Lickbarrow v. Mason, 5 T. R. 683 ; Saltus v. Everett, 15 Wend. 475 ; Gurney 
V. Behrend, 3 Ellis & B. 622. In Thompson v. Dominy, 14 M & W. 403, Alderson, 
B. said : " Because, in Lickbarrow v. Mason, a bill of lading was held negotialle, it has 
been contended that that instrument possesses all the properties of a bill of exchange ; 
but it would lead to absurdity to carry the doctrine to that length. The word • nego- 
tiable ' was not used in the sense in which it is used as applicable to a bill of exchange, 
but as passing the property in the goods only." See also Howard v. Shepherd, 9 C. B. 
297, 319 ; Sanders v. Vanzeller, 4 Q. B. 260, 295 ; Tindal r. Taylor, 4 Ellis & B. 219, 
28 Eng. L. & Eq. 210, 216 ; Dows i'. Cobb, 12 Barb. 310. But it may be shown that 
coupons, though payable to bearer, are by the custom of merchants transferable only 
in a certain manner, as, for instance, only in connection with the certificates to which 
they were attached, and then it is a proper question for tiie jury to determine whether 
these instruments passed by delivery separately. Lang v. Smyth, 7 Bing. 284. It seems, 
however, that it is the province of the court to decide on the negotiability of these 
instruments, except in cases where the law merchant is doubtful. Myers v. York & 
Cumberland R. Co., 43 Maine, 232. This latter case was an action by the assignee of 
the following instrument : — 

" Coupon j York & Cumberland ^ Bond Certificate, 
No. 6. I R. R. Company. S No. 1-19. 

" On the tenth day of February, 1854, the York & Cumberland Bailroad Company will 
pay thirty dollars on this coupon, at the office of said company, in the city of Portland, 
Maine. Nath'l J. Herrick, Treasurer." It was held, that, although the bond certificate 
referred to, with which it was delivered, was negotiable, the coupon, never having been 
annexed or aopended to it, and containing in itself no negotiable words, could not, witli- 
out the interposition of legislation, or the proof of usage, be considered as pos.sessing 
an independent negotiable character. Therefore the plaintiflp was nonsuited. 

(6) Craig v. City of Vicksburg, 31 Missis. 216 ; Maddox v. Graham, 2 Met. Ky. 56 ; 
Morris Canal & Banking Co. v. Fisher, 1 Stockt. Cli. 667 ; Mechanics' Bank v. N. 
Y. & N. H. R. Co., 3 Kern. 599 ; Zabriskie v. Cleveland, &c. R. Co., U. S. C. C 
Northern District of Ohio, 10 Am. Railw. Times, No 15, 23 How. 381. Mr. Justice 
McLean, delivering the opinion of the Circuit Court, said, that if on such paper the 
equities are open as between the persons who created it, its negotiability would be de- 
stroyed and its purpose defeated ; and that if against the holders of the bonds tech- 
nical objections can be raised, as to th» mode of their ^eing issued, when upon their 


If they are sealed, there is more difficulty. If made payable to 
order, or to assigns, or to holder or bearer, they must still, by the 
general law of specialties, be sued in the name of the original 
obligee, or, if in the name of the holder, then subject to equita- 
ble defences ; and only a new principle, or an important modifi- 
cation of an old one, would permit them to be sued in the name 
of the holder, and would liberate them in his hands from equita- 
ble defences, (f) 

face there is nothing to excite suspicion, but everything to secure confidence, it would 
destroy all reliance in such paper. In State of Illinois v. Delafield, 8 Paige, 527, 2 
Hill, 159, 177, State bonds or stocks had been prepared and executed by the officers 
having due authority of law ; the purpose being to sell them in order to raise funds 
for the construction of a canal. They were put into the hands of agents for sale, who 
sold and delivered them in violation of an express provision of the law which author- 
ized their creation. It was held by the Chancellor — and, on appeal, by the Court of 
Errors — that the bonds would be obligatory upon the State of Illinois in the hands 
of bonajide holders; and on that ground, the defendant, Delafield. was restrained from 
selling or disposing of them. In Bank of Rome v. Village of Rome, 19 N. Y. 20, this 
decision was approved, and it was held that bonds issued by the Village of Rome, 
under its corporate seal and payable to bearer, in aid of a railroad company, and 
which were wrongfully delivered by the commissioners of the railroad fund to the com- 
pany before the performance on the part of the company of a condition precedent re- 
quired by the act authorizing the issue of the bonds, were negotiable instruments in 
such a sense as to exempt them, in the hands of a bona Jide holder, from a defence 
which might be available against the railroad company. And where the bonds of a 
city or county have been issued in aid of a railroad corporation, it is no defence to an 
action upon one of these bonds or upon a coupon when brought by an innocent holder, 
that the company, since the .issuing of the bond, has become insolvent, or has been 
dissolved. Maddox v. Graham, 2 Met. Ky. 56 ; Clapp v. County of Cedar, 5 Iowa, 
15. See also Commissioners of Knox County v. Aspinwall, 21 How. 539; Royal 
British Bank v. Turquand, 6 Ellis & B. 327. But certificates of stock in a corporation 
were held by the Court of Appeals of New York, in the Schuyler case, not to be nego- 
tiable ; or at least, that the assignee of a certificate, without any transfer in the corpora- 
tion's books, acquires only the title of the assignor. Mechanics' Bank v. N. Y. & N. 
H. R. Co., 3 Kern. 599. 

(c) Hibblewhite v. M'Morine, 6 M & W. 200, per Parke, B. ; the law does not 
permit a deed to be made transferable and negotiable like a bill of exchange or ex- 
chequer bill. See Buckner r. Greenwood, 1 Eng. Ark. 200. The same principle 
holds with regard to promissory notes under seal. Clark v. Farmers' Manuf. Co., 15 
Wend. 256, Kinniken v. Dulancy, 5 Harring. Del. 384. In Georgia, it is held that a 
note, according to the usage and custom of merchants, docs not lose its negotiable 
quality by having a seal annexed to it. Porter v. McCollum, 15 Ga. 528. The court 
say : " It would seem from adjudicated cases that the negotiability of a paper by deliv- 
ery properly depends upon its terms, rather than upon the fact of its being or not bc- 
\v^ under seal. As a general rule, bonds, specialties, &c. (especially was this true at 
the tirr:' of the enactment of the statute of Anne) are not intended to bo negotiated 
\>j delivery, — are r.nt designed to pass from hand to hand ; and hence, no doubt, the 
^ther general rule which we find in tlic liuoks, that specialties are not negotiable by 


If made without the name of any owner or obligee inserted, but 
a blank instead, or with a name only in pencil, as certificates of 
stock often are, but bonds as we suppose rarely or never, with the 
intent that a holder may, whenever it becomes necessary, insert 
his own name in the original blank, or in that left by rubbing out 
the pencil name, all this is so irregular that it would not be easy 
to find a rule of law to sanction it, or to enforce rights built upon 
such title. (^) But the usage may be sufficient to induce and 
enable the courts to protect these transfers in some way. 

delivery. But there seems to be no sufficient reason why a specialty, that is to say, 
an instrument under seal, purposely framed and intended to pass by delivery, should 
not be negotiable." This case was decided on the authority of Gorgier v. Mieville, 
3 B. & C. 45. In several States bonds under seal are made negotiable by statute. 
In Massachusetts, " bonds and other obligations under seal for the payment of 
money purporting to be payable to the bearer, or some person designated as bearer, 
or payable to order, issued by any corporation or joint-stock company, shall be nego- 
tiable in the same manner and to the same extent as promissory notes." Gen. Stats. 
1860, p. 293, c 53, § 6. In Maryland, the assignee, by writing of any bond or spe- 
cialty, may maintain an action thereon in his own name. Code 1860, Vol. I. p. -13. 
In Tennessee, every bond, bill, or note, whether sealed or not, is declared negotiable in 
the same manner as promissory notes. Code 1858, p. 399. So in Georgia. Cobb's 
New Dig. 1851, p. 519. In Pennsylvania, it is provided that all bonds, specialties, 
and notes in writing, payable to the order of any person, or to his assigns, may be sued 
in the name of the assignee. Purdon's Dig. 1857, p. 93. Subject, however, to equities. 
Bury V. Hartman, 4 S. & R 175; Northampton Bank v. Balliet, 8 Watts & S. 311, 
318. In other States bonds are declared negotiable without specifying whether sealed 
or not, as in Ohio bonds to the order of any person, or to bearer or assigns, are ne- 
gotiable. R. S. 1854, c. 74, § 1, p. 57.5. So in Kentucky, 1 R. S. 1860, p. 268, c. 
'22, § 4 ; and the assignee of bonds may sue thereon in his own name in Virginia, 
Code 1849, p. 147; Mississippi, R. Code 1857, p. 355; Texas, Oldham & White's 
Dig. 1859, p. 51 ; Alabama, Code 1852, § 2129 ; Arkansas, Dig. of Stats. 1858, p. 157 ; 
Florida, Thompson's Dig. 1847, p. 348 ; California, Wood's Dig. 1858, p. 75 ; Illinois, 
Comp. Stat. 1858, Vol. I. p. 291 ; New Jersey, R. S p. 801 ; and so perhaps in some 
other States. In Maine, it is provided that coupons for interest of railroad bonds mav 
be assigned by delivery, and that the assignee may sue thereon in his own name. R. S. 
1857, c. 51, ^ 34. 

{d} Such an instrument was held void, in Hibblewhite v. M'^Iorine, 6 M. & W 200. 
" The only case cited," said Parke, B , " in favor of the validity of a deed in blank, 
afterw.irds filled in, is that of Texira v. Evans, (cited in Master v. Miller, 1 Anstr. 228.) 
where Lord ifanxfiAd held, that a bond was valid which was given with the name of 
the obligee and sum in blank to a broker to obtain money upon it, and he borrowed a 
sum from the plaintitf, and then inserted his name and the sum. But this case is justly 
questioned by Mr. Preston, in his edition of Shepp. Touch. 68, ' as it assumes there 
could be an attorney without deed.' On the other hand, there are several authorities, 
that an instrument which has a blank in it which prevents it from haviuij any opera- 
tion when it is sealed and delivered, cannot become a valid deed by being afterwards 
filled up." 




As a general rule, one who transfers paper by delivery onlj is 
no longer a party to that paper, and has no interest in it, and 
incurs none of the liabilities for it which attach to an indorser. 
The reason for this is twofold. As all paper deliverable by 
transfer, whether payable to bearer, or to order and indorsed in 
blank, may be indorsed by the holder, who thereby incurs cer- 
tain liabilities, it is a reasonable inference, if he transfers it, and 
it is received without his indorsement, that such liabilities did 
not enter into the bargain or the intention of the parties. And, 
moreover, if he gave the paper for goods, it may be understood 
that he sells the paper and buys the goods, or exchanges the 
paper for the goods, each party receiving at his own risk what 
the other party gives. 

One exception to this is derived, indeed, from the law of sales, 
and is analogous to one which belongs to that law : it is that 
which makes the transferrer of notes or bills by delivery warrant 
the genuineness of signatures, and that the title is wliat it pur- 
ports to be.(e) If, therefore, tiie paper is forged, the transferrer is 
liable ; not, however, on the paper and as a party to it, but on the 
original consideration, which revives, or rather has never been 

(e) Jones v. Ryde, 5 Taunt. 488 ; Bruce v. Bruce, 1 Marsh. 165 ; Guriiey v. Wom- 
ersU'v, 4 EUis & B. 133, 28 Eny. L. & Eq. 2.56 ; Fuller v. Sniitii, Ryan & M. 49 ; Ellis 
V. Wild, 6 Mass. 321 ; Young v. Adams, 6 Mass. 182 ; Cabot Bank v. Morton, 4 Gray, 
1.56 ; Markle v. Hatfield, 2 Johns. 455 ; Eagle Bank of New Haven c. Stnitli, 5 Conn. 
71 ; Strange v. Ellison, 2 Bailey, 385; Morrison v. Currie, 4 Duer, 79; Prettynuin v. 
Short, 5 Harring. Del. 360; Thrall v. Newell, 19 Vt 202; Shaver ». Ehle, 16 Johns. 
201 ; Herrick v. Whitney, 15 Johns. 240; Ramsdale v. Horton, 3 Pcnn. State, 3.30 ; 
Lyons ». Miller, 6 Gratt. 427. And .see Keteliutn v. Bank of Commerce, 19 N. Y. 499 ; 
Strange ;;. Ellison, 2 Bailey, 385. In Aldrich v. Jackson, 5 R I. 218, Auks, C J., de- 
livering the opinion of the court, said : " It is too well settled at this day to admit of dis- 
cussion, that the vendor of a hill or note, hy the mere act of sale, impliedly warrants the 
genuineness of the signature of the previous parties to it; although he docs not thereby, 
when he does not indorse or otherwise assure payment of the same, warrant their sol- 
vency. If the signatures, or either of them, he forged, what he sells is not what upon 
Its face it purports, and what, therefore, he affirms and thus warrants it to be ; and he 
IB liable to the vendee for what he has received from him for it, on the ground of failure 
..f consideration." Sec al.>-o Merriam v. Wolcott, 3 Allen, 258. 

VOL. II. 4 


cxtinguislied.(/) And if the transferrer be only an agent, if he 
does not at the time disclose the name of his principal, and the 

(/) Fuller V. Smith, Ryan & M. 49 ; Jones v. Ryde, 5 Taunt. 488 ; Bruce v. Bruce, 
1 Marsh. 16.5, 5 Taunt. 49.5 ; Henick v. Whitney, 15 Johns. 240 ; Baskins v. Wilson, 
eOowen, 471 ; Murray v. Judah, 6 Cowen, 484; Morrison v. Currie, 4 Duer, 79; 
Young V. Adams, 6 Mass. 182; Salem Balik v. Gloucester Bank, 17 Mass. 1,33; 
Mudii V. Reeves, 2 Harris &, J. 368 ; Hargrave v. Dusenberry, 2 Hawks, 326 ; Keene 
V. Thompson, 4 Gill & J. 463 ; Markle v. Hatfield, 2 Johns. 455 ; Shaver v. Ehle, 
16 Johns. 201 ; Canal Bank v. Bank of Albany, 1 Hill, 287; Thomas v. Todd, 6 
Hill, 340. " It would be matter of regret," said Chief Justice Kent, in Markle r. 
Hatfield, supra, " if the law obliged us to regard a payment in counterfeit instead of 
genuine bank-bills as a valid payment of a debt, merely because the creditor did not 
perceive and detect the false bills at the time of payment. The reasonable doctrine, 
and one which undoubtedly agrees with the common sense of mankind, is laid down 
by Paulus, in the Digest (46, 3, 50), and has been incorporated into the French law. 
He says, that, if a creditor receive by mistake anything in payment different from what 
was due, and upon the supposition that it was the thing actually due, as if he receive 
brass instead of gold, the debtor is not discharged, and the creditor, upon offering to 
return that which he received, may demand that which is due by the contract." la 
Chalmers v. Harris, 22 Texas, 265, the plaintiff recovered the amount he had given in 
specie in exchange for a counterfeit bank-bill which the defendant had presented to 
him for the purpose of making change. Where the purchaser of goods agreed to pro- 
cure and deliver to the vendor, in payment, the note of a third person, indorsed by 
two others, and afterwards wrote to B. this letter, — "I enclose you the note of W.'s, 
as proposed, which you will please pass to my credit," — it was held that this was tan- 
tamount to a warranty that the indorsements on the note were genuine. Coolidge v. 
Brigham, i Met. 547, 5 id. 68. See also Thrall v. Newell, 19 Vt. 202. Thei;e is a 
case in Maine which is not in accordance with the rule and the cases given above. It 
was there held, that one who sells a promissory note by delivery is not liable upon an 
implied warranty of the genuineness of it. if he sold the same as property, and not in 
payment of a debt, and if he did not know of the forgery. But it was said, that when 
an innocent holder of negotiable paper parts with it by delivery, without indorsing it, 
in payment of a debt due, or then created, as, for example, in payment for goods then 
purchased, or by way of discount for money then loaned by a bank, banker, or indi- 
vidual, and the paper proves to have been forged, the debt or loan, not being paid by it, 
may be recovered. In such case there is a warranty implied by law that the paper is 
genuine, as there is that coin or bank-notes used for like purpose are genuine. Baxter 
V. Duren, 29 Maine, 434. But this distinction does not seem to be well founded. But 
where bankers paid a forged acceptance of one of their customers, made payable at 
their house, it was held that they could not recover the money from the bonajide holders 
of the bill, to whom the payment was made, on the principle that it was the duty of 
the bankers to have ascertained the authenticity of the order before they obeyed it. 
Smith V. Mercer, 6 Taunt. 76. See also Price v. Neal, 3 Burr. 1354 ; Wilkinson v. 
Lutwidge, 1 Stra. 648; Goddard »;. Merchants' Bank, 2 Sandf 247,4 Comst. 147; 
Canal Bank v. Bank of Albany, 1 Hill, 287. There can be no recovery, however, 
against one who has innocently paid away a counterfeit bill, unless it is returned to 
him, or notice of its want of value is given him, within a reasonable time after the bill 
is discovered to be worthless, in order that he may be enabled to trace out and fall 
back upon the person from whom he received it. Thomas v. Todd, 6 Hill. 340 ; 
Markle v. Hatfield, 2 Johns. 455; Simms v. Clark, 11 111. 137. But what shall b© 


bill or note proves to be a forgery, he is personally liable for the 
consideration received. (g-) 

Most of the cases on this subject relate to the genui;ieness ot 
the signatures of parties to negotiable paper. It is, however, 
equally well settled that the vendor without indorsement war- 
rants that the paper is of the kind and description that it pur- 
ports to be. (A) So, also, there is an implied warranty that the 
parties to the paper are under no incapacity to contract, as irom 
infancy or marriage or other disability, (i) and the assignment of 
a bill or note, as of any chose in action, for a valuable consid- 
eration, would raise an implied warranty that the assignor has 

considered a reasonable time must necessarily depend upon the situation of the parties 
and the facts and circumstances of the particular case, and is therefore a question for 
the jury. Simms v. Clark, supra. 

(g) Gurney v. Womersley, 4 Ellis & B. 133, 28 Eng. L. & Eq. 257 ; Morrison v Cur 
rie, 4 Duer, 79 ; Rieman v. Fisher, 4 Am. Law Reg. 433. In Gurney v. Womersley, 
supra, the defendants were bill-brokers, who received a bill of exchange to be dis- 
counted, and took it to the plaintiffs, who were money-lenders, with whom the de- 
fendants as bill-brokers had previously had similar dealings ; the defendants did not 
disclose their principal, and were regarded as principals ; and it was held by the court, 
all the judges concurring, that they were liable, and the plaintiffs should recover back 
the amount paid by them for the forged bill. " The defendants dealt as principals, and 
were responsible for the genuineness of the bill." Per Lord Campbell, C. J. The 
case of Rieman v. Fisher, supra, was like the above case in its facts, and was de- 
termined in the same way. This case was in the Superior Court of Baltimore City. 
In Baxter v. Duren, 29 Maine, 434, a different view was taken of the liabilities of an 
agent or broker selling negotiable paper. It was held, that, if the broker made no prom- 
ise or representation concerning it, he would not be liable to the purchaser upon its 
proving to be a forgery, though not disclosing his agency ; for anyone dealing with him 
should be presumed to know, from the nature of a broker's business, that he was acting 
as agent for some third person. But see Merriam v. Wolcott, 3 Allen, 258. 

(h) Where, therefore, an unstamped bill of exchange, purporting to be a foreign bill 
drawn at Sierra Leone, but which had been really drawn in London, was sold, and re- 
fused payment by the acceptor, it was held that the vendee was entitled to recover back 
the price of the bill. Gompertz v. Bartlett, 2 Ellis & B. 849, 24 Eng. L. & Eq. 156. 
See also Young v. Cole, 3 Bing. N. C. 724. 

(i) Lobdcll V. Baker, 1 Met. 193, 3 Met. 409. In this case, the plaintiff had pur- 
cha.sed a negotiable note in the market, though not of the defendant, which note had 
been indorsed by a minor, and the action was against the defendant for deceit in pro- 
curing the minor to indorse the note, and then putting it into circulation. No repre- 
sentation by the defendant that the indorsement was valid was shown, or any actual 
intention to defraud proved ; but the court held, that the disposing of the note for a 
valuable consideration was by necessary implication an affirmance that the indorscr 
was a person capable of indorsing, and of binding himself by such indorsement ; and 
upon the gro^nd of such implied affirmation, coimccted with his knowledge of the 
minority of the indorser, the defendant was held liable. See also Thrall c. Newell, 
19 Vt. 202. 


done uKliLig and will do nothing to prevent the assignee from 
collecting it.{J) The reason for the general rule above stated 
is, that forged paper is simply nothing, and one who has trans- 
ferred it for a consideration has transferred nothing, and is there- 
fore liable on the consideration. 

This rule is imiversaUy admitted ; but when the question 
arises, whether the notes of insolvent banks are to be put in the 
same category as forged notes, and to be considered, therefore, 
as nothing at all, and as extinguishing no claim, we find much 
conflict and iincertainty. In our chapter on Bank-notes, it will 
be seen that a large proportion of tliis is due, not so much to the 
uncertainty of the law as to the difficulty of determining the 
facts in each case in relation to the time or the evidence of the 
insolvency, or the times and circumstances of the bargain ; and 
the fui'ther difficulty of separating the law from the fact. (A*) 
There is some reason for putting the bills of a bank which can- 
not pay them on the same footing with those which the bank 
never made ; and for holding that he who delivei-s bills of a 
bank actually insolvent is not harmed by having them returned 
on his hands, if in the mean time they have lost no value except 
that which is derived from an entire ignorance of their real 
worth, or ratlier worthlessness. It may be supposed, in the al>- 
sence of any evidence of a bargain on the subject between the 
parties, that the transferee takes the bill only on condition that 
he will collect them if he can ; but if he cannot, with proper 
diligence, they shall remain at the risk of the ti^ansferrer, and 
the receiver is then only bound to state to the giver tlieir want 
of value, and offer to return them in season to save all his 
rights; and perhaps the weight of authority is in favor of this 
view ; but the decisions on this subject caimot be reconciled. (/) 

The same principles apply in respect to bills of exchange, 
notes, and checks of third persons, taken on account of au 
antecedent debt, without indorsement, (wj) But if there is an 
express or implied agreement by the creditor to take the paper 

{j} EatoD V. Mellas, 7 Gray, 566. 

(i) See post, chapter on Bank-Notes- 

(/) See post, chapter on Bank-Notes. 

(ai) See Noel r. Mniray, 3 Kern. 167; People r. Howel!, 4 Johns 29t). In inch 
ease the onus of showing that the paper was taken as payment by the crediiDr is uoon 
die debtor. 


for the amount of his debt as an absolute payment, this of 
course destroys the right of action for the original debt ; («) and 
if the paper is discounted without indorsement, and without any 
antecedent debt, this seems to be evidence of a purchase, and 
there can be no recovery ou the consideration paid.(o) 

So wheu a bill or note is exchanged without indorsement for 
merchandise, it is held that there is no implied warranty of the 
solvency of the parties to it.{p) In all cases where the assignor 
of a bill or note knows it to be of no value, and tlie assignee 
receives it in good faith, paying a valuable consideration of any 
kind, the assignor may Ije compelled to repay or return the con- 
sideration thus received. (^) 

(n) Ex parte Blackburne, 10 Ves. 204; Broun v. Kewlev, 2 Bos. &. P. 518; Ca- 
inidge r. Alknby, 6 B. & C. 373 ; (Jwenson v Morse, 7 T. K. 64 ; Ex parte Shuttle- 
wortii, 3 Ves. 368 ; Emlv v. Lye, 15 East, 7, 13. 

(o) Emly r. Lye, 15 East, 7, 13 ; Feiin v. Harrison, 3 T. R. 779; Ex parte Shuttle- 
worth, 3 Ves. 368 ; Fydell v. Clark, 1 Esp. 447 ; Ex parte Blackburne, 10 Ves. 204. 

(p) Burgess r. Chapin, 5 R. I. 225 ; Beckwith v. Famum. 5 R. I. 230 ; Bicknall v. 
Waterman, 5 R. L 43. These three cases arose out of the barter of cotton for the notes 
of third persons without iiidorsement. In the last case, Aines, C. J., delivering the 
opinion of the court, said: "The well-known common-law principle, applicable alike 
to sales and exchanges of personal things, is, that fraud or warranty is necessary to 
render the vendor or exchanger liable, in any form, for a defect in the quality of the 
tiling sold or exchanged Applying this principle to the sale or exchange of the note 
of a third person, transferred by indorsement without recourse or by delivery merely, the 
vendee or person taking it in exchange takes the risk of the past or future insolvency 
of the maker or other parry to it; unless, indeed, in case of past insolvency, the vendor 
or exchanger is guilty of the fraud of passing it off with knowledge of that fact." See 
also the remarks of the same learned judge in Burgess v. Chapin, supra. See Ellis i< 
Wild, 6 Mass. 321 ; Roget v. Merritt, 2 Caines, 117 ; Whitbeck v. Van Ness, 11 Johns. 
409 ; Waydell v. Luer, 3 Denio, 410 ; Camidge o. Allenby, 6 B. & C. 373 ; Emly v. Lye, 
15 Ea^i, 7, 12 ; Noel r. Murray. 3 Kern. 167 ; Clerk v. Slundall, 12 Mod. 203 ; Tas- 
Kell V. Lewis, 1 Ld. Raym. 743 ; Fenn v. Harrison, 3 T. R. 759 ; Evans v Whyle, 5 
Bing. 485. But where a purchaser of goods transfers to the seller a note of a thinl 
person, and, with a view to add his own responsibility, indorses a guaranty, which, how- 
ever, is void for not expressing the consideration, the guaranty is evidence that the 
note was not taken in payment, and the seller may recover for the goods. Monroe v. 
Hoff, 5 Denio, 360. 

(q) Anon., 12 Mod. 517 ; Fenn v. Harrison, 3 T. R. 759 ; Popley r. Ashly, 6 Mod 
14*, Holt, 121 ; Camidge r. Allenby, 6 B. & C. 373, 9 DowL & R. 391. 




We have seen that it is now well settled, that one who takes 
negotiable paper, transferable by delivery, acquires an absolute 
property in it, and may recover upon it, although the paper was 
fraudulently put in circulation, or had been stolen, provided he 
takes it iu good faith for a valuable consideration, even though 
guilty of gross negligence in doing so. The burden of proving 
good faith may be on the plaintiff, but this is prima facie implied 
by possession ; and to meet the inference so raised, fraud, felony, 
or some such matter, must be proved. (r) 

A transferee by delivery receives the paper also as free from 
all equitable defences as a transferee by indorsement. But there 
must be an actual transfer, made in good faith, to shut out these 
defences. If, therefore, one present such paper merely as agent 
of another who is the actual owner, and the payee has a good 
defence against that owner, he may make it against the agent ; 
and this even in the case where the owner owes his agent, more 
than the amount of the paper. (s) 

This rule would apply undoubtedly where the paper was in- 
dorsed to the agent to give him authority to collect ; but not 
where the paper had been assigned in payment or as security for 
the debt to the agent, because he would then collect it as his 
own. This distinction depends upon that between an authority 
coupled with an interest and a bare authority. And here, un- 
doubtedly, the further disthiction, best illustrated by Chief Jus- 
tice Marshall, (sa) should be applied. That is, if the agent were 
only authorized to collect the proceeds for the principal, and 
then to apply the proceeds to the payment of a debt due to him- 
self, this would not give him an interest in the paper itself. It 
would be much the same as if he were bound to apply the pro- 
ceeds to the payment of some other debt due from the principal ; 

(r) These questions are very fully considered in the chapter on a Lost Note or Bill. 
See also supra, Vol. I. p. 258. 

(s) See Solomons v. Bank of England, 13 East, 135, note ; Lowndes v. Andt son, 
I Rose, 99. 

tsa) Hunt v. Rousmanier, 8 Wheat. 174, 201. 


nor can he have the rights of principal instead of agent, unless 
there has been an actual assignment of the paper to him. 

If such a note be pledged only, the pledgee holds it as free 
from all such defences as if it were absolutely transferred to 
him. The peculiar quality and exemptions of negotiable paper 
go with them when pledged. And although the pledge was 
given witli such absence or infirmity of title of the pledgor, that, 
had it been a pledge of chattels, the true owner might have 
maintained trover for them against the pledgee, he cannot do 
this, nor demand the paper or its proceeds in any way from the 
pledgee, provided it was received in good faith, and the pledgee 
had the possession in fact, and the note was transferable by de- 
livery. (/) 

It may be remarked, in this connection, that, as no one can say 
to a holder for value of negotiable paper which the transferrer 
had sent with his credit into circulation, or exposed to being so 
used, that he had in fact a private bargain with his transferee, or 
private rights over the paper, it follows that a holder of such 
paper, whether as pledgee or not, may sell, or discount, or pledge 
it, or otherwise dispose of it.(w) 

[t) Collins V. Martin, 1 Bos. & P. 648. This was an action of trover for two bills 
of exchange indorsed in blank and deposited by the plaintiff with his bankers for col- 
lection, and by them pledged for their own debts to the defendant. Held, that tho 
action could not be maintained This decision was cited and approved of in Treut- 
tel V. Barandon, 8 Taunt. 100, and Wookey v. Pole, 4 B. & Aid. 1. See also Bolton v. 
Puller, 1 Bos. & P. 539, 546 ; Ex parte Pease, 1 Kose, 232 ; Thompson v. Giles, 2 B & 
C- 422. If a party authorized by the holder of a bill of exchange to get it discounted, 
and to apply the proceeds in a particular way, misapplies any of the proceeds, he can- 
not be sued in. trover for the bill, but must be sued for money had and received. Palmer 
V. Jarmain, 2 M & W. 282 ; Stierneld v. Holden, 4 B & C. 5, llyan & M. 219. And 
see Sigourney v. Lloyd, 8 B. & C. 622, 5 Bing. 525. If the transferee has notice that 
the paper was wrongfully pledged to him, he will be liable in trover to the true owner ; 
as where a bill was indorsed by the payee in this form : " Pay A. B., or order, for the 
account of C. D.," and A. B. pledged it with the defendant, who advanced money upon 
it to A. B. personally ; it was held, that the defendant had sutlicient notice that it was 
transferred to him without authority, and was liable in trover to C. D. Treuttel v. Ba- 
randon, 8 Taunt. 100, 1 J. B. Moore. 543. 

(u) Bolton V. Puller, 1 Bos. & P. 539; Collins v. Martin, id. 648, 2 Esp. 520; Jar- 
vis V. Rogers, 13 Mass 105, 15 id. 389 ; Appleton v. Donaldson, 3 Barr, 381 ; Palmer 
I). Richards, Exch. 1851, 1 Eng. L. & Eq 529 ; Poirier v. Morris, 2 Ellis & B. 89, 20 
Eng. L & Eq. 103 ; Atkinson v. Brooks. 26 Vt. 569 ; Ramsbotliam v. Cator, 1 Stark. 
228; Clements. Leverett, 12 N. H. 317; Brushy Scribncr, II Conn. 388 ; Sweetser 
V. French, 2 Cush. 309 ; Bay v. Coddington, 5 Johns. Ch 54 ; Coddington v. Bay, 20 
Johns. 637; Stalker v. M'Donald, 6 Hill, 93 ; Swift v. Tyson, 16 Pet. 1 ; Boggs v 
Lancaster Bank, 7 Watts & S. 331. 


fle must account for it to the pledgor when duly called on, 
but his disposition of it in the mean time can work no harm to 
the owner beyond that for which the owner is responsible, and 
therefore gives him no action. And any party to whom he 
transfers it, by indorsement or by delivery, according as the pa- 
per may be transferable, acquires a full right to it.(y) 

If it has been pledged, however, by any party, in fraud of the 
owner, to a bona fide pledgee, as the pledgee has only a lien for 
the amount of his debt, the true owner, by paying the debt and 
discharging that lien, may repossess himself of the paper. And 
in such case, if the pledgee sue the parties liable upon the note, 
he can recover only to the amount for which he took the note as 
collateral security. (ly) 

It is, under some points of view, an important qiiestion 
whether such paper has been transferred for a new or an old 
consideration, or in payment of a new purchase or for a former 
debt ; in full payment of, or only as security for, an antecedent 
debt. But these questions have been already considered. (.«) 



Bills and notes which are not payable either to bearer or to 
order cannot be transferred, either by indorsement or by deliv- 

(v) Lowndes v. Anderson, 13 East, 130; Jacks v. Darrin, 3 E. D. Smith, 557; 
Palmer v. Richards, Exch 1851, 1 Eng. L. & Eq. 529 ; Marston v. Allen, 8 M. & W 494. 

(«;) Stoddard v. Kimhall, 6 Cush. 469 ; Chicopee Bank v. Chapin, 8 Met. 40. In 
this case, an action was brought against the first iiulorser of a note, by a holder to whom 
it was pledged by the second indorser, as collateral security for a debt. The defendant 
offered to show that he indorsed the note for the accommodation of the maker, and in- 
trusted it to him for a special purpose, and that the maker witiiout any consideration 
transfeiTed it to the second indorser, who had knowledge of these facts, though the 
pledgees had not ; and it was held that they could recover only the amount secured by 
the pledge. Shaw, C. J. said : " So far as they would recover beyond that, they 
would recover to the use of the indorser. But if the facts were proved, which the evi- 
dence that was offered tended to prove, they could not recover for his use, because it 
would show that, he was not a bona fide holder. Such a division of the damages re- 
coverable by an indorsee is well warranted, we think, on principle and on the authori- 
ties," citing Jones v. Hibbert, 2 Stark. 304 ; Wiffen v. Roberts, I Esp. 261 ; Parish r. 
Stone, 14 Pick. 198. See also Hilton v. Smith, 5 Gray, 40U ; Bond v. Fiizpairick, 4 
riray. 89. 

(ir) See supra. Vol. I. pp. 21S- 22S. 


ery, so as to substitute the transferee for the transferrer, and 
enable the former to sue in his own name.(7/) But all debts are 
choses in action ; and bills and notes, which are, strictly speak- 
ing, only evidences of indebtedness, are themselves called and 
treated as choses in action ; and now all choses in action may be 

Tlie very meaning of chose in action is " a thing which lies in 
action," or whicii cannot be reduced into possession without an ac- 
tion at law. Anciently it was held that a transfer of this was only 
a transfer of a right to go to law, and such was the dislike of the 
old law to litigation, tiiat the transfer was prohibited and void.(2r) 

Courts of equity long since disregarded tliis rule, aijd now, 
if an assignee of a cliose in action acquires any equitable right 
which the court will enforce, he may generally proceed in 
his own name. (a) It is not so in courts of law. There the 

(y) Hill V. Lewis, 1 Salk. 1-32; Tasscll v. Lewis, 1 Ld. Raym. 743; Whire v. Heyl- 
man, 34 Penn. State, 142 ; Backus v. Danfoith, 10 Conn. 297 ; Parker v. Ritklle, 11 
Ohio, 102 ; Bush v. Peckard, 3 Harring. Del. 385 ; Whiteman i--. Childress, 6 Humph. 
303; Barricre v. Nairac, 2 Dallas, 249 ; Noland v. Ringjiold, 3 Harris & J. 216 ; Mat- 
lack V. Hcndrickson, 1 Green, 263 ; Pratt v. Thomas, 2 Hill, S. Car. 655 ; Fernon v. 
•Farmer, 1 Harring. Del. 32. 

(2) Scholey v. Daniel, 2 Bos. & P. 540; Patridge v. Strange, Plowd. 77, 88; Perry v. 
Jones, 1 H. Bl 30. " No possibility, right, title, nor thing in action shall be granted or 
assigned to strangers, for that would be the occasion of multiplying of contentions and 
suits." Per Lord Coke. Sampet's case, 10 R. 48. And again, in his commentaries on 
Littleton, he says that it is one of the maxims of the common law, that no right of ac- 
tion can be transferred, because, under color thereof pretended titles might be granted 
to great men, whereby right might be trodden down, and the weak oppressed, which 
the common law forbiddeth." Co. Litt. 214, a. In Bacon's Abridgment, Tit. Obliga- 
tion, A, it is stated that " a bond is a chose in action which cannot be assigned over so 
as to enable the assignee to sue in his own name ; yet he has by the assignment such a 
title to the paper and wax that he may keep or cancel it." But as the reason of the 
rule above stated is inapplicable to the sovereign or government, who can never be pre- 
sumed to do any injustice to the subjects, or oppress them in any manner, an assign- 
ment of a chose in action could be made by or to the sovereign or government, in the 
same way as if the instrument had been originally assignable, though no such power 
was conferred upon the assignee of the government. Co. Litt. 232, b, note 1 ; The King 
1;. Wendman, Cro. Jac. 82; The King y. Twine, Cro. Jac. 179; Kingdom i'. Jones, 
Skin. 6, 26; Lambert v. Taylor, 4 B. & C 138, 150; Prosser v. Edmonds, 1 Youngo 
& C, Exch. 481, 499; Miles v. Williams, 1 P. Wms. 249; U. S. v. Buford, 3 Pet. 12; 
U. S. K. White, 2 Hill, 59. 

(a) Wright r. Wright, 1 Ves. Sen. 411 ; Baldwin v Rochfonl, 1 Wilson, 229 ; Peters w. 
Soame, 2 Vcrn. 428 ; Coles v. Jones, 2 Vern. 692 ; Carteret v. Paschal. 3 P. Wms. 197 ; 
Hammond v. Messenger, 9 Sim. 327; Ross v. Smith, 19 Texas, 171, ymr Ilcmfihill, 
C. J. It is said that the only autliority to be found wiiere a court of ctpiily has re- 


ancient rule is, and for a long time has been, so far relaxed that 
he may proceed in the name of his assignor, or of the executor 
or administrator of the assignor, if he be dead ; (b) but then, as 
he stands in the place and upon the rights of the assignee, he is 
subject to whatever defences might be made against the assignor, 
provided they are such as the law considers equitable. 

On this point the principal rule is, that they must be equities 
subsisthig at the time the debtor receives notice of the assign- 
ment, (c) And the obvious reason is, that the debtor has no 
right to create new defences after such notice. 

fused to give efFect to an assignment for a sufficient consideration of a chose in action 
is a case decided in the 11 James I., 1 Rol. Abr. 376, 1. b. 

(6) Amherst Academy v. Cowls, 6 Picic. 427; Skinner v. Somes, 14 Mass. 107; 
Gordon v. Drury, 20 N. H. 353 ; Day v. Whitney, 1 Picii. 503. " The doctrine of 
equitable assignments," said Dewey, J., in Gibson i>. Cooke, 20 Pick. 15, "has been 
gradually extending to meet the convenience of trade and business, and has been favor- 
ably viewed in the courts of law, subject, however, to the legal principle, that in such 
cases the assignee can enforce his claim only in the name of the assignor, unless there 
be an express promise by the debtor to pay the assignee." 

(c) Thompson v. Emery, 7 Foster, 269 ; White v. Heylman, 34 Penn. State. 142 ; War- 
ner r. Whiitaker, 6 Mich. 133 ; Murray v. Lylburn, 2 Johns. Ch. 441 ; Cornish v. Bryan, 
2 Stockt. Ch. 146 ; Goodrich v. Stanley, 23 Conn. 79 ; Freeman v. Perry, 22 Conn. 617 ; 
Hedges v. Sealy, 9 Barb. 214 ; Lirhgow ;;. Evans, 8 Greenl. 330 ; Guerry v. Perry man. 6 
Ga. 119 ; Wood v. Perry, 1 Barb. 1 14; Maybin v. Kirby, 4 Rich. Eq. 105 ; Duncklee v. 
Greenfield Steam-Mill Co., 3 Foster, 245. In order to protect the assignee of a bill or note 
from the effect of any subsequent payment by the debtor to the assignor, it is sufficient if 
he give the debtor notice of the assignment without exhibiting the security, or offering 
him any other evidence of the fact. Davenport r. Woodbridge, 8 GreenL 1 7. He may 
require such evidence of the assignment, say the court, before payment to the assignee, 
but the notice he receives is only a measure of precaution, and to put him upon in- 
quiry. If he finds the original creditor still retaining the evidence of the demand, he 
may be well justified in paying it to him, but if he cannot produce it, he has the best 
reason to believe the notice has truly stated the fact of the assignment. After notice, 
the debtor acts at his peril, and the assignee, conducting fairly on his part, is not to be 
deprived of his equitable interest. See also Anderson i'. Van Alen, 12 Johns. 343; 
King V. Fowler, 16 Mass. 397; Ammidown v. Whcelock, 8 Pick. 470; Kellogg r. 
Krauser, 14 S. & R. 137. Where the holder of a due-bill assigned it by indorsement 
in blank, and the assignee demanded payment, but did not show the due-bill, nor ex- 
pressly state that it had been assigned, and the debtor promised to settle it the next 
week in New York, but afterwards paid it in New York to the assignor, it was held 
that the assignee could not maintain an action in the assignor's name. Meghan v. 
Mills. 9 Johns. 64. A second assignee, who gives immediate notice of his assignment, 
and attends to the prosecution of his claim, has a better title than a prior assignee of 
whom he had no knowledge, and who gave no notice of his assignment, and took no 
step to enforce his claim until after an award had been made in fsvor of the "ccond. 
Judson V. Corcoran, 17 How. 612. Or if the prior assignee be guilty of any neglect or 
fraud which enables the assignor to make a second assignment to a lionn Jirif assignee. 


For example, A owes B one thousand dollars, to be paid in 
one year ; he gives him a note not payable to order, or some 
other recognition and promise, or nothing whatever, for this is 
material only as matter of evidence. B for value assigns the 
debt or note to C, after half of the year has expired, and C gives 
immediate notice to A, At the end of the year C calls on A, 
who says that during the first six months he had let B have 
divers goods or sums of money on account of this note, and this 
he must now ofifset, for all B could transfer was the same right 
he had himself when he made the transfer. To this C must 
assent ; but he may also insist that any further goods or sums 
which A let B have after the assignment and notice shall not 
be offset, because the assignment and notice had the effect of 
changing the debt from A to B into a debt from A to C ; and if 
A now let B have anything on account of this debt, it was done 
in fraud of C, or, at all events, founds no claim against him. 

So also where the assignee sues in the name of the assignor, 
the defendant may set off a debt due from the assignee to him, 
in like manner as if the suit had been brouglit in his own 

The common-law rule, that the assignee of non-negotiable 
paper, and of paper payable to order, and assigned without 
indorsement, must proceed in an action thereon in the name 
of the assignor, has recently been changed by statute in several 
of the States, so as to enable him to sue in his own name ; but in 
such case it is provided that the action sliall be without prejudice 
to any defence or set-off the defendant may have had against the 
same previous to notice of the assignment, (e) 

the latter will be preferred to the first. Mayhin i'. Kirby, 4 Rich. Eq. 10.5. In Jones v. 
Witter, 13 Mass. 304. Mr. Chief Justice Parker said: " The contract between a.ssignor 
and assif^nee is operative between them only until some act takes place which brings 
the maker of the note into the contract. This act is notice to him ; and after anch 
notice it becomes entirely immaterial to him which shall be his creditor, as all pay- 
ments, or lawful offsets existing before such notice, will be allowed him ; and all sub- 
sequent payments may as well, for his interest, be made to the assignee as to the 
original creditor." 

(d) Corser v. Craig, 1 Wash. C. C. 424. 

(e) In New York, Ohio, Wisconsin, Minnesota, and California, it is provided that 
every action shall be brought in the name of the real party in interest. In the case 
of an assignment of a thing in action, the action by the assignee shall be without preju- 
dice to any set-off or other defence existing at the time of, or before notice of, the assign- 
ment; but this latter clause does not apply to a negotiable promissory note, or i)ill of 


There is also a provision in several States that notes made pay- 
able to the maker thereof, or to the order of a fictitious person, 

exchange transferred in good faith, and upon good consideration, before due. R. S. 
of N. Y., Vol. II. p. 499 ; R. S. of Ohio, 1854, c 87, §§ 2.5, 26; R. S. of Wise. 18.58, 
c. 122, § 13; Stats, of Minn., compiled 1859; Wood's Dig. 1858, p. 72. See also 
the Civil Code of Kentucky, adopted March, 1851, § 58, in last edition § 31, and Kelly 
V. Smith, 1 Met. Ky. 313. Under the above statutes it is held that a person to whom 
a promissory note, payable to order, has been sold and delivered, previous to its becom- 
ing due, for a full and valuable consideration, may maintain an action thereon, in his 
own name, without alleging an indorsement of the note to him. Billings v. Jane, 11 
Barb. 620. 

In Alabama, it is provided that " every action founded upon a promissory note, bond, 
or other contract, express or implied, for the payment of money, must be prosecuted in 
the name of the party really interested, whether he have the legal title or not, subject 
to any defence the payer, obligor, or debtor may have had against the payee, obligee, 
or creditor previous to notice of the assignment or transfer ; but this clause does not 
apply to hills of exchange, or instruments payable in bank or at a private banking- 
house ; in all other cases the suit must be instituted in the name of the person having 
the legal title." Code 1852, § 2129. 

In Arkansas, it is provided that all bonds, bills, and notes may be sued in the name 
of the assignee, subject to the defences or offsets, either in law or equity, that any 
defendant may have against the original assignor, previous to the assignment, or 
against the plaintiff or assignee after the assignment. The assignee of every such 
instrument is not required to prove the assignment, unless the defendant shall annex 
to his plea an affidavit denying such assignment, and stating that he believes it was 
forged. Dig. of Statutes, 1858, c. 15, §§ 1-4. p. 157. But under this statute it is 
held that, to authorize an assignee to sue in his own name, the bill or note must be 
indorsed, and delivery alone is not sufficient. Bradley r. Trammel, Hempst. C. C. 
164 ; Hardie v. Mills, 20 Ark. 153. 

In California, there is the further special provision that "all bonds, due-bills, notes, 
or other instruments in writing not negotiable may be assigned, by indorsement, in the 
same manner as bills of exchange are, so as absolutely to transfer and vest the prop- 
erty thereof in the assignee, who may maintain an action thereon in his own name, 
subject to any defence which the maker or obligor might have set up to the action of 
the payee or obligee, where the same has arisen previous to notice of the assignment." 
Wood's Dig. 1858, p. 75, Arts. 198, 199. 

In Florida, it is provided that the assignee or indorsee of any bond, note, or bill of 
exchange may bring suit thereon in his own name, with the same rights and powers 
as might have been possessed by the assignor or indorser. Thomson's Dig. 1847. p. 348. 

In Indiana, actions must be prosecuted in the name of the real party in interest. 
"When any action is brought by the assignee of a claim arising out of contract, and 
not assigned by indorsement in writing, the assignor shall be made a defendant to 
answer as to the assignment, or his interest in the subject of the action. And all 
actions by assignees shall be without prejudice to any set-off or other defence existing 
at the time of, or before notice of, the assignment, except actioTis on negotiable prom- 
issory notes and bills of exchange, transferred in good foith and upon good considera- 
tion before due." 2 R. S. 1852, pp. 27, 28, ^ 3, 6. 

In Iowa, actions are to be brought in the names of the real parties in interest, and it 
is provided specially that notes payable to order or to bearer may be sued in the name 
of the person to whom they are indorsed or delivered, and that bonds, due-bills, and 


shall, if negotiated by the maker, have the same effect, as against 
him and all persons having knowledge of the facts, as if payable 

other promises in writing to pay, without words of negotiability, are assignable by in- 
dorsement or b\' other writing, and the assignee may sue thereon in his own name, sub- 
ject to any defence or set-off, legal or equitable, which the maker or debtor had against 
any assignor tliereof before notice of his assignment. Code 1851, c. 58, ^ 948, 949, and 
c. 100, § 1676. 

In Maryland, the assignee of any chose in action for the payment of money, entitled 
thereto by assignment in writing, may maintain an action thereon in his own name; 
but the defendant may make the same legal or equitable defence as might have been 
had against the assignor at the time of such assignment, and Ijefore notice thereof. 
Code 1860, Vol. I. p. 43. 

In ]\Iichigan, it is provided that "the assignee for a valuable consideration of any 
bond, note, or other chose in action, which has been or hereafter may be assigned, if 
the assignor be dead, and there be no executor or administrator appointed upon his es- 
tate, or if such executor or administrator have no interest in the thing assigned, or shall 
refuse to prosecute for the same, may sue and recover in his own name upon such bond, 
note, or other chose in action, and the defendant in all such suits, until due notice of 
such assignment shall have been given, may set up and avail himself of any defence 
he may have in such action, in the same manner and with the like effect as if the as 
signor had been living, and the action had been prosecuted in his name." Comp. 
Laws, 1857, Vol. II. p. 1147, § 4159. 

In Mississippi, all bonds, obligations, bills single, and promissory notes mav be 
assigned by indorsement, whether the same be payable to order or assigns or not; and 
the assignee or indorsee may maintain an action thereon in his own name, subject to 
the defence and set-offs which the defendant had against the same previous to notice of 
assignment, in the same manner as though the suit had been brought by the obligee or 
payee. R. Code 1857, c. 4.3, § 2, p. 355. 

In Missouri, it is provided that actions shall be prosecuted in the name of the real 
party in interest. 2 K. S. 1855, p. 1217, c. 128, Art. 2, § 1. Under this statute it was 
held, in Boeka c. Nuella, 28 Misso. 180, that a promissory note may be transferred bv de- 
livery, without indorsement or written assignment, so as to enable the assignee to main- 
tain an action thereon in his own name. It seems, however, that a note transferred in 
that way will be subject to every defence wliich the maker had against it at the time of 
or before notice of the transfer. And so it was held of a note non-negotiable, in Ben- 
nett V. Pound. 28 Misso. 598. And again, in Lewis v. Bowcn, 29 Misso. 202, it was held 
that no indorsement or written assignment of a note is necessary to enable the holder 
to maintain an action in his own name. A deed of assignment for the benefit of cred- 
itors, purporting to assign a negotiable promissory note, is sufficient to enable the as- 
sif^nee to maintain an action upon it in his own name. McClain v. Weidcniayer, 25 
Misso. 364. Such, also, is the effect of an assignment written on an envelope of the 
'• within notes." Thornton v. Crowthcr, 24 Misso. 164. 

In Texas, it is provided that the a^.signee of bonds, and other instruments not ncgo- 
ial)le, may maintain an action thereon in his own name, subject to any defence against 
the same which it would have been subject to in the hands of any previous owner be- 
fore notice of the assignment. Oldham & White's Dig. 1859, p. 51, Art. 88. Though 
the holder of an instrument not negotiable may maintain a suit upon it in his own 
name, he must show his right to the paper, either by an indorsement or proof of own- 
ership ; and when he has taken it by delivery simply, his possession of it does not 
create such a presumption of ownership as to dispense with proof of that fact Mer- 

VoL. II.— D 5 


to the b(;arer.(/) And, independent of any statutes, if a note is 
made payable to a fictitious person or order, and is indorsed in 
the name of such person, it will be deemed, as to all bona fide 
holders without notice of the fiction, a note payable to bearer,(^) 
though it would be otherwise if they had notice of the fiction 
when they received it. (A) We have already given some consid- 
eration to this subject in the chapter referred to in our note. 

The law goes yet further ; and by a principle derived from the 
civil law, and there known as novation^ permits the assignee to sue 
the debtor in his own name, provided the assignor has discharged 
the debtor, and the debtor, in consideration thereof and of the 
assignment, has promised the assignee to pay the debt to him.(i) 

lin V. Manning, 2 Texas, 351 ; Merrill v. Smith, 22 Texas, 53. And so it is held that 
the possession of a promissory note, payable to another or order, and not indorsed in 
blank by the payee, does not constitute such evidence of ownership as will enable the 
person in possession to sustain an action on the note upon allegation that it was trans- 
ferred to the plaintiff by delivery. Ross v. Smith, 19 Texas, 171. 

In Virginia, the assignee of any bond, note, or writing not negotiable, may maintain 
thereon any action in his own name which the original obligee or pavee might have 
brought, bnt shall allow all just discounts, not only against himself, but against the 
assignor before notice of the assignment. Code 1849, c. 144, § 14, p. 147. This act 
Joes not apply to negotiable paper, though transferred after due. Davis v. Miller, 14 
Gratt. 1. 

(/) New York, 2 R. S. 4th ed., p. 178, ^ 5 ; Wisconsin, R. S. 1858, c. 60, § 4 ; 
Michigan. 1 Compiled Laws, 1857, p. 407 ; Mis.souri, 1 R S. 1855, p. 297 ; California, 
Wood's Dig. 1858, p. 72 ; Oregon, Stats. 1855, p. .531. The transfer of a note payable 
to the order of a fictitious person by the holder should he made by delivery only, or 
by his own indorsement, and not by indorsing the name of the fictitious payee. The 
holder, without the indorsement of the payee, in order to recover thereon, must prove 
affirmatively that the payee is a fictitious person, and the maker is not liable to one 
claiming as indorsee, unless proved to have had knowledge of the fact that the pavee 
was fictitious at the time of the signing. Maniort v. Roberts, 4 E. D. Smith, 83. The 
clause respecting notes payable to the order of the maker has refei*ence only to cases 
of negotiating without indorsement ; nor is it applicable to a case where a third person 
is named as payee along with the maker. Plets v. Johnson, 3 Hill, 112. 

(g) Plets V. Johnson, 3 Hill, 112 ; Kimmey v. Campbell, 1 Ala. 92 ; Vers v. Lewis, 
3 T. R. 182; Tatlock v. Harris, id. 174 ; Minet v. Gibson, id. 481 ; Collis v. Emett, 1 
H. Bl. 313 ; Ex parte Royal Bank of Scotland, 19 Ves. 310. And so, also, a check 
payable to a fictitious person is the same as if payable to bearer. Willets v. Phceiiix 
Bank, 2 Duer, 121. 

(h) Bennett v. Farnell, 1 Camp. 130; Hunter v. Jeffery, Peake, Add. Cas. 146; 
Cooper V. Meyer, 10 B. & C. 468. See supra, Vol. I. ch. 3, p. 32, note i. 

(i) Currier v. Hodgdon, 3 N. H. 82 ; Wiggin v. Damrell, 4 id. 69 ; Myers v. York & 
Cumberland R. Co., 43 Maine, 232 ; Barrett v. Union M. F. Ins. Co., 7 Cush. 175 ; 
Mowry i». Todd, 12 281 ; Ford v. Adams, 2 Barb. 349 ; Lang v. Fiske, 1 1 Maine, 
?85; Weston v. Barker, 12 .Johns. 276; Doty v. Wilson, "4 id. 378; Thompson a 


This is an unquestionable rule when what may be called open 
debto are assigned ; perhaps where notes not negotiable arc as- 
signed, it might be difficult to frame a declaration on the note 
itself, if the assignee were plaintiff; but if other circumstances 
permitted, he might, by the law of novation, bring his action in 
assumpsit, and use the note as evidence. 

After the debtor has made such promise to pay the assignee, 
he cannot avail himself, in set-oflf, of claims he may have had 
before and at the time of the assignment against the assignor, if 
he did not reserve them in his promise to the assignee, because 
such promise, without such reservation, amounts to a waiver of 
any sbt-off he might have.(y) 

It may be well to remark, that the equities of defence which 
may be relied upon need not have existed at the inception of 
the debt or contract, but they must have existed before notice of 
the assignment. (^) 

After notice of the assignment, a court will prevent the as- 
signor from fraudulently releasing the debtor, or otherwise inter- 
fering to defeat the rights of the assignee. (/) 

But if the assignee of a negotiable note sue the maker, the 
defendant may set off a negotiable note of the assignor which he 
held at the time of receiving the notice of the assignment of his 
own note, although the note thus set off did not become due 
before the note assigned was sued.(m) 

Emery, 7 Foster, 269 ; Fofrg v. Middlesex Mut. F Ins. Co., 10 Cush. 337 ; Phillips v. 
Merrimack Mut. F. Ins. Co., 10 id. 350. A leading English case on this subject is 
Tatlock ?;. Harris, 3 T. R 174. A bill of exchange was drawn by the defendant and 
others on the defendant alone, in favor of a fictitious person, (which was known to all 
parties concerned in drawing the bill.) and the defendant received the value of it from 
the second indorser, it was held that a bona Jide holder for valuable consideration might 
recover the amount of it in an action against the acceptor for money paid, or money 
had and receive.i ; and Buller, J. puts this case : " Suppose A owes B £ 100, and B 
owes C j£ 100, and the three meet, and it is agreed between them that A shall pay C the 
£ 100, B's debt is extinguished, and C may recover that sum against A." To make 
an effectual novation, enabling the assignee to sue in his own name, there must I)c an 
extintruishment of the old debt and the substitution of a new one between the debtor 
nnd the third party. 

(j) Wiggin V. Damrell, 4 N. II. 69 ; Thompson v. Emery, 7 Foster, 269. 

(k) Warner r. Whittaker, 6 Mich. 133. 

(/) Legh V. Legh, 1 Bos & P. 447; Alncr v. George, 1 Camp. 392; Parker v. 
Grout, cited in Brown v. Maine Bank, 11 Mass. 1.57, note 1 ; Wheeler v. Wheeler, 
9 Co wen, 34. 

(m) Stewart v. Anderson, 6 Cranch. 203. 


A note of hand or a bill of exchange, being, as we have said, 
itself only a personal chattel, although called and regarded for 
most purposes as a chose in action, may be assigned by delivery 
only, without any writing upon it, or on another paper. And so 
indeed may any open debt, the transfer being for value, and 
properly witnessed. 

No possession can be delivered of an open debt ; but in the 
case of a note, as possession can be delivered, it should be, and 
we know no reason why it should not come under the general 
rules respecting transfer of possession which belong to the law 
of sales. Formerly, a sale or transfer of a personal chattel, 
without a transfer of possession, was void ; because the retaining 
of possession by the vendor was considered not only as a badge 
of fraud, but as conclusive proof of it. Courts of high au- 
thority have held the same doctrine in this country. And 
indeed, to a very recent period, such has been the tendency, 
if not the positive determination, of some of our State courts. 
The prevailing rule of the country is otherwise. It may now 
be considered established, that a retaining possession by the 
vendor is a circumstance of suspicion, which is, however, more 
or less open to explanation. In some States, if the possession 
is retained for any considerable time, and especially if any third 
parties act on the presumption of property arising from posses- 
sion, fraud is conclusively presiimed. In others, the possession, 
and the inference from it, may be regarded as always open to 
rebutter and explanation, and as not avoiding a sale, if tliat be 
shown to have been made in good faith. («) 

All notes and bills, whether negotiable or not, may be trans- 
ferred by assignment. But no assignment of a note transferable 
by indorsement would permit the transferee to sue in his own 
name.(o) And the same rule applies to a bill or note payable on 
its face to the order of the drawer or maker ; for the mere 

(n) See the cases collected on this point in 1 Parsons's Contracts, 442; Smith's 
Lead. Cas., 4th Am. cd., Vol. I. p. 1, et seq. 

(o) Pease v. Hirst, 10 B. & C. 122, 5 Man. & R 88 ; Thompson r. Emery, 7 Fos- 
ter, 269; State of Arkansas r. Bani^ of Washington, 18 Ark. .'>54 ; Grand Gnlf Bank 
V. Wood, 12 Smedes & M. 482; Amherst Academy v. Cowls. 6 Pick. 427 ; Matlack v. 
Herdrickson, 1 Green, N. J. 263 ; Barriere r. Nairac, 2 Dallas, 249 : Noinnd r. Ring- 
gold, 3 Harris & J. 216 ; Pratt v. Thomas, 2 Hill, S. Car. 653 ; WhecleT v. Wheelei, 9 
Cowen, 34. 


delivery of such a bill or note, without indorsement, gives tho 
transferee no right of action in his own name.(;?) But in most 
other respects we should say that delivery alone of a nego- 
tiable note, which could be indorsed, might still operate as an 
assignment. (^) 

It is a common method of assigning notes to write the as- 
signment on the back ; and there can be no objection to this. 
Such writing would, literally speaking, be an indorsement ; but 
if the note were not negotiable, it woiild have the same force, 
and no more, as if it were an instrument written on other pa- 
per. (/•) If the note were negotiable, it might be a question 
whether the transferee might not treat it as an indorsement and 
sue in his own name, although we should be inclined to hold, 
that the payee might not only limit his indorsement as he chose, 

{p} Smalley v. Wight, 44 Maine, 442 ; Titcomb v. Thomas, 5 Greenl. 282. 

(q) Jones v. Witter, 13 Mass. 304. In this case, a negotiable promissory note was 
held to be assigned, by delivery only without writing, for an adequate consideration ; 
and the assignee might recover thereon in the name of the payee, notwithstanding pay- 
ments made by the maker to the payee after notice of the assignment. And so a bond 
may be assigned by delivery only. Vose v. Handy, 2 Greenl. 322. Mellen, C. J., 
giving the opinion in this case, said : " That for many years courts of justice had been 
gradually becoming more and more inclined to protect equitable interests ; that less 
form is necessary now than formerly, as to the mode of creating such interests ; that the 
object has been to ascertain that it was an interest founded in equity and justice, and 
on good and adequate consideration." See also Titcomb v. Thomas, 5 Greenl. 282 ; 
Littlefield v. Smith, 17 Maine, 327 ; Heath v Hall, 4 Taunt. 326 ; Hastings v. McKin- 
ley, 1 E. D. Smith, 273; Sexton i>. Fleet, 2 Hilton, 477; Ross v. Smith, 19 Texas, 
171 ; Prescott v. Hull, 17 Johns. 284. 292. In the latter case, Spencer, C.J said, that 
the mere delivery of a chose in action u])on a good and valid consideration would be a 
sufficient assignment of it, even were it a specialty ; but that it ought to he alletred, in 
an actiim upon it, that the assignment was for a full and valuable consideration, and 
that it is a subsisting assignment by an averment, that the suit is prosecuted for the 
benefit of the assignee. See also Davis ». Lane, 8 N. H. 224 ; Grover v. Grover, 24 
Pick. 261 ; Hughes v. Harrison, 2 La. 89; Savage v. King, 17 Maine, 301 ; Calder v. 
Billington, 1.5 Maine, 398 ; Foster v. Shattuciv, 2 N. H. 446 ; Thompson v. Emery, 7 
Foster, 269. 

(r; See chapter on Guaranty, posl. A guaranty written upon a negotiable note by 
the payee is held to operate as an indorsement of it, so as to enable the transferee to 
sue the maker or other party to it in his own name. Upham i>. Prince, 12 Mass. 14 ; 
Blakely v. Grant, 6 Mass. 386 ; Myrick v. Hasey, 27 Maine, 9. But in Tyler v. 
Binney, 7 Mass. 477, somewhat confirmed by Tuftle v. Bartholomew, 12 Met. 452, 
the court .seemed inclined to adopt the view tiiat a mere guaranty by the payee of a 
r../te could not be treated as an indorsement in blank, transferring the note to the 
holder, and authorizing him to sue the maker in his own name as indorsee; but in the 
last case there was the additional objection, that the guaranty was a joint one by the 
payee and a third person. 



but might transfer without indorsement, and that express words 
to that effect would bind tlie transferee and all who took from 
him ; still, if the assignment passed to the assignee the whole 
property in the note, reserving no right in the transferrer, we 
should think the original negotiability of the note would permit 
the assignee to sue in his own name, and would cut off any 
equitable defences of which he had no notice. 



Bills and notes may be given causa mortis. But if the donor 
gives a note indorsed to him specially, or payable to him, and 
not negotiable, so that after his death an action on it must be 
brought by the executor or administrator of the donor, it was 
formerly said that the donation is not valid, and that the amount 
recovered would be assets in the hands of the executor or admin- 
istrator. (5) 

But the law upon this point has undergone some changes, and 
it is now held that a note not negotiable, or if negotiable, not 
actually indorsed, but delivered, passes as a gift causa mortis, 
with a right to use the name of the administrator of the donor 
to collect it for the donee's own use, and this would be permit- 
ted, although such administrator, when the case comes on for 
trial, appears and protests against it.(/) 

(s) Miller v. Miller, 3 P. Wms. 356, is the leading case on this point; and it was 
there held, that the gift of such a note, being a mere chose in action, could not be u 
proper subject of a gift causa mortis, because no property therein could pass bv deliv- 
ery, and an action thereon must be in the name of the executor. But a bond was 
considered to be a proper subject of such a gift. Gardener v. Parker, 3 Madd 184 ; 
Snellgrove v. Baily, 3 Atk. 214; Ward v Turner, 2 Ves. Sen. 431, 442, per Lord Hard- 
wicke; Wells v. Tucker, 3 Binney, 366. The distinction formerly made between 
bonds and other choses in action, as bills of exchange and promissory notes, has been 
done away with. 

(t) Chase v. Redding, 13 Gray, 418; Bates v. Kempton, 7 Gray, 3S2; Sessions v. 
Moseley, 4 Gush. 87 ; Grover v. Grover, 24 Pick. 261 ; Borncman v. Sidlingor, 15 
Maine, 429 ; Brown r. Brown, 18 Conn 410 ; Turpin v. Thompson, 2 Met. Ky. 420 ; 
Coutant V. Schuyler, 1 Paige, Ch. 316; Parker v. Marston, 27 Maiiii, 196. The 
delivery of a bond and mortgage as a donatio caitsa mortis is valid. IIui-st v. Beach, 
5 Madd. 3^\ ; Duffield c. Elwes, 1 Bligh, N. S. 497, 514 ; s. c. uom. Drffield v. Hicks, 
1 Dow & Clark, 1. 


And so it is held that the delivery of such a note inter vivoi 
constitutes a valid gift.(M) 

If the donor gives his own note, this is not a valid gift, and 
may be defended against by his representatives for want of con- 
sideration ; (y) and the indorsement by the donor of a bill or 
note made by a third person, and payable to him, while it may 

(h) Grover v. Grover, 24 Pick. 261. See Milnes v. Dawson, 5 Exch. 948, 3 Eng. 
L. & Eq. 530. 

(v) Parish v. Stone, 14 Pick. 198; Haraor v. Moore, 8 Ohio State, 239 ; Harris v. 
Clark, 3 Comst. 93; Raymond v. Sellick, 10 Conn. 480; Holley v. Adams, 16 Vt. 
206 ; Smith ». Kittrid}:e, 21 id. 238; Copp v. Sawyer, 6 N. H. 386 ; Fiak v. Fink, 18 
Johns. 143. See also Holliday v. Atkinson, h B. & C. .501 ; 8 Dow. & R. 163 ; Flint 
r. Pattee, 33 N. H. 520. Contra, sec Bowers v. Hurd, 10 Mass. 427, which is over- 
ruled so far as it rests on the ground of a. donatio causa mortis; Wright u. Wright, 1 
Cowen, 598. This latter case has been overruled in Craig i'. Craig, 3 Barb. Ch. 76 ; 
Harris v. Clark, 2 Barb. Sup. Ct. 94, 3 Comst. 93, in which cases the subject is consid- 
ered at great length, and all the cases upon it carefully reviewed. In Hamor v. Moore, 
6 Ohio State, 239, the action was upon the following paper : " For value received, I prom- 
ise to pay to Mrs. Hamor, wife of John Hanior, the sum of $ 300, as a small recom- 
pense for the kindness shown to me by her. The executors of my last will and testa- 
ment are hereby directed to pay the above to Mrs. H., or her sons Moses and John, 
after my decease. John R. Moore. Attest, Philip Riggs. Feb. 28, 1850." This was 
executed shortly before the death of the promisor, and delivered to the subscribing 
witness, with injunctions to deliver it to Mrs. H. after his death, which was done. It 
was held that this was not a good gift causa mortis. The reason of this rule is stated 
by the court in the case of Holley v. Adams, 16 Vt. 206, to be, that a mere promise to 
pay a sum of money is not a gift that becomes complete in the donee upon the death 
of the donor, as is essential in a donatio causa mortis. But the fact that the donor's 
note, if it constituted any claim against his estate, must be submitted to be allowed 
before it could be available, shows that it is not a complete gift. And then to support 
such gifts '• might in some instances," say the court, " put whole estates at the mercy 
of a few interested individuals, who happen to have access to, and who have gained the 
confidence of, the dying man, and the transaction would be disencumbered of all the 
salutary checks which the law has thrown around the disposition of property by will, 
there being no witnesses required, and there being no tribunal instituted by law for the 
purpose of testing its validity after the decease of the donor ; and the very circumstance 
which sometimes renders a will suspicious is the living principle in a donatio causa 

In Parish v. Stone, 14 Pick. 198, the court say that the donor's own note cannot 
be the subject of such a donation, because it is not an existing available promissory 
note to any one. It is not a chose in action. It is not a binding contract by the prom- 
isor to the promisee ; and if it were, it would be open to another objection as a donatio 
causa mortis, namely, that it would not be revocable by the donor. It is simply a 
promise to pay money, and as such, and as a gift of a sum of money, it wants the 
essential requisite of an actual delivery. In Bowers v. Hurd, 10 Mass. 427, the court, 
speaking of such a note, say : " We cannot consider it as a donatio causa mortis, is 
was suggested at the bar, for that must be complete at the time, by a delivery of 
the thing given." 


transfer the note as a gift causa mortis, will not render his estate 
liable on his indorsement. (i^) 

If a person gives his own check as an immediate gift, the donee 
must collect it in the lifetime of the donor,(a:) otherwise his death 
revokes the gift, if the check is in the hands of the donee. (^) If 
given as a donatio mortis causa, as it was not intended to take 
effect till after death, the death would not operate a revocation 
of the gift.(s) But the rule which prevents the note of a donor 
from being a good subject of a donation causa mortis would 
seem to apply equally to a check. 

We give in this place only the most general rules applicable to 
the case of mortuary gifts, because we are obliged to consider 
them elsewhere, and in other connections. 

(w) Weston v. Hight, 17 Maine, 287. And see Easton v. Pratchett, 1 Cromp. M. 
& R 798, 3 Dowl. 472, 2 Cromp. M. & R. 542. 

(r) Tate v. Hilbert, 2 Ves. Jr. Ill ; Rerldel r. Dobree, 10 Sim. 244. 

[y) Tate v. Hilbert, 2 Ves. Jr. 111. In Lawson v. Lawson, 1 P. Wms 441, a testa- 
tor on his death-bed drew a bill upon his goldsmith to pay £ 100 to his wife, and de- 
clared, in a note, in his own handwriting, on the bill, that the money was to buy her 
mourning, and to maintain her until her jointure should become due. The master of 
the rolU held the gift valid as a donaiio causa mortis, and to operate as an appointment ; 
and he further said, that being for mourning, it might operate like a direction given for 
his funeral, which ought to be observed, although not in his will. Lord Louglibroiiffh, 
afterwards, in Tate v. Hilbert, supra, says that the decision in Lawson v. Lawson was 
right, but that the report in P. Williams is inaccurate, and does not show the ratio dfici- 
dendi; and that, " taking the whole bill together, it is an appointment of the money in 
the banker's hands to the extent of £ 100 for the particular purpose expressed in a 
written appointment, which is a purpose that necessarily .-upposes his death. There- 
fore that case is perfectly well decided." Upon this, Ruyi/les, J., in Harris i;. Clark, 3 
Comst. 93, 118, remarked, that " if by the word appointment is meant a direction which 
the executors were to carry into effect, then the paper was testamentary. But the mas- 
ter of the rolls could not have regarded it in that light, for he did not require the paper 
to be proved in the ecclesiastical court But if an 'appointment ' meant an appro- 
priation of the money to a specific purpose for the benefit of the wife, then it was in 
effect an assignment or transfer to her for that purpose, and that is the sense in which 
I understand the word to have been used." But a draft of the donor, not accepted, for 
a specific sum, upon a third person who has in his possession funds of the donor, docs 
not operate as an assignment or appropriation to the donor of the sum mentioned in 
the draft, and therefore is not valid as a gift mortis causa. Harris v. Clark, 3 Comst. 93. 
See Billing v. Devanx, 3 Man. & G. 56.=j, 571; Rodick v. Gandcll, 12 Bcav. 325; 
1 DeG. M. & G. 763. See as to a check being an appropriation. Matter of Brown, 2 
Story, 502, 516; Dykers v. Leather Manuf. Bank, 11 Paige, 612, 617. 

(z) See the remarks of Shaw, C. J., in Sessions i;. Moseley, 4 Cush. 87, 92. 

CK. UT.] CHECKS. 67 



A CHECK is a brief draft or order on a bank or banking-house, 
directing it to pay a certain sum of money. (a) This instrument 
is in constant use wherever there are banks or houses of deposit, 
and is employed in a variety of ways. In England, the use of 
checks is regulated by statutes, (Z>) with much minuteness ; and 
they are drawn not only on the national bank and on country 
banks, but on private persons and firms. In this country, so 
much statute regulation has not been thought necessary as in 
England. Bank-checks, with us, rest more on the common prin- 
ciples of the law of negotiable paper. Still, they have some 
important peculiarities, and are met with so constantly, that it 
is thought best to consider them in a chapter by themselves ; 
although we have already, in considering other topics, antici- 

(a) The common form of a check in England is this, taken from Chitty on Bills, 
p. 147: — 

Loadon, 1 January, 1840. 

Pay to A. B. or Bearer Twenty Pounds. 

(Signed,) S. K. 

■| lie following is the printed blank of the American check : — 

Bank. No. 

Dolls. Cts. 

Boston, 186 

Pay to or Bearer, 

Dollars lob. 
To the Cashier. 

It may be made payable to " A," to " A or order," to " A or bearer," or " to 
bearer " alone. Harker v. Anderson, 21 Wend. .372; Elting v. BrinkerhofF, 2 Hall, 
4.59; Boehm v. Sterling, 7 T. R 423 ; Cruger v. Armstrong, 3 Johns. Cas. 5; In 
re Brown, 2 Story, .502-612. It is usually made payable to bearer, but not uni- 
versally. Mr Chitty implies this (Bills, 18th ed., ch. 11, p. 545), and M'Culloch 
asserts it (M'Cull. Diet, of Com., Checks), in this language: "They tieurli/ resemble 
bills of exchange, except t/u'i/ are iini/brinli/ payable to bearer"; and as is stated in 
Woodruff V. Merchants' Bank of N. Y., 25 Wend. 673. 

(6) 48 Geo. HI. c. 88, .53 ; 17 Geo. HI. c. 30 ; 7 Geo. IV. c. 6. 


pated much of the law of cheeks, and shall consider them fur- 
ther in future chapters. 

A check may be non-negotiable, negotiable by indorsement, or 
transferable by delivery, accordingly as it is drawn payable to a 
particular person, or to him or order, or to bearer, or indorsed 
in blank. It is plain, however, tliat it is not their principal 
object or purpose to be negotiated. (c) 

Bills and notes are intended to be used as money, and take 
the place of money far more commonly than checks. In this 
country, checks are usually made payable to bearer, and in Eng- 
land, as we have seen, almost always so, in order to protect 
them from the stamp duty.(<i) 

The negotiability of checks is defeated by the same causes 
which defeat the negotiability of bills and notes in general ; as 
by being payable in bank-bills, and the like.(e) The check is 
always considered in England as a kind of inland bill of ex- 
change, and this language is frequently adopted by American 
writers. (/) They are much used here in drawing from one 

(c) Checks are said, by Mr. Chancellor Walworth, to be made at times for a tem- 
porary circulation Mohawk Bank v. Brodcrick, 10 Wend. 304. The negotiability 
of checks and bills of exchange stands on the same footing. Keene V- Beard, 8 C. B., 
N. s., 372, 23 Law Reporter, 171, 187. And in England, where a check is usually 
made payable to a person named as bearer, if it is indorsed by such person with the 
intention of passing a title to it, and to incur the liabilities of an indorser of a nego- 
tiable instrument, he becomes liable as such. Keene v. Beard, sup-a. 

(d) Chit, on Bills, 545 ; Rex v. Yates, 1 Moody, Cr Cas. 170 ; Conroy v. Warren, 
3 Johns. Cas. 259, 261. In Elting v. Brinkerhoff, 2 Hall, 459, an instrument not 
negotiable, nor addressed to bankers, was regarded by Mr. Justice Oakley as a check. 
It is to be observed, that the time of payment is not stated in the forms given above ; 
but when this is the case, they are payable on demand, as we shall have occasion to no- 
tice hereafter. And see Keene v. Beard, 8 C. B., n. s., 372, 23 Law Reporter, 1 71, 187. 

(e) Little v. Phenix Bank. 2 Hill, 425. 

(/) Keene v. Beard, 8 C. B., k. s., 372, 23 Law Reporter, 171, 187. In Barker v. 
Anderson, 21 Wend. 372, Cowen, J. defines a check to be "a bill of exchange, pay 
able on demand." He criticises the expression, that " checks are like bills of ex- 
change," on the ground that 'nihil simile est idem,' whereas checks are bills, ''or rather, 
bill is the ijenns, and check is a species." He cited Boehm v. Sterling, 7 T. R. 423, 
426. per Lord Kenifon, and Cruger i\ Armstrong. 3 Johns. Oas. 5, 7, 8, where Ridcliffe 
J. says, " It possesses all the requisites of a bill " ; and Kent, J., " Checks are sub- 
stantially the same as inland bills, payable to bearer." In Merchants' Bank v. Spiccr, 
6 Wend. 443, 445, Marcy. J. said : " Checks are considered as having the character 
of inland bills of exchange." So in Murray v. Judah, 6 Cowen, 484, 490, per Sulher 
land, J. These general expressions are declared, by Mr. Justice Coicen, supra, not to 
be dicta merely ; but they may perhaps be ex|)lained by the cases themselves, and h\ 
the fact that the points decided were equally applicable to bills of exchange and chcika. 

CH. m.] CHECKS. 59 

State upon houses of deposit in anotlier ; and small sums of 
money are frequently and very conveniently sent in this way , 
and it has even been suggested that these checks are foreign 
bills, and as such subject to protest and damages. (o-) While a 
check is used as money in many respects, in others it is only 
evidence of debt ; and the law of gifts, and especially of mor- 
tuary gifts, which we have already considered, seems to rest 
upon this distinction. It is quite certain that a check, when 
given without any consideration, is not a valid gift, so far as to 
give an action to the donee against the drawer, or against the 
indorser who indorses for the purpose of giving it. It is in this 
respect like a bill of exchange. (A) 

A check is always supposed to be drawn against funds ; and 
there is much authority for holding it to be in some important 
respects an appropriation of those funds. (i) As soon as the 

So also niiiy the cases Ellis v. Wheeler, 3 Pick. 18; Shrieve ?•. Duckham, 1 Littell, 
194; Humphries v. Bicknell, 2 Littell, 296; Mohawk Bank v. Broderick, 10 Wend. 
304 ; Woods v. Schroeder, 4 Harris & J. 276 ; Sutdiffe v. M'Dowell, 2 Nott & McC. 
2.51 ; Glenn v. Noble, 1 Blackf. 104; Smith v. Janes, 20 Wend. 192; Minturn v. 
Fisher, 4 Calif. 35 ; Barnet v. Smith, 10 Foster, 256. We admit that checks are a 
class of negotiable instruments, and a species of the <jenits bill ; but we consider that 
the species has some distinguishing peculiarities, and this is implied even by Mr. Justice 
Cowen, Harker v. Anderson, 21 Wend. 372, 380, in the opinion quoted above, where 
he says, " Does not the argument apply with greater force to common checks'? " 

(g) Per Con-en, J., in Harker v. Anderson, 21 Wend. 372. But there is no decision 
to this effect. 

{h) A check cannot be the subject of a donatio caus<i mortis. See supra, p. 56; 
but if a donee receive the money before the donor's death (in which case it is not prop- 
erly a donatio causa mortis), or before the bank or banker has notice, the gift will be 
good. The draft of a donor unaccepted was held not good as a donatio mortis causa. 
Harris v. Clark, 2 Barb. 94, 3 Comst 93, overruling Wright v. Wright, 1 Cowen, 598. 

(() The funds cannot properly be withdrawn by the drawer. Chapman v. White, 
2 Seld. 412 ; ("^onroy v. Warren, 3 Johns. Cas. 259, 262, 264; Cruger v. Armstrong, 
id. 5, 9; Brown r. Davies, 3 T. R. 80; Boehm v. Sterling, 7 T. R. 423, 429, 430. 
See Kemble v. Mills, 1 Man. &, G. 757. " It is an absolute appropriation of so much 
money in the hands of his banker to the holder of the check, and there it ought to 
remain till called for, unless the drawer suffer by the delay, as by the intermediate fail- 
ure of his banker, he has no reason to complain of delay not unreasonably protracted." 
4 Kent, Com. p. 549, note, 4th ed. In Brown v. Lusk, 4 Yerg. 210, the judge said : 
" They are appropriations of so much money in the liands of a banker, and are paya- 
ble on presentment." Morrison v. Bailey, 5 Ohio State, 13 ; Franklin v. Vandcrpool, 
1 Hall, 78 ; Hoyt v. Seelcy, 18 Conn. 353 ; In re Brown, 2 Story, 502 ; Robinson v. 
Hawksford, 9 Q. B. 52. But it seems contrary to all reason to say that the check 
works such an appropriation that the bank could pay the holder when forbidden to do 
80 by the maker. Parsons's Mer. Law, 92 ; Dykcrs i'. Leather Maiiuf Bank, 1 1 Paige, 
«12. hold'i it contrary to custom. In Bullard v. Randall, 1 Gray, 605. it was held that 


drawee has notice of it, he is ordinarily bound to pay it ; and 
a bank should not be permitted to affect the right of a holder of 
a check to the funds in its hands by refusing to pay it witliout 
sufficient reason. It is, however, undoubtedly a general rule, 
that a drawee who has refused to accept a bill of exchange can- 
not be sued by the payee upon that bill, nor, without special 
reasons, for his refusal to accept it. If a check be drawn upon 
a bank, the bank must have something of the same power and 
security. And as, in the whole transaction, the bank acts only 
as the agent of the depositor and drawer, it would seem that the 
bank would perhaps be bound to refuse, and would certainly be 

a check for a portion of the drawee's funds worked no assignment until presented for 
paj'ment and accepted by the bank. Even the verbal assent of the cashier when ab- 
sent from the bank was not binding. In this case a debtor was sued, and the bank 
summoned as his trustees ; he gave his creditor his checks for a part of his deposit. 
This the creditor delivered to the cashier when absent from the bank, and with it an 
order for discharge of the trustee process when the amount of the check sliould be 
transferred to his account This did not work such an assignment as would hold good 
against another trustee process, served before the transfer of the funds on the bank- 
books. In Harris ». Clark, 3 Comst. 93 (see s. c. 2 Barb. 94), it was held by a ma- 
jority of the court who took part in the decision, that a check worked no assignment. 
These judges were Ruggles, Gardner, Jewett, and Hoyt ; on the other side were Cady, 
Shankland; and Strong. Brown took no part in the decision. In Chapman e. White, 
2 Seld. 412, it was expressly held that a check before acceptance neither operates as an 
assignment nor creates any lien on the funds. In this case the bank of Geneva drew a 
check on the Canal Bank on the 7th of July, in favor of a party who l^ad a note of the 
same amount to meet at the latter bank, payable on the 12th of July. The check was 
received by the cashier of the Canal Bank on the 8th, the payee sending it by mail, with 
instructions that it was sent to pay his note ; but the note was neither indorsed by the 
cashier nor accepted by the bank. On the 10th the bank failed ; and on the 12th the 
note was presented, when payment was refused. Subsequently the check was returned 
to the payee, who brought this action against the receiver of the bank to recover the 
amount of it from the assets of the bank. But it was held that he had acquired no 
right to be paid the amount of the check in preference to the general creditors of the 
bank. The court said : ■' The question upon the facts stated is, whether the draft under 
these circumstances operated as an assignment of the deposit of the Geneva Bank to 
the amount of the draft either at law or in equity. The question has been decided by 
this court. Cowperthwaite v. Sheffield, 3 Comst. 243 ; Harris v. Clark, 3 Comst. 93 ; 
Winter v- Drury, 1 Seld. 525. The instrument in question was an ordinary bill of ex- 
change. It did not purport to be drawn on a particular fund, even if one existed. Bat 
there is nothing to show that any part of the deposit of the Geneva Bank was held by 
the drawees at the time when the draft was received or transmitted, or when the note for 
the payment of which the proceeds were to be ap))ropriated matured, and was presented 

at the banking-house of the depositary A check is a bill of exchange payable on 

demand. The drawee owes no duty to the holder until tlie check is presented and 
accepted." This decision is approved and followed in Butterworth r. Peck. 5 Bosw 
341 So also in Dykers i\ Leather Manuf. Bunk, 11 Paige, 612, it was hi'ld that a 

CH. m.] CHECKS. 61 

justified in refusing, to pay a check, if directed td refuse by tlie 
drawer. This is certainly the duty of the bank before it hac* 
promised to pay a check, as by certifying it to be good, or in 
some other way. 

While, therefore, we admit that a bank may be liable in a 
proper action to a holder of a check for a wanton or fraudulent 
refusal to pay the check, whereby the holder lost the funds, we 
should say that only in such cases could any action be maintained 
against the bank for the refusal. We have gathered the cases on 
this important question in our note.{j) 

One of the many reasons why the holder of a check, upon the 

mere priority in drawing a check upon a bank, or in demanding payment of it, is not 
sufficient to give to the holder of it any legal right of preference in payment, and of 
the funds of the drawer over the holders of checks subsequently drawn, or of which 
payment has been subsequently demanded. In the case of Fry & Cliapman's bank- 
ruptcy, in the year 1829, stated in Byles on Bills, p. 17, several holders of ciiecks on 
the bankrupts claimed to prove, alleging that they were equitable assignees of choses 
in action. The commissioners took time to consider, and afterwards disallowed the 
claim. The decision of the early case of Lawson v. Lawson, 1 P. Wms. 441, where 
a testator on his death-bed drew a bill upon his goldsmith for the payment of £ 100 
to his wife, declaring in a note upon the bill that the money was to buy her mourning, 
and to maintain her until her jointure should become due, seems to have been placed on 
the ground that it was an appointment of the money in the goldsmith's hands to that 
extent for the purpose expressed. " But upon that decision," said Lord Louyhbor- 
ough in the subsequent case of Tate v. Hilbert, 2 Ves. Jr. Ill, 121, " I cannot say that, 
at all events, drawing a cash-note upon a banker is an appointment of the money in 
his hands." There may be cases where in equity a check might operate as an assign- 
ment to the holder; as in case of the death of the drawer and the consequent revoca- 
tion of the banker's authority to pay, the holder may have relief in equity against the 
banker." Rodick v. Gandell, 12 Beav 32.5, 1 DeG. M. & G. 763. 

{j) The weight of authority rests with the view stated in the text; namely, that, 
under ordinary circumstances, the bank upon which a check is drawn owes no duty to 
the holder of it, and is liable to no action by him for refusing to pay the check, though 
it has sufficient funds therefor. Bellamy v. Marjoribanks, 7 Exch. 389, 403, S Eng. L. 
& Eq. 513 ; Mandeville v. Welch, .5 Wheat. 286 ; Warwick v. Rogers, .5 Man. & G. 340 ; 
St. John V. Romans, 8 Misso. 382 ; Levy v. Cavanagh, 2 Bosw. 100 ; National Bank 
t;. Eliot Bank, Superior Ct. Suffolk Co., Mass.. 20 Law Reporter, 138; Chapman v. 
White, 2 Seld. 412; Dykers v. Leather Manuf Bank, 11 Paige, 616. And see also 
Sims V. Bond, .5 B. & Ad. 389 ; Carr v. Carr, 1 Meriv. .541, note ; Devaynes v. Noble, 
1 Meriv. 568. It docs not avail to bind the bank in any way, that the holder of the check 
gives notice to the bank of his holding the check ; or even that the cashier of the bank, 
when absent from it, has verbally assented to the drawing of the check. Bullard v. Ran- 
dall, 1 Gray, 605. In Bellamy v. Marjoribanks, 7 Exch. 403, 8 Eng L & Eq. 523, 
Baron Parke remarked, that a holder " could not sue the drawee unless he had accepted 
the check, a practice not usual." The judge, in Chapman v. White, 2 Seld. 412, also 
remarks : " Tfie right of a depositor is a chose in action. It is immaterial whether the 
implied engagement upon the part of the banker is to pay the sum in gross or in parcels 

vol.. n. 6 


lefusal of the' bank to pay it, having sufficient funds of the 
drawer therefor, cannot maintain an action against tlie bank, is 
the existence of such a right of action on the part of the drawer, 
who may sue the bank in tort for the wrong done, or in assump- 

as it shall be required by the depositor. In either case, the draft or check of the latter 
would not of itself transfer the debt or alien upon it to a third person without the con- 
sent of the depositary." Dykers v. Leather Man. Bank, 11 Paige, 612, held that when 
a customer had given checks exceeding in the aggregate his funds in the bank, and had 
forbidden the bank to pay, and finally had drawn out his funds to make ratable dis- 
tribution among the check -holders, that the owner of a check presented before with- 
drawal of the funds, but after orders not to pay, could maintain no action against the 
bank, that mere priority in drawing a check does not gi»'e the holder the preference and 
priority in payment over the holders of checks drawn subsequently. In Pope v. Luff, 
7 Hill, .577, the drawee refused to accept the bill, but promised to pay the holder by a 
given day. The holder was not allowed to maintain an action against the drawee, though 
he ought to have accepted Tiie question whether the holder of a bank-check can main- 
tain an action in his own name against a bank having sufficient funds of the drawer, for 
refi::sing to pay the same, was much discussed in a late case in the Superior Court of Mas- 
sachusetts for Suffolk Co., National Bank i'. Eliot Bank, 20 Law Reporter, 138, .5 Am. 
Law Reg. 711. The case was tried before a full bench, and it was decided that such an 
action would not lie Mr. Justice Abbott dissented, in an able opinion, and rested his 
argument upon the principle, that, when money is paid by A to B, for C, the latter 
may sue B in his own name, if he refuse to pay over the same ; Farmer v. Russell, 1 B. 
& P. 296 (22 Am Jur. 17, 2 Greenl. Ev. 109 ; Arnold v. Lyman, 17 Mass. 400 ; Hall v. 
Marston, 17 id 575; Felton v. Dickinson, 10 Mass. 287 ; Carnegie v. Morrison, 2 Met. 
102 ; Fulton v. Poole, T. Raym. 302) ; and secondly, upon the general understanding and 
intent of the parties, concluded that the action ought to lie. See Weston r. Barker. 12 
Johns. 276 ; Fenner v. Meares, 2 W. Bl. 1 269, which were not on the point, but go a little 
further than the cases cited supra Fenner v. Meares was exploded in Johnson p. Col- 
lings, 1 East, 104, and at the time B/arhtone, J. did not fully agree with De Grei/. C. J. 
In a very late case in South Carolina, the same doctrine with Mr. Justice Abbott's was 
held, the Chief Justice, O'Neal/, however, dissenting (q. v ). This case was decided 
in February, 1860. Fogarties v. State Bank, 8 Am. L. Reg. 393. The opinions are 
very long and able. The case, in Massachusetts, of the National Bank v. Eliot Bank, 
was before the court. The grounds of the decision are the implied contract of the 
bank; the treneral imderstanding of the commercial world, and the interests of trade ; 
much weight is given to the ex leijuo el bono argument, and because the bank was wrong 
in refusing, the court thinks the holder has a right of action. The case of Dunlap v. 
Silver, 1 Cranch, 440. Appendix A, is cited, and the cases of wagers recovered from 
a stake-holrler, in which the right to the money is altered by the cast of a die, per Lord 
Holt. The strongest authority, however, which we find quoted is Weston v. Barker, 
12 Johns. 276, in which case it appeared that A hail assiL'ned certain securities to B, to 
apply the proceeds to certain purposes, and hold the balance subject to his order; he 
gave an order to C, who was allowed to recover against B, on an action for money had 
and received ; for it was held that the acceptance of the trust was equivalent to an ex- 
press promise on the part of B to pay to the person whom A should appoint. S/>encer, 
J., however dissented, and Piatt, J. delivered no opinion, not having heard the argu 
ments See M'Kim )'. Smith, 1 Hall's Law Journ. 486. which is criticised by Sfiencer, 
J. and Kent, C. J , in M'Evers v. Mason, 10 Johns. 213. The opinion of Chief Justice 

CH. m.] CHECK^S. 63 

sit for the breach of the implied contract to honor promptly the 
customer's checks. (A;) In such action nominal damages may be 
recovered, though no actual damage be shown ; the jury have a 
right to assume that the wrongful refusal to pay the check would 
be to some extent injurious to one in trade in every case, and 
they may further take into consideration, in estimating the dam- 
ages, the natural and necessary consequences of such refusal, 
and may award such damages as they may reasonably judge to 
be a fair compensation for the injury the plaintiff must have 
sustained from the dishonor.(/) Perhaps, in case such an action 

O'Neal! , in Fogarties v. State Bank, is well put : " Unless in law there is foundation for 
an implied contract, the plaintiffs have nothing upon which they can stand. There is 
no such foundation, for the contract is express with the depositor, and there cannot be 
both an express and an implied contract. The holder of the check cannot sue on the 
deposit. That gives a right of action to the depositor, and, as we have seen, he may 
sue and recover. It seems to me that there is no right of action, and I make no in- 
quiry as to what may be the notions of bankers or their customers. If they think a 
different course from that which I have pointed out best subserves the purposes of busi- 
ness, they have only to pursue it, and not ask the aid of the law. If they think my 
conclusion is right, then I can only say I regret that hereafter we shall be governed by 
a different rule." 

(k) Marzetti v. Williams, 1 B. & Ad. 415, 1 Tyrw. 77, note b; Rolin v. Steward, 
14 C. B 595. It appeared at the trial of the case of Marzetti v. Williams, that the 
plaintiff drew a check on the defendants, who were his bankers, to whom it was pre- 
sented at a time when there were ample funds of the plaintiff's in their hands to meet it ; 
but the check was dishonored for want of assets, through the inadvertence of the bank- 
er's clerk, in not entering to the plaintiff's credit in the ledger a payment that had been 
made to his account in the morning. Tiie check was again presented the following 
morning, and paid. The jury found that when the check was presented for payment, 
a reasonable time had elapsed to have enabled the defendants to enter to the plaintiff's 
credit the money they had received for him, and the Court of King's Bench held that 
the refusal to pay the check, under such circumstances, was a breach of duty for which 
an action would lie, upon which the plaintiff might have a verdict for nominal dam- 
ages, although it did not appear that he had sustained any actual damage, and there 
was no malice on the part of the defendants. Independently of other considerations, 
the credit of the drawer of the check is likely to be injured by the dishonor of his 
check ; and if he is a trader, he may be considered as in fact injured by the banker's 
refusal to pay the check when it is presented. 

(/) Kolin V. Steward, 14 C. B. 595. In this case the jury, having returned a verdict 
for £500 damages to the phiintiff in an action against his banker for dishonoring his 
checks when there were sufficient assets in the banker's hands to meet them, the court 
were of opinion that the jury had awarded a very large sum under the circumstances, 
as the banker had, previous to the drawing of the checks, notified the plaintiff that h<? 
must arrange with the bank if he desired any more checks to be paid, and at the sug 
gestion of the court the parties ultimately agreed to fix the damages at £200. No evi- 
dence was offered that the plaintiff had sustained any special damage. But the court 
were dl opinion that, it being alleged and proved that the plaintiff was a trader, the 


is brought by one not a trader, it would be necessary to allege 
and prove special injury, in order to obtain substantial dam- 
ages, (m) Even an agent who has paid in to his own private 
banking account funds belonging to an undisclosed principal, 
and which had been improperly obtained by the agent, may, 
upon the bank's refusal to honor his check against such funds, 
recover damages for such refusal. (/i) 

Though usually drawn payable to bearer, very commonly, where 
a check is for a large amount, and especially if it is to be sent to 
any considerable distance, it is drawn payable to order. Then 
if it be lost or stolen before it is indorsed, the loss does not fall 
on the drawer or the drawee ; for the bank cannot pay it before 
indorsement. Sometimes it is drawn in this way merely to se- 
cure the receipt of the person in whose favor it is drawn. 
Whatever the reason of this may be, if a bank pay a clieck so 
drawn, and with a forged indorsement, it is the same thing as if 
it pay a check with the drawer's name forged. (o) In New York, 

jury, in estimating the damages, might take into consideration the natural and neces- 
sary consequences which must result to the plaintiff from the defendant's breach of the 
contract; just as in the case of an action for a slander of a person in the way of his 
trade, or in the case of an imputation of insolvency on a trader, the action lies without 
proof of special damage. 

(m) Per \Vi/liamx,J., in Eolin v. Steward, 14 C. B .595. 

(n) Tassell v. Cooper, 9 C. B. 509. A., the farming bailiff of LoH D. (after hia 
employment as such had ceased), received a check for £ 180, in payment for wheat be- 
longing to Lord D., which he had sold on his account while acting as bailiff, and paid 
it in to his own account with B. & Co., his bankers, who received the cash for it, and 
gave A. credit for the amount, but afterwards, under an indemnity from Lord D., re- 
fused to honor his drafts. In an action to recover damages for the dishonor of two 
checks drawn against such funds, special damages being alleged, it was held that, even 
assuming: the funds to have been improperly obtained by the agent, there was an im- 
plied undertaking on the part of the bank to pay his checks, and that not having done 
so, they were responsible to him in damages. 

(o) Moreau v. Bank of the State of N. Y., 1 Duer, 434, 1 Kern 404 ; Robarts v 
Tucker, 16 Q. B. 560. In Smith v. Mechanics' & Traders' Bank, 6 La. Ann. 610, 
the plaintiff was a broker, and deposited with the defendant bank. A certain bill of 
exchange, purporting to be in favor of one Garland, was drawn on Paine & Harrison 
a well-known firm in New Orleans. The bill was. indorsed by Garland, of whom no 
account was given, so that the name is supposed to have been fictitious. The accept- 
ance of Paine & Harrison was forged. The plaintiff discounted the bill for a stranger, 
but to protect himself drew the check on the defendant bank, payable to the orders of 
the alleged acceptors, Paine & Harrison. " Paine & Harrison " was forged on the 
check, and the bank paid it. Under these circumstances, the bank was held to be ex- 
cused. This opinion, however, was not unanimous, and the ground seems to have 
been that the greatest good faith was required between bank and customer, and that 

CH. III.] CHECKS. 6/> 

and perhaps elsewhere, it is common to draw checks payable " to 
the order of bills payable," or to the order of a number (as to 
the order of No. 1176), or by some similar phrase, to express 
that negotiability which only exists in connection with the word 
order. But as such a check cannot be indorsed by any party, it 
has been held, for obvious reasons, to be a check payable to 
bearer, and of course transferable by delivery. (/>) 

In England there is a custom of crossing checks with the 
banker's name through whom the check is to be paid. How far 
this may act as a restrictive indorsement, and how far, not being 
a restrictive indorsement, it may go to show negligence in the 
banker who pays it to a person whose name is not crossed, is 
mucli discussed in a late case.(^) The custom is held not to 
operate as a restrictive indorsement, and the circumstance that 
a check is crossed is material, not in determining whether a tliird 
party was guilty of negligence in taking it, but in considering 
whether he took it in good faith and for value. (r) 

The custom was shown to have arisen among the clerks at the 
clearing-house, who were in the habit of writing their employers' 
names across the checks simply to facilitate the settlements. And 
it extended and is now sanctioned by statute, because a crossed 
check must by usage be paid through some banker, and when 
so paid it may be traced more easily, if it should have been lost 
or stolen, and so fallen into wrong hands. (5) 

The crossing does not form any part of the instrument itself, 
and therefor.e its erasure does not amount to a forgery, or pre- 
vent the banker upon whom it is drawn from paying it otherwise 
than through another banker, and availing himself of such pay- 
ment as a valid charge against the drawer..(^) This is the case 
even under the recent statute in England, (?t) which makes the 

the buyer of negotiable paper must take care, which doctrine was long ago abandoned. 
See post, as to the payment of forged checks. 

(p) Willetsy. Phoenix Bank, 2 Duer, 121. 

(7) Bellamy v. Marjoribanks. 7 Exch. 40.3, 8 Eng. L. & Eq. .513 ; and see Simmon? 
V. Taylor, 2 C. B., n. s., 528, 4 id 463 ; Boddington v. Schlencker, 4 B. & Ad. 752. 

(r) Carlan v. Ireland. 5 Ellis & B. 765, 34 Eng. L. & Eq. 130. 

(s) Bellamy i\ Marjoribanks, supra; Stewart ». Lee, Moody & M. 158. 

(t) Simmons v. Taylor, 2 C. B., n. s., 528 ; affirmed in the Exchequer Chamber, 4 
C. B., N. s , 4f«3 ; Bellamy v. Marjoribanks, supiyj ; Carlan v. Ireland, 5 Ellis & B 765, 
34 Eng. L & Eq. 130; Stewart v. Lee, Moody & M. 158. 

(m) 19 & 20 Vict. c. 25. This statute provides that, " Whereas doubts have arisen 

Vol. II .— E 6 * 


crossing operate as a positive direction to the banker on whom it 
is drawn not to pay it except through some banker, whereas the 
custom before the statute had not the force of a peremptory 
direction, but only made it incumbent upon the banker to use a 
greater degree of caution in paying the check. 

It has been said tliat the word " memorandum," or " mem.," 
written on the check would not affect the right of the holder, (v) 
We think this might have been doubted, because there is a well- 
known custom in all our commercial cities of drawing and using 
checks in this form merely as due-bills, or as what they are called 
and are, " memorandum checks." But it is also usual to run a 
pen through the name of the bank in memorandum checks ; and 
if this were omitted, and the name left, perhaps the holder might 
lawfully present it and demand payment. (if?) 

as to the obligations of bankers with respect to cross-written drafts ; and whereas it 
would conduce to the ease of commerce, the security of property, and the prevention 
of crime, if drawers or holders of drafts on bankers payable to bearer or to order on 
demand, were enabled effectually to direct the payment of the same to be made only 
to or through some banker"; be it therefore enacted, that "In every case where a 
draft on any banker made payable to bearer or to order on demand, hears across its 
face an addition, in written or stamped letters, of the name of any banker, or of the 
words ' and company,' in full or abbreviated, either of such additions shall have the 
force of a direction to the bankers upon whom such draft is made, that the sume is to 
be paid only to or through some banker, and the same shall be payable only to or 
through some banker." 

(v) Dykers v. Leather Manuf. Bank, 11 Paige, 612. It was held that the in.scrtion 
of the word "mem." in a check upon a bank in New York did not affect the negotiabil- 
ity, or the right to present and demand payment immediately. Where such check be- 
ing paid exhausts the funds, no claim arises against the bank in favor of holders of 
other checks presented on the same day which are not paid. Id. A cu-^tom wits at- 
tempted to be shown, that, in Wall Street, mem. was intended to limit the effect of 
checks, hut it was not satisfactorily siiown. " The weight of the testimony is. that this 
memorandum amounts to nothing more than an indication of an understanding that 
the check is not to be presented immediately for payment so as to destrov the drawer's 
credit with the bank, when he has not provided funds to meet the draft." 

(w) The name of the bank has been sometinies erased, as appears ni Ball v. Allen, 
15 Mass. 43.3, (1819,) where the following instrument was sued upon : — 

" Union Bank." 
100 dollars cents. Boston, Oct. 17, 1816. 

Pay to No. 100 or bearer, one hundred dollars joo 

To the Cashier. For account of James Allen. 

The check was a common one, with the name Union cancelled, by a line drawn through 
it. This was held per Parker, C. J. not to import a consideration, and the plaintiff 
was nonsuited. In Ellis v. Wheeler, 3 Pick. 18, we have a case in which there was 
a regular memorandum check, and the name of the bank erase4 »lso. It was re- 

CH. m.] CHECKS. Q'i 

A check may be drawn on any house of deposit, but is most 
usually drawn in this country only on banks, because there 
deposits are usually kept. Usually it is payable on demand,(a:) 
but sometimes it bears date as of a future day, and then is pay- 

covered on against the drawer, value given, and bona Jides having been proved. The 
following was the form : — 

Memdm. State Bank. No. 100 doll. cts. 

May 29. 1819. Pay to Capt. Cazueau or bearer, &c. 
To the Cashier. Elisha Wheeler. 

The word "State" was cancelled. In Franklin Bank v. Freeman, 16 Pick. 535, the 
following instrument was before the court : — 

Market North Bank, Memo , 
1000 dolls. cts. Boston, Aug. 27, 1833. 

Pay to Payable, Friday, 30 inst., or bearer, one thousand dollars loo 
To the Cashier. Benj. Freeman. 

The word " North " was cancelled by two lines drawn through it. Mr. Justice Putnam 
said : " A memorandum check is a contract by which the maker engages to pay the 
bona Jide holder absolutely, and not upon a condition to pay if the bank upon which 
it be drawn should not pay upon presentation at maturity, and if due notice of the pre- 
sentation and non-payment should be given. The word ' memorandum ' wrirten or 
printed upon the check describes the nature of the contract with precision." The pre- 
sentment and notice were held to be waived. It appeared in this case, that the word 
"Market" was written by the defendant, and that at the latter bank he had funds. 
This, it was contended, showed that presentment should be made there ; that if he had 
intended a "memorandum check," it would have been unnecessary to substitute the 
name of one bank for another. But the word memorandum was held to control this. 
It seems, then, from the New York and Massachusetts cases, that " memorandum " 
waived presentment and notice, whether the name of the bank be cancelled or not; 
but that if it be not cancelled, the holder may at his option treat the check like any 
other as to demand and notice. In Kelley v. Brown, 5 Gray, 108, it was held that 
a check in the common form could not be shown by parol evidence to be a memoran- 
dum check, and not intended for presentation, and so excusing the holder from pre- 
senting before he charged the drawers. 

(x) In Harker v. Anderson, 21 Wend 372, it is said that checks must be on demand. 
Bowen v. Newell, 4 Seld 190. As will be seen by consulting the forms supra, this 
does not appear on their face; but by express or legal implication such seems to be 
the case, when no time or conditions are stated. And this is true as to all negotia- 
ble papers. Whitlock v. Underwood, 2 B. & C. 157, 3 D. & R. 356. In Brown v. 
Lusk, 4 Yerg. 210, the instrument in question was payable at a day certain. It was 
held not to be a check. This was on the authority of Chitty (Bills, 7th Am. ed. 322J. 
It may, perhaps, be asked, Why pronounce that not a check which is plainly a bill of 
exchange, if there is no distinction to be taken between them ? So if it be post-dated, 
is\A not stated to be •' payaltle on demand" In re Brown, 2 Stor\', 502. The 
check was as follows : — 

Boston, Apr. 18, 1841. Pay W. Courtis & Co., 18th May, or bearer seven han- 
Jred three dollars. Ephraim Brown, by J. W. Green. 

To Cashier. 


able only when that day comes ; but then it is said to be payable 
without grace, on the ground that it is presumed to be drawn 
against funds on deposit, and grace is not required to provide for 
it as for bills of exchange. (y) 

If, however, it be correctly dated on the day on which it is 

But checks, though on demand, must be demanded, which is not the case with prom- 
issory notes. In an action against the drawer, demand and refusal before suit brought 
is an essential preliminary. Murray v. Judah, 6 Cowen, 484; Daniels v. Kyle, 5 Ga. 
245; Sherman v. Comstock, 2 McLean, 19; Strader v. Batchelor, 8 B. Mon. 168. 
See also, as to cash-note in England, Grant v. Vaughan, .J Bun-. 1.516, 1 W. Bl. 485. 
And evidence that the check was only intended as evidence of money lent is inadmis- 
sible to charge the drawee, without presentment. Kclley v. Brown, 5 Gray, 108. 

(y) Veazie Bank v. Winn, 40 Maine, 60, per Tcnjieij, J. ; Westminster Bank v. Whea- 
ton,4R. 1.30; In re Brown, 2 Story, 502, 512, 514 ; Osborne y. Smith, decided in Supe- 
rior Court of the City of New York, cited in Kilgoie v. Bulkley, 14 Conn. 366 ; Taylor 
V. Wilson, 11 Met. 44, per Huhburd, J ; Salter v. Burt, 20 Wend. 205 ; Mohawk Bank 
)•. Broderick, 10 Wend. 304, 13 id. 133 ; Bowen v. Newell, 4 Seld. 190 ; Woodruftr. 
Merchants' Bank of N. Y., 25 Wend. 673. In In re Brown, supra, Story, J. says: 
" We all know, from the history of inland bills of exchange, that originally they were 
not entitled to days of grace ; and that days of grace were first established, as appli- 
cable to them, by the statutes 9 & 10 Wm. III. ch. 17, and 3 &4 Anne, stat. 2, eh 9. 
In Massachusetts, days of grace were not formerly allowed upon promissory notes, 
payable at a future time; and the like rule was supposed to apply to inland bills of 
exchange, or at least the contrary was not established. This rule, in Massachusetts, 
was altered by the stat. of 1824, ch. 1.30, and by the Revised Laws of 1835, stat. 12, 
ch. 33, §§ 5, 6, which allows days of grace upon all bills of exchange payable at sight, 
or at a future day certain, and on all promissory negotiable notes, orders, or drafts 
payable at a future day certain. But no mention whatsoever is made, i« either statute, 
of checks ; but they are silently left to the known rules, practice, and usages of banks, 
which I believe to be invariable, never to accept them prior to payment, and always to 
pay them on presentment on or after the day stated for payment by the date, or upon 
the face of the check." The weight of judicial authority seems to be with the cases 
above cited, which hold that no allowance of days of grace is to be made upon checks 
payable on a specified day, or so many days after date. There are cases, however, 
which hold that such checks are entitled to days of grace by the law merchant. Such 
are the decisions in i )liio, Tennessee, California, Delaware, Georgia, and New York. Mor- 
rison V. Bailey, 5 Ohio State, 13 ; An<lrew i'. Blachly, 1 1 id. 89 ; Brown v. Lusk, 4 Yerg. 
210 ; Minturn v. Fisber,4 Calif. 35 ; Bradley v. Delaplaine, 5 Harriug. Del. 305 ; Ilender- 
.son V. Pope, 39 Ga. 36 1 ; Taylor i: French, 4 E. D. Smith, 458 ; Bowen v. Newell, 5 Saudf. 
326 ; 4 Seld. 1 90, 2 Duer, 584, 3 Kern. 290. In New York, however, it is provided l)y a re- 
cent statute, eniitled "An Act in relation to commercial paper," passed April 17, 1857, 
that checks and drafts, appearing on their face to be drawn upon banks, banking associa- 
tions, or individual bankers, carrying on business under the act to authorize the business 
of bunking, payable on any specified day, or in any number of days after the date or sight 
thereof, shall become due and payable without any days of grace being allowed ; and that 
it shall not be necessary to protest the same fur non-acceptance. 'J'he allowance of days 
of grace upon bills and notes was in the first place a matter of usage, and it would seem 
a custom or usiige either for or against such an allowance upon checks is admissible in 
determining the right to it. Per Jonen, C. .J., in Osborne r. Smith, cited 14 Conn. 366. 

CH. ffl.] CHECKS. 69 

drawn, but expressly made payable on a future day, we know no 
sufficient reason why it should not have grace. Tlie authorities, 
iiowever, ditfer, not only on this point, but, as our notes will show, 
on the wliole law of post-dated checks. (5) In England, the stat- 
ute 55 Geo. III. c. 184, provides that " all drafts or orders for 

This question of usage was much discussed in the case of Bowen y Newell, 4 Seld. 
190, 5 Sandf. 326, 2 Duer, 584, 3 Kern. :i90 ; and the case was finally decided on the 
ground that the check, beinj^ payable in Connecticut, was governed by the usage of the 
banks in that State as to tlie allowance of grace ; and it being proved that by such 
usage there was no allowance of days of grace, it was held that the check was payable 
without grace. A usage must be general, in order to govern as to payment of a 
check with or without days of grace ; evidence of a usage strictly local will not be 
received in evidence. Woodruff «;. Merchants' Bank, 25 Wend. 673, 6 Hill, 174; 
Morrison v. Bailey, 5 Oiiio State, 13. The rule in Ohio, as stated in Morrison v. 
Bailey, has been greatly modified and limited by the recent decision in the case of 
Andrew v. Blachly, 11 Ohio State, 89. The court in this case decide that tlie cir- 
camstajice that a draft for money in the form of a check payable on a future speci- 
fied day, is prima facie, but not conclusive, evidence that the instrument is a bill of 
exchange, and as such entitled to days of grace. Although payable at a future day, 
it is a check, and not a bill of exchange, if it was drawn upon a bank or banker, and 
is designed by the parties as an absolute transfer and appropriation to the holder of 
so much of an actually existing fund belonging to the drawer in the hands of the 
drawee ; and in such case it is not entitled to days of grace. 

(z) In Serle v. Norton, 9 M. & W. 309 ; Allen v. Keeves, 1 East, 435 ; Whitwell v. 
Bennett, 3 B. & P. 559, a post-dated check was held altogether void. It is held or 
implied that such an instrument is payable on the day it is dated in the follow- 
ing cases : Boyd v. Emmerson, 2 A. & K. 184, per Denman, C J., Boddington v. 
Schlencker, 1 Nev. & M. 540, 4 B. & Ad. 752 ; Hill v. Gaw, 4 Barr, 493. See Regina 
V. Taylor, 1 Car. & K. 213. In Watson v. Poulson, Exch. 1851, 7 Eng. L. & Eq. 585, 
it is said that a post-dated check was not absolutely void, if ])aid without knowledge 
of its false date. In Walker v. Geisse, 4 Whart. 252, a check was indorsed the day 
before its date. Post-dated as well as ante-dated checks are payable on presentment at 
anytime after date. Mohawk Bank v. Broderick, 10 Wend. 304, 13 id. 133; In re 
Brown, 2 Story, 502, 512 ; Salter v. Burt, 20 Wend. 205. In the case of In re Brown, 
2 Story, 502, it is said that " a check is not less a check for being post-dated, and 
thereby becomes in effect payable at a future and different time from that on which it 
was drawn or issued." This is a very full case on the subject of checks. Story, J. 
says, inter alia: "Thus, if a check be dated on the 1st of December, and be payable 
on the 10th of December, it is presentable on the latter day, and on presentment on 
that day will be paid by the bank. It is never presented for acceptance, and no 
days of grace are allowed upon it. In short, it is always treated as payable on the 
very day designated as the day of payment." In Brown i;. Lusk, 4 Yerg. 210, a check 
drawn on the 13th of December, 1827, and made payable to A. B. or bearer, at 
the Branch Bank of the United StJXtes at Nashville, on the 1 4th of January following, 
A'as held an inland bill of exchange, and entitled to grace. Catron, C. J. was absent, 
and no authorities on the point were cited. It is of some importance to discover 
whether an order so drawn is or is not a check ; for at common law inland bills were 
not entitled to days of grace. As to them, days of grace were established by 9 & 10 
\Vm. III. ch. 17, and 3 & 4 Anne, stat. 2, ch. 9. In Massachusetts, the rule was origi- 


the puymeni of money to the bearer on demand, and drawn upon 
any bank or bankers, or any person or persons acting as bankers, 
within ten miles (now fifteen, by 9 Geo. IV. c. 49) of the place 
■^diere such drafts or orders shall be issued, provided such place 
shall be specified in such drafts or orders, and provided tlie same 
hhall bear date on or before the day on which the same shall be 
issued, and provided the same do not direct the payment to be 
made by bills or promissory notes," &c. shall be exempt from 
stamp duties. Of course, post-dated checks are excluded from 

nally to allow no days of grace on promissory notes. This was changed by statute 
(1824, ch. 130, Rev. L "1835, stat. 12, ch. 33, H 5, 6). Now grace is allowed upon 
(Gen. Stat. Mass. 1860, ch. 53, §^ 15, 16, p. 294) bills of exchange payable within the 
State at sight or at a future day certain, on promissory negotiable notes, orders, and 
drafts payable within the State at a future day certain, in which there is not an ex- 
press stipulation to the contrary, in like manner as it is allowed by the custom of mer- 
chants on foreign bills of exchange payable at the expiration of a certain jjeriod after 
date or sight. " The provisions of the preceding .section shall not extend to any bill 
of exchange, note, or draft, payable on demand." A post-dated check, like the one 
in Brown ?•. Lusk, is " payable at a future day certain," and there is no express stipu- 
lation against days of grace. Would the nature of checks so drawn make them como 
under the exception in the 1 6th section 1 In Bowen r. Newell, 4 Seld. 190, overrul- 
ing 5 Sandf 326, the question arose, whether the following instrument was entitled to 
days of grace : — 

N. York, Octobers, 1849. 
Cashier of Thomson Bank, pay Zenas Newell or order two thousand dollars on the 
12th inst. (Signed,) B. Searls & Son. 

(Indorsed,) Zenas Newell. 

It was held that this was entitled to days of grace, upon the authority of Woodruff v. 
Merchants' Bank. 25 Wend. 673, in error, 6 Hill, 174, the judge saying that he was una- 
ble to distinguish between the case of a check made payable as above and one payable 
" 7 days after date." It does not seem to us essential that a check should be drawn on 
a hank, or that it should be payable to bearer ; and we cannot distinguish the instru 
ment in Woodruff v. Merchant's Bank from a bill of exchange. It was as follows : — 

$ 1,500. Detroit, Nov. 15, 1838. 

Sixty days after date, pay to the order of Daniel Green, Esq., fifteen liundred dot 
lars, at the Phoenix Bank in the city of N. Y., value received, which place to account. 

Your ob. serv't, 
To Wm. H. Griswold, Esq., L. Godard, 

Cashier Oakland County Bank. Detroit, Mich. 

In the case of Bowen v. Newell, 4 Seld. 190, it was finally decided, upon a second trial 
in the Superior Court, and appeal to the Court of Appeals, that the check was not 
payable with grace, it being shown that in Connecticut, where the check was made 
payable, there was a general usage not to allow days of grace ; and this is dis- 
tinguished from the case of Woodruff v. Merchants' Bank, 25 Wend. 673, where the 
usage was not allowed to control, in the fact that the usage in the latter ca"»c h'os a 
local one See 2 Duer, 584 ; 3 Kern. 290. 


the exemption, and fall within the stamp act.(a) As a check is pay- 
able on presentment, it cannot, in the usual course of business, b^ 
presented for acceptance.(6) But it must be presented within a rea- 
sonable time in order to charge the drawer or iudorser in case of 
failure of the drawee.(66) The fact that it is presumed to be drawn 
against deposited funds makes it of even greater importance than 
in the case of a bill that a check should be presented, and that the 
drawer should be notified of the non-payment, and that he and any 
indorser should be discharged by neglect of notice.(c) But a holder 
who takes a check for value some days after it was drawn, takes it 
free from defences of which he had no notice. (cc) 

It has sometimes been said that this was indispensable, even 
where there were no funds. (c/) Where there is no presentment of 
the check or no notice, there is of course a presumption of injury 
to the drawer. But is this presumption absolute? We should say 
not; and that it was rebutted by proof that the check was not 
drawn against funds, or that the funds on which it was drawn were 
removed by the drawer before presentment of the check. (e) So it 

(a) The penalties are extremely severe for ■vdolation of the provisions of the act. 
But where defendants, knowing that the check was void because post-dated, and that 
the drawers were insolvent, made presentment to the t)ankers, who paid the amount 
innocently, though they had no funds, but expected some in the course of the day, it 
was hehl that the bankers could maintain an action for money had and received. Martin 
V. Morgan, Gow, 123, 1 Brod. & B. 289, 3 J. B. Moore. 635. 

(b) Per Jones, C. J., in Osborne v. Smith, cited in Kilgore v. Bulkley, 14 Conn. 366. 
(bb) Moody t). Mack, 43 Mo. 210. In this case there was a delay of three months, 

and it was held that the indorser would be discharged without good reason was shown 
for the delay. 

(c) Cruger v. Armstrong, 3 .Johns. Cas. 5; Harker v. Anderson, 21 Wend. 372; 
Murray v. Judah, 6 Cowen, 484; Lilley v. Miller, 2 Nott & McC. 257; Brown v. 
Lusk, 4 Yerg. 210; Tassell v. Lee, 1 Ld. Eayni. 743; Fosters. Paulk, 41 Maine, 425; 
and see also Camidge v. Allenby, 6 B. & C. 373; Taylor v. Young, 3 Watts, 343; St. 
John V. Homans, 8 Misso. 382; Heid v. Reid, 11 Texas, 585. 

{cc) Ames V. Meriam, 15 Gray, 267. 

(d) Cruger v. Armstrong, 8 Johns. Cas. 5, 8, 9; Edwards y. Moses, 2 Nott & McC. 
433; Cathell v. Goodwin, 1 Harris & G. 488; English v. Trustees Indiana, &c. Uni- 
versity, 6 Ind. 437. 

(e) Healy v. Gilman, 1 Bosw. 235; In re Brown, 2 Story, 502, 519; Eichelberger 
r. Finley, 7 Harris & J. 381; Franklin v. Vanderpool, 1 Hall, 78; Fitch r. Red- 
ding. 4 SandF. 130; Pack y. Thomas, 13 Smedes & M. 11; Humphries r. Bicknell, 
2 Littell, 296; Case v. Morris, 31 Penn. State, 100; True*'. ThoTnas, 16 Maine, 36; 
Kenihle r. Mills, 1 Man. & G. 757; Foster r. Paulk, 41 Maine. 425. The case of 
Bickerdike v. BoUman, 1 T. R. 405, was among the first, if not the first, in which it 
was held that drawing without funds is a fraud, and takes away from the drawer the 
right to exact notice. We do not see that there is any difference between originally 
having no funds in the hands of the drawee and withdrawing them before the liill is 
presented. See Valk !'. Simmons, 4 Mason, 113; Commercial Hank v. Huglies, 17 
Wend. 94 ; Harker v. Anderson, 21 Wend. 372 ; Lilley v. Miller, 2 Nott Si McC. 257 ; 
Mohawk Bank v. Broderick, 10 Wend. 304; Blaiikenship v. Rogers, 10 Ind. 333; 
Spanglcr v. Mc]3aniel, 3 Ind. 275, Sunw/e, C. J. In Levy v. Peters, 9 S. & H. 125, 
127, although ])roof of presentment was (lispensed with under special circumstances, 
TU(jhiiii(n,C J. said: ''In general there cannot be ii recovery without j)roof of a 
demand and notice to the drawer,'''' 


lias been held, that a drawer who has stopped payment may be sued 
without averment of notice, or proof of it if averred.(/) It has, 
however, been held in New York, that, when a plaintiif relies upon 
facts to excuse notice, he must state them in his complaint ; and an 
averment of due notice is not sustained by proof of excusing facts. (^) 
The rule of reasonable time is generally the same as to drawer and 
indorser,. in case of the failure of drawee. And in most cases it is 
held that a check should be presented the day after it is received, (^) 
and that such presentment is sufficiently early to hold the drawer.(/iA) 
If a check be presented long after date, and is refused pay- 
ment, not on account of a failure, but because the drawer has 
closed his account or withdrawn his funds, the drawer is still 
liable. (J) Where the drawer, drawee, and payee of a check live 
in the same place, the payee has still a day for his presentment. 

(/) Purchase v. Mattison, 6 Duer, 587 ; Devoe v. Moffat, Anthon, N. V. 162 ; Jacks 
V. Darrin, 3 E. D. Smith, 557; Spangler v. McDaniel, 3 Ind. 275; Watson v. Poul- 
son, 15 Jur. 1111 ; Whaley v. Houston, 12 La. Ann. 585. 

(.9) Little V. rhenix Bank, 2 Hill, 425. The English cases on this point are in con- 
flict with each other. See Carter v. Flower, 16 M. & \Y. 750; Thomas r. Fenton, 
5 Dowl. & L. 28; Jones v. Broailhurst. 9 C. B. 173, 190. 

(A) Eitchie v. Bradshaw, 5 Calif. 228; Moule v. Brown, 4 Bing. N. C. 266, 5 Scott, 
694; Veazie Bank v. Winn, 40 Maine, 60; Mohawk Bank v. Broderick, 10 Wend. 
304, 13 id. 133. Nunnemaker v. Lanier, 48 Barb. 234; Johnson v. Bank of North 
America, 5 Kob. 554. In Appleton v. Sweetapple, B. K. Mich. 23 Geo. III., a bill pay- 
al)le in London on demand was given to the plaintiff at 1 o'clock in the afternoon, and 
he did not present it till the next morning ; the question was, if he presented it in time. 
Lord Mannfield left the point to the jury, who found for the defendant. A new trial 
was grunted, on the ground that it was a matter of law ; the jury found again for the 
defendant, against the direction of the judge; this was set aside; but the same verdict 
i-esulted from the new trial, and then the court refused to disturb the verdict. Bay ley 
on Bills, 226, note 46, ed. 1836. In Hankey v. Trotman, 1 W. Bl. 1, the plaintiff, a 
banker, held a bill on the defendant, for which the latter gave him a draft upon an- 
other banker at 12 o'clock. Tliis the holder got marked for acceptance that night; but 
before the next morning the drawee stopped payment. The jury found for the de- 
fendant, and were held ( Wright, J. duhitante) to be sufficient judges whether the plain- 
tiff had had time enough to recover his money. Robson v. Bennett, 2 Taunt. 394 ; 
Beeching v. Gower, Holt, N. P. 313; Rickford v. Ridge, 2 Camp. 537, allowed pre- 
sentment on the day following the receipt. Reynolds v. Chettle, 2 Camp. 596 ; Mer- 
cliants' Bank r. Spicer, 6 Wend. 443; Boddington v. Schlencker, 4 B. & Ad. 752, 
1 Nev. & M. 540; Alexander v. Burchfield, 7 Man. & G. 1061, Car. & M. 75, 3 Scott. 
N. R. 555; Shrieve v. Duckham, 1 LittcU, 195. 

{Tih) Smith V. Miller, 6 Rob. 157; Bickford v. First Bank, 42 III. 238. 

(i) Robinson v. Hawksford, 9 Q. B. 52 ; Mullick v. Radakissen, 9 Moore, P. C. 46, 
28 Eng. L. & Eq. 86; Conroy v. Warren, 3 Johns. Cas. 259; Murray v. Judah, 6 
Cowen, 484; Elting v. Brinkerhoff, 2 Hall, 459; In re Brown, 2 Story, 502. See 
Howes ('. Austin, 35 111. 396; Lawrence v. Schmitlt, 35 111. 440, 

CH. m.] CHECKS. 73 

But if it is drawn on a distant place, it has been held, in Eng- 
land, that the payee has until the next secular day to forward it, 
and his agent has till the day after receiving it for presentment 
and demand. (y) As between the holder of a check and an in- 
dorser of it, or the transferrer and the drawer, there can be no 
doubt that it must be presented for payment within a reasonable 
time ; and it seems, by the best authority, that this is the same 
time as required in the case of a bill or note. (A;) But as be- 

( /) Smith V. Janes, 20 Wend. 192 ; Moule i,\ Brown, 4 Bing. N. C. 266 ; Rickford 
r. Ridge, 2 Camp. 537. 

{/c) Smith V. Janes, 20 Wend. 192 ; Rickford v. Ridge, 2 Camp. 537 ; Beeching v. 
Gower, Holt, N. P. 313; Clark v. Stackhouse, 2 Mart La. 327 ; Morrison v. Bai- 
ley, 5 Ohio State, 13. In Merchants' Bank v. Spicer, 6 Wend. 443, Murcy, J. hints 
at this distinction, but he repudiates it at the beginning of his opinion, and lays down 
the general rule: " Checks are considered as having the character of inland bills of ex- 
change, and the holder, if he would preserve his right to resort to the drawers and in- 
dorsers, must use the same diligence in presenting them for payment, and in giving 
notice of the default of the drawee, that would be required of him as the holder of 
an inland bill." Gough v. Staats, 13 Wend. 549; iiarker v. Anderson, 21 Wend. 
378. This is also adopted by Chancellor Kent. 3 Kent, Com. 87. See Kemblo 
V. Mills, 1 Man. & G. 757 ; Robinson v. Hawksford, 9 Q. B. 52. The ground 
taken by Mogadara v. Holt, 1 Show. 317, 12 Mod. 15, was that the drawer was liable 
at any distance of time, and the onus rests upon him to show that loss or damage has 
accrued. See Sarsefield v. Witherly, Comb. 152. It is sometimes asked, "Why 
should not the same rule apply to the drawer of a bill of exchange 1 " Bayley on 
Bills (1836), p 229, note o ; Harker v. Anderson, 21 Wend. 372. We should say, in 
answer, tiiat checks and bills of exchange are not the same, as we have attempted to 
show; and therefore the query has no application. And in particular the drawer of 
fhe check seems to be always regarded as the principal debtor : the drawer of a bill is 
Bometimes the surety merely. Morrison v. Bailey, 5 Ohio State, 13; Daniels v. Kyle, 
1 Ga. 304. See cases in former notes, and Conroy v. Warren, 3 Johns. Cas. 259 ; 
Murray v. Judah, 6 Cowen, 484; Eichelberger v. Finley, 7 Harris & J. 381 ; Frank- 
lin V. Vanderpool, 1 Hall, 78. Checks are drawn against funds deposited ; bills 
of exchange rest upon commercial arrangements of various kinds ; and when the 
drawer settles with the drawee of a bill of exchange, he presumes that the balance 
is made with reference to all the transactions of all kinds. Morrison i). Bailey, 5 
Ohio State, 13. But a check is rather an appropriation of so much money, which 
the drawer has no further right to use or meddle with, or if he does, he is liable to 
account for it in a reasonable time, though not at any distance of time. When Mo- 
gadara V. Holt was cited to Abbott, C. J., Hill v. Heap, Dow. & R., N. P. 57, 59, 
(1823,) he said that the doctrine was noiv exploded, for, until the contrary was 
thown, the drawer was presumed to have funds in the drawee's hands. Thurman v. 
Van Brunt, 19 Barb. 409; White v. Aml)ler, 4 Seld. 170. A drawer is supposed to 
«»tand, dejiire, in the place of a guarantor. Little v. Phcuix Bank, 2 Hill, 425. The 
onus of showing that he has suffered no injury seems to rest on the holder. Id. ; 
Cruger v. Armstrong, 3 Johns. Cas. 5 ; Conroy v. Warren, id. 259 ; Iloyt v. Seeley, 
18 Conn. 353 ; Daniels v. Kyle, 1 Ga. 304, 5 Ga. 245. But insolvency of the drawee 
is almost the only case in which tlie drawer is a lo-cr, BO that he is disciiarged on 

VOL. U. 7 


Iween tlie holder and the drawer, it seems also to be settled, 
althougli not without some dissent, that the drawer is not dis- 
charged by any delay of presentment whatever, unless he can 
show tl at he has been injured thereby, as by a failure of the 
drawee, or a change in the state of accounts, or otherwise. (/) 
The authorities, however, are not quite in agreement as to this 
distinction between the drawer and indorser. It is quite com- 
mon in this country to present a check, not for payment, but to 
be marked and certified as good, (which is usually done by tlie 
cashier on whom it is drawn writing upon it " Good," over his 
signature,) and then it circulates or is transmitted as cash. 
Checks are often certified as good in England, as well as here, 
and are there used and deposited as bills of the certifying bank. 
This marking or certifying is called in some cases " acceptance," 
and is said to have the same effect as acceptance. It seems to 
be determined that such certifying creates an immediate and 
positive engagement of the bank to pay the check. (m) The 

a check. Haibeck v. Craft, 4 Duer, 122. The presumption that a drawee of a check, 
when he has accepted, has funds, is so strong, tiiat, if the drawer is obliged to take 
up the check, he may maintain an action against the drawee on that presumption. 
Thurman v. Van Brunt, 19 Barb. 409. In Pack v. Thomas, 13 Smedes &. M. II, tho 
drawer of the check was injured ; but it was held tliat he was released on his check 
only to the extent of his injury from want of actual notice. He is not released, it 19 
said, by want of notice, although he has the funds on deposit. Daniels v. Kyle, 1 Ga. 
304 ; Little v. Phenix Bank, 7 Hill, 359. In Laws v. Kand, 3 C B., N. S. 442, it was 
held, in accordance with Robinson v. Hawksford, 9 Q. B. 52, that no time less than six 
years was an unreasonable time to present a cJieck, unless some loss accrued mean- 
while to the drawee. See Conroy v. W^arren, 3 Johns. Cas. 259, in which there was 
delay and no loss ; and a very similar case, whore tiiere was a loss, is Little v. Phenix 
Bank, 2 Hill, 425 ; Elting v. Brinkcrhotf. 2 Hall, 459. 

(/) Alexander v. Burchfield, 3 Scott, N. ^. 555, 7 Man. & G. 1061 ; Serle v. Nor- 
ton, 2 Moody & R. 401 ; Robinson v Hawksford, 9 Q B. 52 ; Foster v. Paulk, 
41 Maine, 425; Morrison v. Bailey, 5 Ohio State, 13; In re Brown, 2 Story, .502; 
Tryon v. Oxley, 3 Iowa, 289 ; Smith v. Janes, 20 Wend. 192; East River Bank v. 
Gedney, 4 E. D. Smith, 582; Pack v. Thomas, 13 Smedes & M. 11 ; Fiemming v. 
Denny, 2 Phila. R. Ill, 13 Leg. Intelligencer, 140; Shrieve v. Duckham, 1 LittcU, 
194; Daniels v. Kyle, 1 Ga. 304, 5 Ga. 245; Little v. Phenix Bank, 2 Hill, 425 ; 
Murray v. Judah, 6 Cowen,484 ; Harbeck v. Craft, 4 Duer, 122. Tiiis rule of present- 
ment was stated in a recent case in the Queen's Bench to be, that, " as between the 
drawer of a check and the holder, if presentment is deferred to such a time that incon- 
venience has been sustained, the time may then be deemed unreasonable ; but if none 
has resulted, I see nothing unreasonable in a presentment, I should even say, at any 
time within six years." Per Patteson, J., in Alexander jk Burchfield, 3 Scott, N. R 
55.5, 7 Mnn. & G. 1061 ; and see Laws v. Rand, 3 C. B.. n. s. 442. 

(>n) Uobson v Bennett, 2 Taunt. 388; Barnct r. Smith, 10 Foster, 256 ; Will* ts * 

CH. m.] CHECKS. 75 

bank becomes so far the primary debtor, that no delay in pre- 
senting — at least, not a delay for a year or more — would affect 
the obligation of the bank.(Ai) The law of demand and notice 
has no application between the bank and the holder ; but may 
still have as between the holder and drawer. As to the author- 
ity of a teller or cashier of a bank to certify checks in this way. 
it cannot be derived from his general power or duty, or from the 
nature of his office. (o) But it is certain that the bank may, by 
vote, confer this power upon an officer. And even if they con- 
Phoenix Bank, 2 Duer, 121 ; and see In re Brown, 2 Story, 502. By the practice 
of the London bankers, if one banker who holds a check drawn on another banker 
presents it after four o'clock, it is not then paid ; but a mark is put on it, to show that 
the drawer lias effects, and that it will be paid ; and this marking binds the banker to 
pay on the next day at tlie clearing-house. Robson «. Bennett, 2 Taunt. 388. 

(n) Farm. & Mech. Bank v. Butchers & Drovers' Bank, 4 Duer, 219, 14 N Y. 
623, 16 id. 125. In Willets v. Phoenix Bank, 2 Duer, 121, it was decided that the 
neglect to demand payment of a certiKed check for two months after the time of 
certifying, the drawer having in the mean while drawn all his funds out of the bank, 
did not constitute a valid defence for the bank in a suit on the check. Oakley, C. J. 
said : " The question in this case evidently depends upon the construction to be given 
to the act of the proper officer of a bank in certifying a check. Is it a mere declaration 
of an existing fact ■* or does it create a new and binding obligation on the part of the 
bank ? Is it simply a declaration that tlie maker had then funds in the bank corre- 
sponding with the amount of the check ? or is it an appropriation of those funds to the 
credit of the check, and a promise that, upon demand, they sliall be applied to its pay- 
ment 1 If the former, the defendants are not liable ; if the latter, they have no defence. 
That the latter is the true legal interpretation of a certified check we cannot doubt ; 
since, upon any other construction, the act of certifying would be nugatory, or would 
operate as a fraud. It would be nugatory, if understood by all as creating no obliga- 
tion on the part of the bank to retain funds to meet the payment of the check. It 
would operate as a fraud, if generally understood as creating an obligation which the 
law would hold not to exist The sole and manifest object of the maker or holder of a 
check in requiring it to be certified is to enable him to use it as money ; that is, to pass 
it to others with the same certainty of its acceptance, as affording the same security to 
a holder ; and the bank, in complying with the request, must know that such is its 
object. It is, therefore, certain that a bank, by certifying a check, means to give it a 
currency and value that would not otherwise belong to it, and this additional value, it 
seems to us, can only be given by interpreting the certificate as an unconditional 
promise of payment, whenever payment .shall be demanded ; otherwise a certified check 
would be of no more use or value than an ordinary check, and would afford no greater 
security to a holder. The certificate is a useless form, unless it means, not merely that 
the check was good when certified, but that it will be good when presented for pay- 
ment. This construction is, therefore, necessary to give effect to the apparent inten- 
tion of the parties ; and at any rate is necessary to prevent the check from being subse- 
quently used as a means of deception and fraud." In Barnet v. Smith, 10 Foster, 256, 
a statement by the casliier, that a check on the bank was good, was held to amount \r 
an acceptance. 

(o) Mussey v. Eagle Bank, 9 Met. 306. 


fer if with limitations, as a thing to be done only when actually 
in funds, still, if the officer use this power collusively with a 
customer, and in fraud of the bank, the bank is held in favor of 
one who in good faith takes such certified paper for value, (yy) 

In one case it is held that a usage on the part of the cashier 
to certify checks, however clear or however proved, would be a 
bad usage, and would not bind the bank.(^) But in that case 

ip) 111 Farmers & Mech. Bank of Kent Co. v. Butchers & Drovers' Bank, 4~Duer, 
219, 14 N. Y. 623, 16 id. 125, it was held that a bona Jide holder for value, of a check 
certihed by the payinj; teller of the bank ou which it is drawn, whose authority was 
limited to cases where the drawer had funds to meet the check, might recover of the 
bank ; althouj^h there were no funds of the drawer in the bank, and the check was cer- 
tified by the teller in violation of his duty and for the accommodation of the drawer. 

{q) Mussey v. Eagle Bank, 9 Met. 306. The court remarked, that " if a usage had 
been proved of the certifying by the teller that the dieck is good, to enable a holder to 
use it afterwards at his pleasure, we are clearly of opinion that such a usage would be 
bad, and could not be upheld. It vs'ould give to bank-checks, which are intended for 
immediate use, and are the substitutes for specie in the ordinary transactions of busi- 
ness, the character of bills of e.Kchango, payable to the bearer, the bank being acceptor, 
and payable at an indefinite time. It would lead to loans to favored individuals, with- 
out the usual security ; it would substitute checks for cash in the hands of tellers who 
receive them, and would confer the power upon a single officer to pledge the credit of 
the bank by the mere writing of his name, a power never contemplated by the legisla- 
ture, nor intended to be conferred by the stockholders'. It would expose the teller to 
the frauds of a bookkeeper, and both of them to the temptations of unprincipled and 
greedy men, who might, under various pretences, procure their checks to be thus certi- 
fied, in the first instances, when their deposits were good, and afterwards when there 
was no balance to their credit ; allowing interest, as a bonus for the certificate, to the 
certifying officer, who would afterwards receive such checks as cash. And tlie present 
case well illustrates the hazards and the evils to which banking companies and their 
officers are exposed by the allowance of such a practice. It has been pressed in the ar- 
gument on the subject of usage, that this certificate of 'good' on the check is but 
another form of the exercise of a usage so common in banks, to grant by the teller a 
certificate of deposit of money to the credit of a third person. But we are of opinion, 
with the judge before whom the trial was held, tliat usage of the one will not support 
the practice of the other. The two practices, while having the appearance of resem- 
blance, and although one may be used for the same purpose as the other in the form 
of a remittance, are in their character essentially distinct. A certificate of deposit is 
regularly issued only when money is actually paid into a bank for the benefit of a tinrd 
person, and is placed to his credit ; by means of which certificate, and on the return 
thereof, he can draw for the money deposited ; or, if the money is not actually depos- 
ited, but the check of the party procuring the certificate is given, such check is imme- 
diately charged to the account of the drawer. This is a transaction in which money is 
actually paid for the certificate, and the certificate is no more than entering the amount 
in the depositor's bank-book. The difference is, that the credit is given to the corre- 
spondent of the depositor, and not to the depositor himself. But where a check is cer 
tifii,'d, as in the case at bar, no money is deposited, no check is received, and the teller 
can only rely on the declaration «f the bookkeeper that the check is good The trans- 

CH. m.] CHECKS. 77 

no such usage was proved, and the remark was therefore obiter, 
and it is difficult to see why the express authority of the di- 
rectors should bind them, and not a usage of the cashier, per- 
fectly well known to them, and fully confirmed and sanctioned 
hy their continued acquiescence. If a bank is induced to certify 
a check through Ifie fraudulent representations of the drawer, it 
may reclaim or countermand the payment of the check or the 
money represented by it, unless the check had been previously 
paid to a bona fide creditor of the drawer, without notice on his 
part of the fraud by which it was procured. (r) Banks are in 
the habit, as it seems, of paying checks sometimes when not in 
funds. This of course is in the case of old and well-known 
customers, whose credit is good, and the bank would not will- 
ingly injure it. It woiild seem that if a check is sent to a 
bank when no funds are placed there to meet it, it may well 
raise aai implied assumpsit on the part of the drawer ; but some 
of the cases think the bank unauthorized to make such payment, 
and hold that there is no claim derived therefrom against the 
drawer, and no usage could well affect it, for it would be a bad 
iisage.(5) It may be inferred from all the cases that the drawer 
is not generally liable until after demand on the drawee and 
refusal, and is in this respect regarded only as a surety of the 
drawee ; but if he drew witiiout a right to draw either from 
funds or from a bargain or other reasonable ground, he is then 
liable at once, without any presentment or demand. (^) 

If drawer and holder both keep their accounts at the same 
bank, and the cashier receive the check and hold it, this does not 
bind the drawee to pay it, because the bank has the right to re- 
ceive it as agent of the holder, and to examine whether the bank 
has funds of the drawer before it pays the check. (w) Where a 

action enters not into the hooks of the hank, is not necessarih' known hy its higher 
officers ; and yet, it is contended, the bank is bound by the transaction." 

(r) Bank of the Republic t. Baxter, 31 Vt. 101. 

(s) Lancaster Bank v. Woodward, 18 Penn. State, 3.57. In England, where one got 
a check cashed, knowing the bankruptcy of the drawer, and that he held no funds, the 
bankers were allowed to recover back. Martin i;. Morgan, Gow, 123. 

(t) Siijiru, p. 71, note e. 

(u) A banker of both the holder and drawer will he presumed, if lie take the check 

of the latter from the former, to receive it as the former's agent ; and no jiromise to 

pay it will he implied if he keep it till the following day. Boyd /;. Knimerson, 2 A. & 

E 184, 4 Nev. & M 99 ; Kilsby v. Williams, 5 B. &-Ald. 815 ; 1 Dow & II. 476. Id 



bank carries on business by means of branches established at 
different places, each branch transacting business as a separate 
bank, having its own customers and giving out distinct check- 
books, lieaded with the name of the place, if one branch cashes 
a check drawn on another, the branch so paying it will not be 
considered as honoring the check, or as purl?liasing it, but as 
taking it on the credit of the holder. (y) If two or more checks 
of the same drawer are presented at a bank, it is said that that 
which is first drawn has no claim over the otliers. If the bank 
has funds to pay the check, or all checks presented, it must pay 
tliem, although the bank or its paying officer may know that 
other checks have been drawn, which, when presented, wmU go 
beyond the funds. But if all the checks presented at once go 
beyond the funds, it seems that the bank is under no obligation 
to pay any of them, and certainly it is not bound to divide the 
funds among all of them.(?t?) But if the bank choose to pay tlie 
first in date, it would be difficult to see on what ground either 
the drawer or the holders of the others could complain. It 
might be otherwise if the bank selected and paid a check of 
later date, but even this is doubtful. A bank is not bound to 
pay a part of a check when it has not funds for the whole ; nor 
is the iiolder bound to receive a part if it be tendered to him.(.r) 
But if the bank saw fit to pay to the iiolder all the funds it had, 
although less than the amount of the check, the drawer should 
not be permitted to object that he had knowingly overdrawn and 

the last case, it was held, that any money paid into the banking-house by the drawer, 
while the banker holds the check, must be applied to the draft, although the drawer is 
indebted by a large balance to the banker. 

(v) Woodland v. Fear, 7 Ellis & B. .519. 

{w) Dykers v. Leather Manuf. Bank, 11 Paige, 612. 

{x) In re Brown, 2 Story. 502, .516, per Curiam: "Now, the bank is not bound to 
pay unless it is in full funds ; and it is not obliged to pay, or accept to pav, if it 
partial funds only, for it is entitled to the possession of the check on payment ; and, 
indeed, in the ordinary course of business, the only voucher of the bank for any pay- 
ment is the production and receipt of the check, which the holder cannot safely part 
with unless he receives full payment, nor the bank exact, unless under like circum- 
stances. The holder is not bound to accept part payment, even if the bank is willing 
to pay in part ; for he has a claim to the entirety." The partial fiiilure of funds is re- 
garded as an entire failure of funds, so far as notice to the drawer is concerni.'d. Bat 
a deposit of depreciated bank-notes has been held to entitle a drawer to due diligence 
on the part of the holier in presenting a check to the drawee. St. John v. lloraans. 
S Misso. 382. 

CH. m.] CHECKS. 79 

did not expect payment, or that lie had drawn expecting pay- 
ment of the whole amount of the check, and was injured by 
payment of all the funds he had there. Suppose a holder 
should learn before presentment of a large check, that the funds 
would fall short, and tliat the check would not be paid, and he 
should thereupon make a deposit of the deficiency to the credit 
of the drawer, and then, presenting his check, should l)e paid the 
whole amount by the bank, we are not sure that the drawer 
could complain either of the payee or of the bank. 

A check payable on demand may be said to be always over- 
due, in one respect. One who takes it some time after it is 
dated is said to acquire no better title than his transferrer had. 
This, however, must be true only where so much time has elapsed 
as properly to put the receiver of it on his guard ; for if he takes 
it without either fraud or negligence, and presents it and re- 
ceives the money, he should be permitted to hold it. But as 
checks are seldom made, or rightfully used, for circulation, a 
few days' delay would charge the taker with negligence ; and 
whether the taker exercised reasonable caution seems to be a 
question: of fact for the jury. For some purposes, it is clear that 
a check is overdue only when it has been demanded and pay- 
ment refused. (2/) So far as relates to the liability of the 
drawer, who is not injured by the failure of the bank, and has 
not suffered any damage from delay, there seems to be no un- 
certainty. The question is, how far the equities of the original 
parties will be let in against subsequent transferees who take a 
check long after it is payable. Doubtless, a subsequent trans- 
feree is bound to present the check as early as the first liolder 
should have presented it, so far as the risk of the solvency of 
the drawee is concerned, because checks not being intend(!d 
for circulation, the drawer is entitled to the same early present- 
ment, without any reference to the party whose duty it may be 
to make the presentment. (s) If a banker pays a check which 

{y) See same topic treated supra, Vol. I. p. 271, with cases cited. And sec, for 
the law generally on these points, Rothschild v. Corney, 9 B. & C. 388 ; Brooks v. 
Mitchell, 9 M. & W. 15; Boehm v. Sterlinf^. 7 T. R. 423, 429; Down v. Hailing, 
4 B. & C. 330; Serrell v. Derhyshire, &c. Railway Co., 9 C. B. 811 ; Bank of Bengal 
V. Fagan, 7 Moore, P. C. 72 ; Willets v. Phounix Bank, 2 Duer, 121 ; Anderson v. Bus- 
teed, 5 Duer, 485. 

(z) Boehm v. Sterling, 7 T. R. 423. Muilman lent his arccj)tancc to the defendant, 
receiving tne letter's check, dated Feb. 1796, on 20th January, 1797. Muilman passed 


was cancelled, and the cancelling remains, or a check which had 
been torn to pieces and then pasted together, or one which is so 
long overdue as to be stale, or otherwise justifying suspicion and 
inquiry, he pays it at his own peril. And although it may 
have been rightfully drawn, the drawer, if he had actually can- 
celled or recalled it, may recover the funds from the bank. (a) 
On the other hand, if it was the negligence of the drawer 
which led to the payment, or if he was tlie cause of the be- 
lief of the drawee that such a check, or even a forged or 
altered check, was valid and payable, and such a check is paid 
m good faith, the drawer loses it. And generally, a drawer of a 
check, who, by fault of any kind, enables a third person to de- 
fraud a banker by means of the check, must lose the amount 
paid by the banker.(6) If a bank pays a forged check, without 
some such excuse as above suggested, of course it cannot charge 
the payment to the drawer. (c) And if the check be only altered 
by the forgery, the drawer is still liable for the original amount, 
and no move.{d) It is equally obvious that it can reclaim the 
money from the payee, if the payee were in fault. But a more 
difficult question arises where a bank pays a forged check to an 
innocent holder. (e) The cases on this subject are few and inde- 

the plaintiff the check, unci the defendant was obliged to take up the acceptance. The 
defence was, that the check was stale when passed. Lord Kenyon left the question of 
butia fides to the jury, who found for the plaintiff. Lord Kenyon held afterwards, that, 
when a l.ill was taken after it was due, it was subject to the equities, and that checks 
\Yere upon the same footing. But in the case at bar the defendant could not object, as 
he had issued it nine months after date. 

(a) Scholey v. Ramsbottom, 2 Camp. 485. In this case a check had been torn in 
pieces by the drawer and thrown aside; these pieces were pasted together on another 
slip of paper, the rents, however, being quite visible, and the face of the check soiled 
and dirty. This check was presented by a stranger, and paid without inquiry; and 
the bank was held liable for the amount to the drawer, the condition of the instrument 
being sufficient notice of cancellation. 

In a recent case in England, tiie cashier of a bank counted out the amount of the 
check in specie and placed it on the counter. The plaintiff took it and counted it, and 
was counting it a second time, when the cashier, discovering that the check was over- 
rirawn, demanded the money of the plaintiff, and on refusal took it by force. It was 
held that the payment by the bank to the plaintiff was complete and could not be re- 
voked. Chambers v. Miller, 13 C. B. (U. S.) 12.5. 

(b) Lickbarrovv v. Mason, 2 T. R. 63 ; Young v. Grote, 4 Bing. 253. 

(c) Orr V. Union Bank, 1 Mac(i. H. L. Cas. 513, 2» Eng. L. & Eq. 1; Hall v. Fuller, 
5 B. & C. 750; .Johnson v. Windle. 3 Bing. N. C. 225 ; Young v. Grote. 4 Bing. 253; 
Morgan v. Bank of N. Y., 1 Kern. 404; Cogjiill v. Am. Exch. Bank, 1 Comsr.''ll3. 

id) Hall V. Fuller, 5 B. & C. 750, 8 Dow. & R. 464; Smith v. Mercer, 6 Taunt. 76; 
Robarts v. Tucker, 16 Q. B. 560. 

(e) It has been held, that money paid a bova fide innocent holder on a forged check 
cannot he recovered by the bank. Burlington Countv Bank v. Miller. Legal Intelli- 
gencer, Phila., Feb. 8, 1856; Godilard tC Merchants'" Bank, 4 Comst. 147"; Bunk of 
Commerce v. Union Bank, 3 id. 230. AVe think this in accordance with the decisions 

CH. m.] CHECKS. 8 J 

cisive ; but we think the law must be this : the bank can recover 
it from the payee, if the payee were in fault, or if an innocent 
payee will then be in no worse condition than if the bank had 
refused to pay it. Still the bank, rather than the holder, is 
bound to know whether the signature be genuine ; and if by any 
change of accounts, by any consideration paid which might liave 
been recovered had payment been refused, b\it cannot be re- 
covered now, or by any loss of opportunities to get security or 
indemnity from the transferrer which the holder would have had 
but for the payment to him, the payee cannot be replaced in as 
good a position after he returns the money to the bank, then 
we say he is not bound to return it. Perhaps injury to the 
payee, by the demand of repayment, would be so far presumed, 
as matter of law, as to cast upon the bank the burden of 

Where a check payable to order is paid by the bank on a 
forged indorsement of the payee's name, the bank is liable for 
the amount to the drawer, if the check had not passed into the 
hands of the payee, and is liable to the payee, if it was then his 
property. The burden of proving such indorsement genuine 
rests with the bank.(/). 

A bank should not pay a check after notice that it was 
lost ; nor before it is due, if on time ; («•) nor after notice of 

which hold a drawee bound to know his drawer's signature. Price v. Neal, 3 Burr. 
1354 ; Butler, J , Smith v. Chester, 1 T. R 654. See also Cocks v. Masterman, 9 B. & 
C. 902 ; Smith v. Mercer, 6 Taunt. 76. 

(/) Morgan v. Bank of the State of N. Y., 1 Duer, 434, 1 Kern. 404 ; Robarts v. 
Tucker, 16 Q. B. 560; Smith v. Mechanics & Traders' Bank, 6 La. Ann. 610 In 
England, it is now provided by statute, — 16 & 17 Vict. ch. 59, ^ 19, — that "any 
draft or order drawn upon a banker for a sum of money payable to order on demand, 
which shall, when presented for payment, purport to be indorsed by the person to 
whom the same shall be drawn payable, shall be a sufficient authority to such banker 
to pay the amount of such draft or order t(i the bearer thereof; and it shall not be in- 
cumbent on such banker to prove that such indorsement, or any subsequent indorse- 
ment, was made by or under the direction or authority of the person to whom the 
said draft or order was or is made payable, cither by the drawer or any inilorser 
thereof." Notwithstanding this statute, the banker is not relieved of responsibility, if 
he pays such a check when the drawer had no funds in his hands. Grant on Bank- 
tng, p. 27. And it is probable that, if the payee were a customer of the banker's, the 
handwriting of the payee should be presumed to be known to the banker, and he 
would be liable for a payment made on a forged indorsement. Id. 28. 

(g) Godin v Bank of Commonwealth, 6 Duer, 76 ; Dc Silva v. Fuller, Sittings at 
London, Easter, 1776, Sel. Cas. 238, Ms. Chitty. 260. 
Vol. II.— F 


insolvency ;(A) nor after the death of the drawer •,{hh) but if the 
bank pays a check after the death, and before notice of the 
death, it is said to be a good payment.(i) A banker must pay a 
check at once, if he has funds, or as soon as he can conveniently 
ascertain that he has funds ; and it has even been said that if 
he fails to do this, the drawer may have an action of tort against 
the banker for the refusal, without proving specific injury ; but 
this question of the liability of the bank we have already suffi- 
ciently considered. 

If the deposit is by many, who are not partners, the banker 
should pay only to the signature of all the depositors. (7') If, 
however, one or more of the depositors abscond, equity will re- 
lieve the others. (A:) One of several executors or administrators 
may draw a check for funds deposited in bank in the names of all 
of them, as each has entire control of the whole property of the 
estate, and the act of one is generally deemed the act of all ; and 
the payment of such a check is a discharge of the bank, unless 
it has been countermanded by a co-executor or administrator. {/) 

{h) Ex parte Sharp. 3 Mont. D. & D. 490 ; Vernon v. Hankey, 2 T. R. 113 ; Ex 
parte Bowness, 2 Miuile & S. 479, 2 Rose, 266; and see Udal v. Walton, 14 M. & 
W. 254. In Hammersley r. Purling, 3 Ves. 757, it was so held, though banker had 
no notice of his customer's insolvency. The assignee of the bankrupt has no remedy 
against the person to whom the bank has paid the check after the drawer's bankruptcy, 
unless such person had knowledge of the act of bankruptcy. His only remedy is 
against the bank which paid, with notice of the bankruptcy. Mathew v. Sherwell, 2 
Taunt. 439, 1 Rose, 118. 

(hh) Second Bank v. Williams, 13 Mich. 282. 

(i) Tate v. Hilbert, 2 Ves. Jr. 118. 

(j) In Stone v. Marsh, Ryan & M. 364, the court said: "If two perscms give a 
power of attorney to bankers to sell out their joint stock, the bankers ought to place 
the proceeds to their joint account, and both ought to draw." In Innes v. Stephenson, 
1 Moody & R. 145, Lord Tenterden said: "That the case was a very clear one that 
money was paid to bankers by three persons not partners in trade ; that it had been 
stated that one of them could draw checks so as to bind the others ; but that was not 
law, and to allow it would defeat the very object of paying the money in jointly, and it 
must be well known to the jury that it was not the practice unless the persons draw- 
ing stood in the relation of partners." Dixon's case, 2 Lewin, Cr. Cas. 178; Sloman 
V. Bank of England, 14 Sim. 475, 9 Jurist, 243, pronounced the opposite doctrine 
"absolute nonsense " This was an attempt on the part of the Bank of England to 
break down the rule. See also Wallace v. Kelsall, 7 M. & W. 264 ; Husband t>. 
Davis, 10 Cons. B. 645 ; Can v. Read, 3 Atk. 095 ; Smith v. Jamesons, 1 Esp. 114. 
The same principle applies to joint bailors. May v. Harvey, 13 East, 197 ; Regina 
V. Turpin, 2 Car. & K. 820. 

{k) Ex parte Hunter, 2 Rose, 382 ; Ex parte Collins, 2 Cox, 427 ; and see Sloman 
V. Bank of England, 14 Sim. 475; Shortbridge's case, 12 Ves. 28. 

(/) Shep. Touchst. 484 ; Gaunt i-. Taylor, 2 Hare, 413 ; Ex parte Rigby, '9 Ves. 

CH. ra.] CHECKS. 83 

A check paid and held by the banker is no evidence whatever 
of a loan of money by the drawee to the drawer, for the plain 
reason that in the vast majority of cases such payment was only 
a return of funds previously deposited by the drawer. (m) But 
if it is made to appear tliat the check was accepted without 
funds, an implied promise is raised that the drawer will put the 
drawee in funds. (w) But this inference or presumption may be 
rebutted, (o) 

As between the drawer and other parties this question is more 
difficult. If one holds a check which is unpaid, and has not 
been presented for payment, it seems to be clear that this cannot 
be used as evidence of any indebtedness from the drawer to the 
payee ; and we siiould say this would be true, if payable to the 
holder expressly by his{p) 

If a check be payable to a person by name, it seems that the 
mere payment of the check is not proof that the person named 
received the money, unless the check bear his indorsement, 
which should always be required ; (q) but it may perhaps be 
doubted if a bank have a strict right to require an indorsement, 
unless the check be drawn payable to the payee or order. 

On the other hand, if a note is made payable to some one or 
order, the possession of it by the drawer with the name indorsed, 
or any proof by him that the bank had paid it to that payee 
personally, and cliarged the payment to the drawer, would have 
all the effect of any other written receipt of money signed by the 

462; Can v. Read, 3 Atk. 695 ; Pond ». Underwood, 2 Ld. Eaym. 1210; Allen v. 
Dundas, .3 T. R. 125 ; Clough v. Bond, 3 Mylne & C. 490. 

{in) Ilealy v. Oilman, 1 Bosw 235 ; Tluirman v. Van Brunt, 19 Barb. 409; Lan- 
•aster Bank v. Woodward, 18 Penn. State, 361 ; Fletdier v. Manniiijr, 12 M. & 
VV^. 571. 

(n) Fletcher ». Manninp;, 12 M. & W. 571 ; Thnrman v. Van Brunt, 19 Barb. 409. 

(o) v. Van Brunt, 19 Barb 409. 

(p) Pearcc v Davis, 1 Moody & R 365; FleniTninj; v. M'Clain, 13 Penn. State, 177. 

iq) Eiiir V. Barnctt, 3 E.sp. 196 > Patton i;., 7 S. & R. 116; Mountford v. Har- 
per, 16 M. & \V. 8-25, 16 Law J. Exch. 184 ; Cromwell v. Lovctt, 1 Hall, 56 ; Pearce 
r. Davirt, I Moody & R. 365 ; People v Howell, 4 Jobn.s. 296 ; Lloyd v. Sandiiand.s, 
Gow, 13 ; People v. Baker, 20 Wend. 602 ; Boswcll v. Smith, 5 C & P. 60; Tliomp- 
son V. Pitman, 1 Fost. & F. N. P. 339. An order by an incorporated company on it.s 
own treasurer is certainly an evidence of indebtedness ; but it must be prc^etitcd. 
M.arion & M. R. R. Co v. Hodge, 9 Ind 163. But a draft by the postmaster-general on 
a deputy IS no evidence of debt from the drawee to payee, unless accepted. Goodwin 
?. Hazzard, I Smith, Ind. 320. 


payee, but no more.(r) And whether the question was one of 
demand, or defence, or set-otf, we should say it would not of 
itself be evidence as to the cause of payment, or the account on 
which it was paid, although it might be made so by other evi- 
dence or circumstances connecting it with a previous account or 
debt. A cancelled clieck in the hands of the bank upon which it 
is drawn is evidence of payment of it by the bank. (5) 

The natural inference from the giving a check is, that it was 
given in payment of a debt due the payee from the drawer ; and 
in order to charge the payee as a debtor to the drawer, it must 
be shown that the check was in fact loaned to the payee. (^) A 
check drawn in favor of one who had lent money to the drawer, 
on a bank where the drawer was known to have no funds, and 
which was not expected by him to be presented to the bank, 
is evidence of money borrowed by the drawer. («*) On proof 
of money lent by the drawer to the payee, the check, when 
paid, may be given in evidence of the amount of the loan.(7;) 
It may be added, that the bearer may sue upon a check, as 
upon an inland bill of exchange. (w) And a lost check may 
be recovered in like manner as a lost note. (a:) So if it be 
destroyed. (7/) 

There are also rules in England, founded on custom, which 
are not yet law in this country ; at least, no further than they 
might be so held on general grounds, — that is to say, the cus- 
tom is not established in this country. Thus, by usage of trade 
in London, it seems that a banker will not render himself liable 
on a check if he return it any time before five o'clock on the day 
he receives it, and although the check had been cancelled by 

(r) Thompson v. Pitman, 1 Fost. & F., N. P. 339 ; Burton v. Payne, 2 Car. & P. 
520 ; Egg V. Barnett, 3 Esp. 196. 

(s) Conway v. Case, 22 111. 127. 

(/) Graham v Cox, 2 Car. & K. 702 ; Thompson v. Pitman, 1 Fost. & F., X. P. 
339 ; Aubert v. Walsh, 4 Taunt. 293 ; Lloyd v. Sandilantis, Gow, 13 ; Cary v. Gerrish, 
4 Esp. 9 ; Patton v. Ash, 7 S. & R. 116. 

(«) Gushing v. Gore, 15 Mass. 69. 

(v) Healy v. Gilman, 1 Bosw. 235. 

{w) Cruger v. Armstrong, 3 Johns. Cas. 5 ; Conroy v. Warren, id. 259 ; Woods v. 
Schroeder, 4 Har & J. 276 ; Boehm v. Sterling, 7 T. R 423. See also In re Brown, 
2 Story, 502 ; Foster v. Paulk,4l Maine, 425; Mauran v. Lamb, 7 Cowen, 174. 

(x) Bevan v. Hill, 2 Camp. 3S1. 

(y) Pierson v. Hutchinson, 2 Camp. 211 ; Wain v. Bailey, 2 Perry S' D. 507 


No doubt, here as well as there a banker would liave a rea- 
sonable time to ascertain whether he was in funds to meet a 
check. (z) So if a banker receive a check from a customer, to 
hold an indorser still liable it must be presented by the next 
day, as we have seen. But as between him and his customer it 
may be his duty to present it earlier, or waiting longer may be 
excused. («) And to hold a drawer in case of insolvency of 
the banker, the check must be presented the next day after re- 
ceipt, or if the parties live in different towns, it must be for- 
warded on the next day ; but an agent of a bank, or a branch 
thereof, is not allowed to keep the check one day before forward- 
ing the same to the principal bank, and then the principal bank 
to keep it one day before forwarding it to the drawee. (6) It 
must not be kept till the third day, though it then reaches the 
drawee as early as it would by the regular post of the second 

Checks liave been held in England to be a legal tender, if 
not objected to, in the same way as bank-notes. (c?) How far 
checks may be considered as payment will be somewhat treated 
of in the chapter on Payment by Bill or Note. It is un- 
doubtedly payment as soon as it is cashed. But, generally at 
least, not until then ; and therefore a holder of a note or bill is 
not obliged to give it up on receipt of a check until the check is 
paid,(e) And neither in England nor in this country do bank- 
ers usually receive checks in payment of the paper they hold. 
But if a creditor for any debt receive for it a check which is 
dishonored, his original rights and remedies are unaffected by 
the check. (/) And even presentment at the bank and accept- 

{z) See Fernandey v. Glynn, 1 Camp. 426, note. 

(a) Boddin<;rton v. Schlencker, 4 B. & Ad. 7.52, 1 Ncv. & M.fiAO; Alexander w. 
Uurchticld, 1 Car. & M. 7.5, 3 Scott, N. R. 5.55, 7 Man. & G. 1067. 

{b) Rickford ». Ridge, 2 Camp. 537 ; Moule v. Brown, 4 Bing. N. C. 266, 5 
Sc-o'tt, 694. 

(c) Beeching v. Gower, Holt, N. P. 313. 

(d) Per Duller, Wilby ». Warren, Tidd's Prae., 9th ed., 187, note. So Jones v. Ar- 
thur, 8 Dow, Prac. Cas. 442, 4 Jur. 859. Vide E.k parte Cunlifl'e, De Gex, 408. 

(e) Pearce ». Davis, 1 Moody & R. 365 ; The Peojde v. Baker, 20 Wend. 602 ; Taylor 
r. Wilson, 11 Met. 44; Moore v. Barthrop, 1 B. & C. 5, 2 D. & R. 2.5; Iloiijrh v. 
May, 2 Har. & W. 33, 4 A. & E. 9.54 ; Barnet v. Smith, 10 Foster, 256; Hansard 
r. Rohinson, 7 B. & C. 90; Ward v. Evans, 12 Mod. 521 ; Vernon v. Boverie, 2 
Show. 296. 

(/) Brown v. Kewley, 2 B. & P. 518; Everett v. Collins, 2 Camp. 515 ; Sttdnian 
VOL. II. 8 


ance cliere has been held to be no payment. {^'•) More evidence 
is required to show that a check given to take up a note is 
received in satisfaction and discharge, than is demanded where 
one note is given for another. (//) We think it may well be 
doubted whether a check may be considered as payment, even 
in Maine, Vermont, and Massachusetts. (i) A drawer of a check 

V. Good). 1 Esp. 3 ; Dent v. Dunn, 3 Camp. 296 ; Marsh v. Pedder, Holt, N. P. 72, 4 
Camp. 2.57 ; Barnet ». Smith, 10 Foster, 256 ; Tupley v. Martens. 8 T. K. 451 ; T.-iylor 
B. Wilson, 11 Met. 44 : W^yatt v. Marquis of Hertford, 3 East, 147 ; Ex parte Blaek- 
burne, per Lord Eldon, 10 Ves. 204. In Dennie v. Hart. 2 Pick. 204, A, being sum- 
moned as trustee of B, disclosed a general assignment to himself from B, in trust to pay 
debts due to himself and others, and to pay over the surplus to B; that, being told the 
plaintiff intended to summon him, he gave a bank-check to B for the probable surplus, 
without any understanding that it should not be presented for payment, but that it was 
not presented ; that afterwards, B being about to be absent from the State, A suggested 
that it should be left to pay debts not provided for. It was accordingly put into the 
hands of A's clerk, with whom it still remained. Held, the giving of the check waj> 
not a jiayment of the surplus, A having still the control of it. 

((j) Barnet v. Smith, 10 Foster, 256. 

(/() Olcott V. Rathbone, 5 Wend. 490; and see Hawley r. Foote, 19 Wend. 516. 
Even if agreed upon as payment, the want of funds, and knowledge of such want of 
funds, would be, probably, such a fraud as would render the- bargain no protection to 
the drawer, though this might be otherwise with a transferrer not the drawer. 

(/) As a matter of fact, this seems not to be the intention of the parties. If a check 
were taken from the maker of a note, are the indorsers to be held discharged 1 " If the 
paper accepted is not binding upon all the parties previously liable, the presumption of 
payments may be considered as rebutted " Fowler v. Ludwig, 34 Maine, 455. See 
Payment by Bill or Note. See Cashing v. Gore, 15 Mass. 74. In Dennie v. Hart, 
2 Pick. 204, it was resolved that giving the check was no payment in that case, 
which was, however, somewhat peculiar. When an order is unaccepted and non- 
negotiable, it is no payment, although receipted for as such. In Taylor v. Wilson, 1 1 
Met. 44, 51, the court, on this point, said: "A check is merely evidence of a debt due 
from the drawer; whether it shall operate as payment or not, depends on two facts : 
Jirst, that the drawer has funds to his credit" in the bank upon which it is drawn ; and, 
second, that the bank is solvent, or, in other words, pays its bills and the checks duly 
drawn ui)0ii it, on demand The receipt of a check, therefore, before presentment, if 
there is no laches on the part of the holder, is not payment of the debt for which it is 
delivered. But if the party receiving it is guilty of laches in presenting it, or in giving 
notice of non-payment after presentment, and the bank in the mean time suspends pay- 
ment, he thereby makes it his own, and it shall operate as payment of his debt, the 
drawer having funds in the bank at the time of drawing the check, and not having 
withdrawn them." See The Eastein Star, Ware, 184. In Ocean Tow Boat Co. v. 
Ship Ophelia, 11 La. Ann. 28, the plaintiff was directed to an agent to receive his pay. 
The agent took a receipt and gave him his check. This was not held to operate as « 
payment, although, as it appears (see chap. Payment), a note given and a receipt takeu 
together operate a novation in Louisiana. But Mr. Chitty, ed 1833, ch 9, pp. 433, 434, 
says : " If a creditor, on any other account than a bill of exchange, is offered cash in 
payment of his debt, or a check upon a banker from an agent of his debtor, and prefcr 

CH. ffl.] CHECKS. 87 

without funds may be sued at once, without presentment, de- 
maud, or notice. (^; 

the latter, this does not discharge the debtor, if the check is dishonored, although the 
agent fails with a balance on his hands to a much greater amount." We doubt whether 
this be law. But see Everett v. Collins, 2 Camp. 515. In Louisiana, a debt is not no- 
vated by taking a check on a bank. Bordelon v. "Weymouth, 14 La. Ann. 93, though it 
may be so by clear agreement, or be, by like agreement, novated in place of a note; 
Helnie v. Middleton, id. 484. In Puckford v. Ma.xwell, 6 T. R. 52, one who was 
arrested gave a draft, which was dishonored, and another arrest on the same affidavit 
was held good. Sometimes a check is mere evidence of an amount due, as in Devoe 
r. Moffat, Anthon. 161. In this case presentment was not contemplated by the 

(j) True V. Thomas, 16 Maine, 36 ; Cromwell v. Lovett, 1 Hall, 56, 6 Wend. 369. 




Bank-notes, or, as they are quite commonly but less accu- 
rately called in this country, bank-bills, are, in their form, only 
the promissory notes of a bank, payable on demand to bearer, 
and therefore negotiable by delivery. Like other promissory 
notes on demand, they may be sued without demand. (a) And 
if made payable at a particular place, demand need not be made 
there, but a readiness to pay the note there discharges from 
interest and costs. (6) And interest begins to run on bank-notes 
from demand, as on other notes payable on demand ; (c) but 
not from the time of suspension of the bank, without demand. (c?) 
In practice, to a very great extent, and in law to a considerable 
extent, bank-notes differ from all other negotiable paper, (e) In 

(a) Bryant v. Damariscotta Bank, 18 Maine, 240; State Bank w. Van Horn, 1 
South. 382 ; Haxtun v. Bishop, 3 Wend. 22 ; Bank of Niagara v. M'Cracken, 1 8 
Johns. 493, per Woodworth, J. In Jefferson Co. Bank v. Chapman, 19 Johns. 322, the 
opinion of Mr. Justice Wooducorth has been said not to be that of the court ; but the 
question is now settled. But demand must be made in Kentucky before suit brought, 
although it need not be averred. Bank of Kentucky v. Hickey, 4 Littell, 225. 

(h) Caldwell v. Cassidy, 8 Cowen, 271. There seems to be a distinction taken on 
the question of demand between notes payable generally, which do not require de- 
mand, and those which are payable at a particular place. If payable at a specified 
place, it is held by one of the cases that this must be averred and proved. Dougherty 
». Western Bank, 13 Ga. 287. If payable generally, the same case holds, no de- 
mand is necessary. 

(c) Bank of Kentucky v. Thornsberry, 3 B. Mon. 519; Bank Commissioners v. 
Lafayette Bank, 4 Edw. Ch. 287. Sometimes increased interest is allowed by 

(d) Ringo V. Biscoe, 8 Eng. Ark. 563. 

(e) Southcot V. Watson, 3 Atk. 232. In Miller v. Race, 1 Burr. 452, which is the 
leading case upon the subject. Lord MansfieJd indulged in a good many strong ex- 
pressions, and in dicta which were not called for by the case. A bank-note was lost, 
and payment stopped at the Bank of England. When presented for payment by the 
plaintiff, an innocent holder, the defendant or clerk would not pay it, or return it to 
the plaintiff, who brought trover for it. It is obvious that the action could have ^(f.a 

CH. rV.] BANK-NOTES. 89 

most of the States of the United States, the privilege of issu- 
ing bank paper is confined to certain incorporated companies, 
or parties who act under a general banking law, and all other 
parties or corporations are prohibited from making notes paya- 
ble on demand and intended to circulate as money. (/) 

In order to be evidence of a promise on the part of the bank, 
the bank-note must be signed by tlie officers thereof, who are 

maintained, under similar circumstances, by any innocent transferee of a ne<rotiable 
instrument. But Lord Mansfield's remarks, which have been quoted again and 
again, and in many instances have misled the courts, are these : Bank-notes "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 gen- 
eral 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 payment as money or cash, and 

are never considered as securities for money, but as money itself. On payment of 
them, whenever a receipt is required, the receipts are always 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." In 
Solomons v. Bank of England, 13 East, 13.t, Grose, J. said that bank-notes were to be 
considered as cash. See also Fleming v. Brook, 1 Sch. & L. 318 ; Stuart v. Bute, 11 
Ves. 662 ; Drury v. Smith, 1 P. Wms. 40-1 ; Miller v. Miller, 3 P. Wms. 356. In Bay- 
ard V. Shunk, 1 Watts & S. 92, Gibson, C. J. said : " By the conventional rules of 
business, a transfer of bank-notes, though they are of the same mould and obligation (as 
notes of third persons) betwixt the original parties, is regulated by peculiar principles, 
and stands on a different footing." It is to be observed that Lightbody v. Ontario Bank, 
II Wend. 9, 13 id. 101, went upon the same ground with regard to the conventional 
character of bank-bills. Whereas, the case of Corbit v. Bank of Smyrna, 2 Barring. 
Del. 235, though agreeing with the former case in its conclusions, holds that the etlect 
of bank-notes given in payment arises from their legal character, and not from then con 
ventional one. This case, as well as that of Scruggs v- Gass, 8 Yerg. 175, mentions tl.e 
distinction between prior and contemporaneous debts. The question of conventional or 
legal character is, after all, one of terms alone. For, as will be seen on referring to our 
chapter on Payment, the effect of any payment by the note of a third person is rested 
entirely upon the intention of the parties. Now, to show this intention with regard to 
any particular class of notes of third persons, the general understanding is clearly the 
proper guide. It has been repeatedly said, that bank-notes in ordinary business trans- 
actions arc to be regarded as cash. Morris v. Edwards, 1 Ohio, 189 ; Edwards v. Mor- 
ris, id. 524 ; Bradley v. Hunt, 5 Gill & J. 58 ; Morrill v. Brown, 15 Pick. 173. From 
the business of banking being regulated by law, and carried on under certain re- 
strictions, a sort of credit from that very circumstance attaches to the notes of a 
hank and gives them credit. Smith v. Strong, 2 Hill, 241 ; Safford r. WyckofF, 
1 id. 11. The value of bank-bills, and the practice of treating them as money, obvi- 
ously depends upon their being redeemable, and tiius converted into money at any 

(/) Stat. Pa., Mar. 19, 1810; Myers v. Irwin, 2 S. & R. 368; Act Pa., 21 Mar. 
1814, 22 Mar. 1817 ; Hess v. Werts, 4 S. & R. 356 ; Stat. Mass. 1804, ch. 58, ^ 1 ; 
Sayley v. Talier, E Mass. 28f 


designated for that purpose by the charter of the bank or a gen- 
eral law. These are usually the president and cashier.{^) 

In England, the bank-notes of the Bank of England take, by 
statute, the place of coin.(/t) Those of other banks are not 
equally privileged, and the capital of those banks is often made 
up in large measure of Bank of England notes. In this country 
nothing is a legal tender by law except the precious metals. (i) 
And not only so, the government officers are, for the most part, 
obliged to receive only gold or silver, and pay out only that. 
But the use of bank-notes as cash is far more common here than 
anywhere else in the world ; (j) and even the law, as settled by 
adjudication, accommodates itself somewhat to this practice. 
Thus, it is a universal rule that current bank-bills are a lawful 
tender, unless objected to because not money. That is, the 
creditor has a right to claim coin, if he chooses to, and refuse 

{g) Salem Bank v. Gloucester Bank, 17 Mass. 1, 26. 

(h) 3 & 4 William IV. ch. 98, § 6, enacts that the Bank of England notes shall ba 
legal tender for all sums above five pounds, except at the Bank of England or it3 
branches. No notes of less amount than £ 5 are issued by the Bank of England, such 
issue being prohibited by 7 Geo. IV. ch. 6. In Ireland and Scotland the amount of 
bank-notes is limited to £ 1. 7 & 8 Vict. ch. 32. Bank of England notes are exempted 
from stamp duty. 55 Geo. III. ch. 184, § 21 ; 7 & 8 Vict. ch. 32, § 7. No banks are 
allowed to issue notes within sixty-five miles of St. Paul's, London. This protects tho 
Bank of England notes. 7 & 8 Vict. ch. 32. 

(i) The Constitution of the United States, § 10. 1, provides that "No State shall 
.... make anything but gold and silver coin a tender in payment of debts." By tho 
Acts of 1861, chaps. 5, 46, 12 U. S. Stats, at Large, 259, 313, Treasury-notes are made 
receivable in payment of public dues, and payable for salaries and otlier dues fium the 
United States. And by an act of 1862 certain kinds of government paper are made a 
legal tender. 

(j) We have mentioned that the issue of bank-bills of less amount than £5 (S25) 
is restrained in England by 7 Geo. IV. ch. 6. In France, the smallest papei money i.s 
a bill of one hundred francs. Ordinary or common transactions do not require so large 
amounts. And in this country, where the denomination of bills is not regulated bv 
statutes, bills are ordinarily used in payments of one dollar and upwards. In Ireland 
and Scotland, the smallest bank-bills are £ 1 in value. Encyclopaedia Britannica, 
Art. Money. In some of the States, no bills of less amount than five dollars are al- 
lowed to circulate. N. Y. Stat. 1830, ch 295, made the circulation of foreign bank- 
bills of less amount than five dollars unlawful. Merchants' Bank v. Spalding, ^ Seld. 
53. But wherever paper is allowed to circulate at all, the desire of banks to ci/culate 
their own notes will render bank-bills an almost universal substitute for coin. In some 
of the States it is made a misdemeanor to pass or receive bank-notes under some small 
specified sum ; as three or five dollars. State v. Bank of Fayetteville, 3 Jones, N Car. 
450. In Massachusetts, the receiving or putting in circulation as currency a bank- 
note which is in whole or in part for a fractional part of a dollar is punishable by « 
fine. Stat. 1853, ch. 392 ; Gen. Stats. 1860, ch. 162, § 20. 


anything else. But if current bills, by which we meiji thosd 
that are redeemed at the bank counter, and are passing at par 
value in or during transactions, (^') are tendered, and he refuses 
them on any other ground than because they are not money, he 
cannot afterward make that objection, and they have then the 
force of so much specie. (/) Bank-notes are not, generally, so 
far cash or a legal tender, that they may be brought into court 
either in payment or satisfaction of a judgment and execution 
obtained by the bank which issued tliem.(;») 

(k) Pierson v. Wallace, 2 Eng. Ark. 282. Bank-notes depreciated in value may, of 
course, be taken at par. White v. Guthrie, 1 J. J. Marsh, 503 ; Honore v. Colmesnil, 
id. 506. 

(i) In England, country bank-notes are a legal tender, unless objected to, and are in 
some measure like cash. Owenson v. Morse, 7 T. R. 64; Ward v. Evans, 2 Ld. 
Rayra. 928 ; Tiley v. Courtier, 2 Cromp. & J. 16, overruling Mills v. Saftbrd, Peake, 
N. P. 180, note, Lockj-er v. Jones, Peake, N. P. 180, note; Polglass v. Oliver, 2 
Cromp. & J. 15, 2 Tyrw. 89, 1 Price. P. C. 133 ; Black v. Smith, Peake, 88, per Lord 
Kenyan, the offer of a bank-note, with a request of change, was held a good tender, if 
not objected to on that account. See Cod man v. Lubbock, 5 Dowl. & R. 289. When, 
by Stat. 56 Geo. Ill ch. 68, § 11, gold coin was the only legal tender for sums above 
a certain amount, bank-notes were held a legal tender, unless objected to on that ac- 
count. Wright V. Reed, 3 T. R. 554 ; Grigby v. Oakes, 2 B. & P. 526 ; Brown v. 
Saul, 4 Esp. 267. So in America, bank-tiotes are legal tender, unless specially objected 
to on that account. Phillips v. Blake, 1 Met. 156, per Shaic, C. J. ; Snow v. Perry, 9 
Pick. 539 ; Jefferson Co. Bank v. Chapman, 19 Johns. 322; Warren v. Mains, 7 Johns. 
476 ; Thomas v. Todd, 6 Hill, 340. 

(m) Co.\e V. State Bank. 3 Halst. 172. This is allowed by statute in some states. 
Union Bank v. EUicott, 6 Gill & J. 363. In Hallowell & Augusta Bank r. Howard, 
13 .Mass. 235, the suit was brought on a promissory note due the plaintiffs from the 
defendant, who moved for leave to pay into court the amount of the note in the bills 
of the hank. It seems that the notes were much depreciated in value. The court said: 
" Nothing is a lawful tender but gold and silver. To permit the defendants thus to set off 
these promissory notes would be allowing cross demands to be set off in a like manner in 

every case. These notes are nothing more than evidence of a right of action The 

only course in such cases would be to obtain a judgment ujjon the notes, and set oft' such 
judgment the plaintiff's judgment " This does not reach the case of set-off of 
claims uiid<r the statute. In the Bank of Niagara v Rosevelt, 9 Cowcn, 409, 1 Hopk. 
Ch. 579, a bank was held, per Woodirorlh, J., bound to take its own bills or notes in the 
payment of delits ; and a set-off existing against the bank at the time it stopped pay- 
ment would be allowed, although the debt due the bank had not fallen due. But it 
was held, that, although the debtor might set oft' the bills of the bank in the hands of 
another for his use, vet that they must not have been oinained after the insolvency of 
the bank, which decision seems to confirm the view in the text. Tlw time of the in- 
solvency is decisive, and not the appointment of a receiver ; and the bills claimed to 
be held by another for the defendant's use must be shown really to have been so held. 
In Haxtnn v. Bishop, 3 Wend. 13, the plaintiff' was the receiver of a bank ; he was held 
I? be a trustee of the bank for the benefit of the creditors, and the debtor had bought 
up at par the bills on the insolvent bank after the assignment of the debt to a receiver. 


Bank-notes may be a good mortuaiy gift or donation. (w) 

In England, by a recent statute, they may be taken on ex- 
ecution, and they may, in this country, by common law and 
usage, (o) 

Bank-notes pass by a will bequeathing a testator's money or 
cash,(/>) and they may be so described in the memorial of an 
annuity. (9) 

Nor is it an objection to an averment of " money lost in bank- 
notes," that bank-notes are not money. {/•) 

In fact, for every purpose in business except legal tender, 
bank-notes are considered as money. {5) 

Perhaps, however, the most important particular in which 
they are considered cash is, that property follows possession ; 
and this rule of law, which applies to all negotiable paper, is 
eminently true of bank-notes. This subject, which comes up 
repeatedly in different branches of the law of negotiable paper, 

The bank-bills were not allowed to be so used, for reasons of equity, stated in the text. 
In Mississippi, although, as between individuals, a note payable in bank-bills, when 
sued upon, is recoverable only in the actual value of the notes at the time the note fell 
due, a different rule prevails in the ca~e of a bank, because, when the full amount of 
the note with interest is recovered, the defendant may after judj^ment pay the debt in 
the notes of the bank. Abbott v. Agricultural Bank of Mississippi, 1 1 Smedes & M. 
405. See also Anderson v. Hawkins, 3 Hawks, 568 ; Moody v. Mahurin, 4 N. H 296 ; 
Hevener v. Kerr, I South. 58 ; Sinclair v. Piercy, 5 J. J. Marsh. 63 ; Goodenow v. 
Duffield, Wright, 457 ; Adkins v. Blake, 2 J. J Marsh. 40. 

(k) Drury v. Smith, 1 P. Wms. 404 ; Miller v. Miller, 3 id. 356 ; 1 Roper, 3. See 
Stuart V. Bute, 11 Ves. 662, in Dom. Proc, 1 Dow, 73. 

(o) At common law, bank-bills, like money, could not be taken in execution. Fran- 
cis V. Nash, Cas. Temp. Hardw. 53, 2 Barnard., London ed. 225 ; Kniglit v Criddle, 9 
East, 48 ; Armistead v. Philpot, 1 Doug. 231 ; Fieldhouse v. Crofr, 4 East, 510. Stat. 
1 & 2 Victoria, ch. 110, ^ 12, allows money, bank-notes, checks, bills, promissory notes, 
and other securities for money, to be taken in execution. The money and bank-notes 
are to be handed over by the sheriff to the execution creditor. In America, as we have 
said supra, a sheriff may receive in payment current bank-notes. Governor v. Carter, 
3 Hawks, 328 ; Scott v. Commonwealth, 5 J. J. Marsh. 643. And it has been held 
that bank-notes may bt seized or sold on execution. Spencer v. Blaisdell, 4 N H. 198. 
This subject is now regulated by statute in most of our States. If a note be made 
pavable in bank-bills, or if the party agree otherwise to accept them, they are a good 
tender in discharge of the contract. Warren i;. Mains, 7 Johns. 476 ; Edwards v. 
Morris, 1 Ohio, 524. 

(p) Fleming ». Brook, 1 Sih. & L. 318 ; Miller v. Race, 1 Burr. 457; Stuart v. 
Bute, 1 1 Ves. 662. 

(r/) Wright V. Reed, 3 T. H. 554 ; Cousins v. Thompson, 6 T. R. 335. 

(r) Towson v. Havre de Grace Bank, 6 Harris & J. 47. 

(s) Edwards v. Morris, 1 Ohio, 524; Bradley f. Hunt, 5 Gill & J. 54; Monill ». 
Brown, 15 Pick. 173 ; Pierson v. Wallace, 2 Eng. Ark. 282. 


is fully considered by us in the chapter on Lost Bills or Notes. 
It will be seen there, that if one loses a bank-note, he who takes 
it for value from the finder or thief, without notice or knowledge 
of fraud, is entitled to the possession of it. Nor will mere neg- 
lect in not inquiring into the title of the party from whom he 
takes it defeat his right, iinless this negligence is wilful and 
Iraudulent.(^) And the American rule seems to be, that the 
party from whom the bank-bill is obtained by fraud or felony, or 
by whom it is lost, and who claims to hold the property of it on 
that ground, must show that it was so parted with by him, and 
also that the plaintiff came by the note in a way which gives him 
no title to it. This is going one step further in favor of bank- 
bills than is done in the case of ordinary negotiable paper ; and 
it seems that the bank is not liable on showing that a note is lost, 
though it is so on one that is destroyed. (t-') So, too, bank-notes 
are considered as cash in a case of bankruptcy, and cannot bo 
traced and identified any more than dollars or eagles. (z^) It has 
l)een said that an action for money had and received will not lie 
against one who had the bank-notes of the plaintiff without right, 
unless he has cashed them ; but that trover, as for any other 
chattel, is the proper remedy. We do not believe, however, that 
this doctrine would now be held.(.x') The statutes in some of the 

{t) The general rule is, that if any check, bill, or note, originally payable to bearer, 
or become so payable by a blank indorsement, pass into the hands of a bona fide 
holder for value, he has a perfect title as against the original owner and as against 
the promisor. For an examination of the authorities on this question, and an his- 
torical view of the law on the subject, we refer to the subsequent chapter on a Lost 
Bill or Note. 

(v) On a lost note it seems that a bank is not liable to the loser, hut it is otherwise 
if the note is destroyed. Hinsdale v Bank of Orange, 6 Wend. 378, per Maicy. J. ; 
Bank of Louisville v. Summers, 14 B. Mon. 30G: Burriilge v. Geauga Bank, Wright, 
688. But in Georgia, it is only necessary to indemnify the bank to recover on the lost 
note. Waters v. Bank of Georgia, R M. Charlt. 193. 

(w) Chitty, .524; Lowndes v. Anderson, 13 East, 130. 

(x) Assumpsit for money had and received will lie for country bank-notes, and 
checks even, which have been treated like money. Pickard v. Bankes, 13 East, 20, was 
a case against a stake-holder who had so treated notes that he had received. Spratt v. 
Hobhouse, 4 Bing. 173, 12 J. B. Moore, 39.5. Perhaps the receipt of their value may 
be presumed, Longchamp v Kenny, 1 Doug. 137 ; but if a finder of bank-notes has not 
turned them into money, or treated them as money, trover is the proper aeiion. Noyes 
V. Price, cited by Chitty, 524, Sittings Lond. post Hilary term, 16 Geo. HI., Ms. Sel. 
Cas. 242. The following cases hold that assumpsit for money had and received will 
not lie against a finder, unless the notes found have been turned into money. Mason 
r Waite, 17 Mass. 560; Ainslie v. Wilson, 7 Cowcn, 662; Arms v. Ashley, 4 Pick. 


States go so far in favor of the circulation of bank paper, that 
they allow bills to take precedence of all other bank debts in 
case of insolvency. (y) But in others of the States the holders 
of bank-bills come in with the other creditors, like the holders 
of ordinary promissory notes. (2:) Bank-notes are also held to be 
only negotiable paper for some purposes. They may be, and 
often are, indorsed. And, although we liave no distinct adjudica- 
tion on this question, we have no doubt that the indorser would 
be held in much the same manner as the indorser of other paper 
payable to bearer. (a) 

The law of presentment, which is so important in its applica- 
tion to common notes and bills of exchange is applicable in 
some degree to all promissory paper ; and it is certain that 
bank-notes should be presented for payment, for some pur- 
poses. (6) Undoubtedly they are intended to circulate, and this 
indefinitely ; (c) for the longer the bank can keep them out, the 

71 ; Murray v. Pate, 6 Dana, 335; Kellogg u. Budlong, 7 How. Miss. 340; Honx 
V. Russell, 10 Misso. 246; Muir v. Rand, 2 Ind. 291. So negotiable notes received 
by defendant are often considered money. Floyd z. Day, 3 Mass. 403 ; Hemmenway v. 
Bradford, 14 id 121 ; Willie ». Green, 2 N. H. 333. Contra, Mercer v. Sayre, Anthon, 
N. P. 119. If there is a fair presumption that defendant has received plaintiff's money, 
the action may be maintained. Tuttle v. Mayo, 7 Johns. 132 ; Hatten v. Robinson, 4 
Blackf. 479 ; Haskins lu Dunham, Anthon, N. P. 81 ; Hutchinson v. Philli|>s, 6 Eng. 
Ark. 270; Muir v. Rand, 2 Ind. 291. This action will only lie in general when 
money may be presumed to have been actually received. M'Lachlan v Evans, 1 
Younge & J. 380 ; Spratt w Hobhouse, 4 Bing. 173. See Cole v. Gushing, 8 Pick. 48 ; 
Ellsworth V. Brewer, 11 id. 316 ; Miller v. Miller, 7 id. 133. 

(y) Robinson v. Bank of Darien, 18 Ga. 65. 

(z) Cochituate Bank v. Colt, I Gray, 382. 

(a) This is certainly implied in Corbit v. Bank of Smyrna, 2 Harring Del. 235. 
The indorsement would seem to indicate an intention on the part of the indorser to 
regard the bank-note or bill as an ordinary bank-note or bill payable to bearer, and we 
Fee no other way in which an indorsement could be treated. 

(b) The English rule seems to be, that one who receives bank-notes or banker's notes 
is bound to present them or forward them the next day after they are received. This 
enables the transferee to recover the value of the note from the transferrer, in case the 
hank has failed and become insolvent. Camidge v. Alienby, 6 B. & C. 373, 9 Dow. & 
R 391. 

(c) And because bank-notes are intended for circulation, it would also free the taker 
from the charge of laches to put the note in circulation immediately. Robinson v. 
Hawksford, 9 Q. B. 52 ; Shute v. Robins, Moody & M. 133, 3 Car. & P 80. In Ca- 
midge V. Allenhy, 6 B. & C. 373, 6 Dow. & R. 391 , Boiley, J. said : " Then the qa->J- 
tion is, what it was the duty of the plaintiff to do in order to obtain payment of these 
notes. They were intended for circulation. But I think he was not bound imme- 
diately to circulate them or to send them into the bank for pavment ; but he was touui 

en. IV.] BANK-NOTES. 95 

more it gains by the substitution of them for gold and silver. 
They are intended to be reissued again and again, and this is the 
constant practice with our banks, though the Bank of England 
never reissues a bill which has once been redeemed. This, liow- 
ever, is only to guard against counterfeits. Therefore English 
bank-notes have not often that worn and soiled appearance which 
ours pi'esent, and which is sometimes regarded as an indication 
of their genuineness. An ordinary bill of exchange, note, or 
order payable to a particular person, which has been paid by any 
person who has no resort over against another, is regarded as 
functum officio, and as having ceased to have legal existence ; but 
this is not the case with a bank-note which is payable to the 
holder or bearer. (rf) A bank-note is never old, and it is held to 
be unaffected by the statute of limitations. (e) 

A promissory note made payable in bank-bills is not every- 
where negotiable. Nor does " lawful money," in the statutes, 
include bank-bills. (/) He that passes them has, of coiirse, some 
right as to the matter of presentment. {^) If he gave them as 

within a reasonable time after he had received them, either to circulate them or to pre- 
sent them for pa^'ment. Now here it is conceded that if there had not been any insol- 
venc\- of the banl<ers, the notes should have been circulated or presented for payment 
on the Monday," the next business day after they were received. 

((/) Beck r. Robley, 1 H. Bl. 89, note a ; Mead v. Small, 2 Greenl. 207 ; Bryant v. 
Ritterhush, 2 N. H. 212 ; Havens v. Huntington, 1 Cowen, 387 ; and see supra. 

(e) 12 Geo. III. ch. 72, 4 39. exempts bank-notes from the statute of limitations. 
See Dougherty v. Western Bank of Georgia, 13 Ga. 287. In Selfridge v. North- 
ampton Bank, 8 Watts & S. 320, it appeared that the notes were not issued until two 
years after their date, so that should not be evidence on the question of limitation. Tho 
(late does not seem to be evidence in the case of a bank-bill. Wright v I)()iiy:h^ss, 3 
Barb. .5.54. In F. & M. Bank of Memphis v. White, 2 Sneed, 482, it was held that an 
ordinary bank-note payable on demand is not barred until after six years from demand, 
and refusal at the counter of the bank ; and a mere suspension is not equivalent to 
Buch demand and refusal. Tiic judge, delivering the opinion of the court, said, inter 
alia: " The notes exhibited in this record arc payable on demand without limitation 
of time. It would be absurd to bold, that because payable on demand it must be taken 
that they were actually issued and put in circulation at their respective dates ; for, as 
said in the case of Greer v. Perkins, 5 Humph. 588, the date of a bank-note nffords no 
presumption that it was put in circulation at that time ; it may have been filled up and 
dated long before it was issued ; and after issuance it may have been returned and re- 
issued repeatedly and at distant intervals. Be this as it may, it is difiicult to repel the 
application of the statute of limitations, that the promise to pay upon the face of tho 
note is to be regarded as a continuing promise to pay upon demand being made, until 
actual refusal." 

(/) See supra. Vol. I. p. 46. 

{g) If the bank notes arc not tendered at the day, it has been held that money bo 


cash, and the holder keeps them in his pocket a long time, and 
wlien lie presents them finds that the bank has failed, he re- 
covers nothing against the transferrer of them, if they were good 
when transferred, and are lost by his delay. But it must be an 
unreasonable delay which thus destroys the right of the holder. 
He is not bound to drop all other business, and instantly carry 
them or send them to a bank. And if the bills are good at the 
hour, or during all the day when they were given, but the bank 
failed at night, and next morning the holder on presenting them 
was refused payment, we should apprehend that he might re- 
cover from tlie transferrer. So, too, if the taker, within the 
time during which he holds them without losing his right, that 
is, before he must present them for payment, circulates them, 
he still retains that right. So will any subsequent person who 
receives them. (A) 

It must not be inferred from this that one who pays out bank- 
notes might be held if the bank, however good when he paid, 
should fail a month afterwards, if he wlio then held them at that 

comes payable for the nominal value and not for their market value. Smith v. '^od- 
dard, 1 Ohio, 178 ; Morris v. Edwards, id. 189, id. .524 ; but generally the market value 
of the bills has been allowed to be recovered, which seems more reasonable. Huston 
V. Noble, 4 J. J. Marsh. 130 ; Scott v. Conover, 1 Halst. 222 ; Wilson v. Hickson, 
1 Blackf. 2.30; Osborne v. Fulton, id. 23-3; Coldren v. Miller, id. 296 ; Van Vleet v. 
Adair, id. 346 ; Feemster v. Ringo, 5 T. B. Mon. 337 ; Brown v. Durbin, 5 J. J. 
Marsh. 170; Kennedy ». Vanwinkle, 6 T. B. Mon. 398 ; Abbott » Agricultural Bank 
of Mississippi, 11 Smedes & M. 405 ; Garner v. The State, 5 Yerg. 160. 

(//) For a full discussion of the duties, of presentation for payment, and what is 
laches, making the bill the taker's and at his risk, consult the notes to the chapter on 
Payment, section on Payment by Bank-bills or Notes. See also note c, supray p 94. 
In Timmins v. Gibbins, 18 Q. B. 772, 14 Eng. L. & Eq. 64, M. W. deposited certain 
bills on a country bank on the 26th of the month ; the notes were presented to the 
London agents of the bank the ne.xt day, when it was discovered the bank had stopped 
the 26th. The notes were returned, and notice of dishonor given to the plnintift, and 
it was held, that the plaintiff was by this barred an action for money lent or money had 
and received. Turner v. Stones, 1 Dow. & L. 122 A £b bank-bill was changed rbr 
the defendant on Saturday. Monday the banking-house was opened two hours befdie 
it stopped payment; but the jury thought the bill would not have been paid hart it 
been presented. The same day the note was sent to the defendant, and the money ae- 
manded. The duty of holder in such a case was stated to be to give prompt notice of 
the stoppage of the bank, and to tender the note to the transferrer; this had been done 
in this case. From this and the former case, insolvency appears to date from the close 
of the banking hours, after which the bank never opens. It seems from this case that 
presentment at the bank itself in case of insolvency is not required, but that prompv- 
ness in notice and return are necessary. In England, after passing the bill, the takei 
must have had time and an opportunity to get his money from the bank. 


time had received them shortly before, and they had passed dur 
ing that month from hand to hand, without unreasonable delay 
in any part of the chain. Such a decision would not be made, 
and the courts might avoid it, if on no other ground, then on 
the ground that these notes are cash. 

It is also said, that the holder must present the notes, if the 
bank be shut up, if he would have a valid claim against the 
transferrer. It is certain, however, that bank-notes are never 
overdue, and their mere age does not affect them with suspicion. 

Nor are they, if transferred when old, open to the equities of 
defence which might be urged against negotiable paper trans- 
ferred and received when overdue. (i) ' 

({) The case of Camidge v. AUenby, 6 B. & C. 373, 9 Dow. & R. 391, implies that the 
duty of the holder is either to present at the bank, or to circulate the next day, or to give 
notice of the insolvency. "If presentment was unnecessary," says Bai/ley,J., "he (the 

holder) had another duty to perform The law requires that the party on whom the 

loss is to be thrown shall have notice of non-payment, in order to enable him to exer- 
cise his judgment whether he will take legal measures against other parties to the bill 
or note." In Turner v. Stones, 1 Dow. & L. 1 22, cited in last note, Mr. Justice Cole- 
ridge delivered the opinion of the court, and all the previous cases were ably reviewed. 
Rogers v. Langford, 1 Cromp. & M. 637, is quoted, and the remarks of Mr. Justice 
Baijlry were repeated, as follow? : " I think the notes ought to have been either pre- 
sented by the holder to the bank for payment, or else to have been returned without 
delay to the defendant, so as to have given him an opportunity of getting payment for 
them, or of making the best of them." Upon these remarks Mr. Justice Coleridge 
makes the following nice criticism: "I confess I feel a difficulty in seeing the relation 
to each other of these alternatives ; presentment at the bank should seem to be required 
on the principle that the bankers are primarily liable, and the former holders only sec- 
ondarily on their default, which is not established till a demand on them according to 
the terms of the contract. But if this be so, how is this aft'ected by a prompt return of 
the note to the holder, and a demand from him at a time when by the hypothesis his sec- 
ondary liability has not arisen ' On the other hand, how can a presentment at the bank 
in due time dispense with the responsibility of prompt notice and' return of the notes to 
the former holder, who may have the means of recovering the value from the person 
from whom he received them, and who certainly has a right to consider that the person 
who ke(!|js the notes an unreasonable time in his possession has thereby decided to 

maki; them his own 1 Where, therefore, a presentment at the bank could not 

reasonably be expected to produce payment, I think the obligation on the holder 
is to give notice promptly to the party from whom he receives the note, and to 
tender him the note ; this enables that party not merely to present at the bank, but 
to have recourse to the former holder, if he himself shall have so dealt with the 
note while ho held it as to have preserved any rights as against that holder." This 
seems to us to be the soundest doctrine on the subject. By this, presentment is not 
necessary in every case, but return of the note is required. If this is the true English 
rale, it is very like the American doctrine, which we do not think requires present- 
ment in all cases, but makes notice and return of the note necessary, unless waived by 
particular circumstances. In Phillips v. Blake, 1 Met. 156, Shaw, C. J. says : " It is 

Vol. II.— G 9 


What is the unreasonable delay of presentment which would 
discharge one who transferred them when they were good is not 
determined witli any exactness. It is said to be a question for 
the jury. But, we apprehend, a jury would rarely find a trans- 
ferrer of good bank-bills responsible for a subsequent failure, 
after any considerable time (by which we mean anything more 
than a day or so) had elapsed before the failure. (y) 

In the chapter on Payment by Bill or Note, we consider the 
case of a bank receiving payment of a debt in bills which pur- 
port to be its own, but are in fact counterfeit or forged ; and wo 
come to the conclusion that, if a bank receives payment for a 
debt (whether its own or one held by it for collection) in such 
bills, it is bound by it as to every one but the giver, and prob- 
ably as to him, if he made the payment in good faith. For the 
bank is under a stronger obligation than any customer can be to 

extremely questionable, when bank-notes are paid and received, whether it can be 
averred that they would not have been ])aid on presentment, without presentment 
made. Until such presentment there was no default, and the notes were not dishon- 
ored." No doubt the general rule is, tiiat negotiable paper must be presented, although 
the maker is insolvent. Bowes v. Howe, .5 Taunt. 30 ; Sands v. Clarke, 8 C. B. 751. 
And in Harley r. Thornton, 2 Hill, S. Car. 510, it was said : " It is always necessary 
that the note should have been presented within a reasonable time, when the party in- 
tends to charge the person from whom he took it" In Scruggs v. Gass, 8 Yerg. 175, 
which is generally quoted to show that the law in Tennes.see is, that the risk is on the 
taker of a bank-bill, as far as the solvency of the bank is concerned. It was said: 
" This court does not say but that Scruggs might have avoided the effect of payment 
in bank-notes, by having presented them to the bank for payment, and on refusal noti- 
fied Gass of the fact " In Lowrey v. Murrell, 2 Port. Ala. 280, a dictum in Wiiitbeck 
17. Van Ness, 11 Johns. 409, which has since been overruled, was quoted as the ground 
of the decision. The dictum was, that the transferrer of the bank-bill did not warrant 
the solvency of the bank. But it is to be observed in this case, that there was no dili- 
gence in attempting to collect the bill, and no offer to return it, so that the decision might 
well have gone upon this ground. In Snow v. Perry, 9 Pick. 539, there was decided 
laches in giving notice to the defendant. It seems that, even if the tran.sferrer were 
liable from having agreed that the bank-bills should be at his risk, he is entitled to 
proper legal notice of a default in payment. In Young v. Adams, 6 Mass. 182, we 
are reminded by the court, that, after all, bank-bills are only private contracts, having 
no public sanction. Alexander v. Dennis, 9 Port. Ala. 174, was a case of fraud, and no 
notice or return of the bills was held necessary to bind the payer of them. Where one 
passed a bill on a broken bank fraudulently, or with a promise to take it back if it 
proved uncurrent, a demand on the makers need not be proved. Hellings v. Hamil- 
ton, 4 Watts & S. 462. In Bank of Niagara v. M"Cracken, 18 Johns. 493, and in 
Jefferson Co. Bank v. Chapman, 19 id. 322, bank-notes are spoken of as forming an 
exception to the ordinary rules with regard to presentment and notice See Caldwell 
V. Cassidy, 8 Cowen, 271. 

( /) See cases cited in preceding note. 


know its own bills. (A;) It might at first seem that when a bank 
takes its own bills on deposit^ that it should not bo liable in case 
tliey turn out to be forged ; for deposit implies a bailment en- 
tirely for the benefit of the bailor, and that slight diligence only 
would be required of the bailee. This would perhaps be true 
of a special deposit. But bank deposits really are what were 
termed mutua in the civil law. A use of tlie money is contem- 
plated, and a debt is created from the bank to the depositcu-. 
The bank is as much bound by receiving its own bills on deposit 
as when they are taken in payment of a debt.(/) We do not 
tliink that a bank is bound to know whether a bill on another 

{k) See pout, chapter on Payment by a Bill or Note. If a bank receive in payment 
or on deposit counterfeit bills, purporting to be on the bank receiving them, the person 
who innocently pays or deposits the bills is not liable, and the bank must bear the loss. 
This is much upon the same principle that a drawee is bound to know his dravver's sig- 
nature, and if he accepts a bill in which the drawer's name is forged, he is still liable on 
his acceptance. Price v. Neal, 3 Burr. 13.54 ; Smith v. Chester, per Bidler, J., 1 T. R. 
6.53 ; Smith v. Mercer, 6 Taunt. 76 ; Bass v. Clive, 4 Maule & S. 13 ; Wilkinson v. 
Lutwidge, 1 Stra. 64S ; Jenys v. Fawler, 2 id 946. U. S. Bank v. Bank of Georgia, 
10 Wheat. 333, is the leading case upon the subject. The Bunk of Georgia issued the 
bank-bills in question ; they found their way into the Bank of the United States, and 
were presented, received as genuine, and placed to the general account of tlie United 
States Bank. The forgery was discovered nineteen days afterwards, when the bills 
were tendered to the bank of the United States and refused. It was a question which 
of two innocent parties should bear the loss. The receipt of the bank-notes was 
deemed an adoption of them. This was said to be demanded by public policy, every 
bank having the best means of knowing the genuineness of its own bills. The bills 
were received on deposit. Levy v. Bank of U. S., 4 Dall. 234, 1 Binn. 27, and Bolton 
i;. Richard, 6 T. R. 139, were cited as authorities, both of which were cases of checks 
which were paid, accepted, and carried to the credit of the transferrer. Gloucester 
Bank r. Salem Bank, 17 M.ass. 1, 33, was also cited. This case is in point, but, 
like the case in Wheaton, may he made to rest on the laches of the transferee in 
not discovering the forgery and returning the bills. In the Massachusetts case the 
bills were in a bundle, and were not examined by the cashier of the transferee bank 
until some time had elapsed. Notice of the doubtful character was given in fifteen days, 
and that the bills were forged, in fifty days after receipt. The court said, p. 45 : " The 
true rule is, that the party receiving such notes must examine them as soon as he has 
opportunity, and return them immediately. If he does not, he is negligent, and neg- 
ligence will defeat his right of action. This principle will apply to all cases where 
forged notes Iiave been received, but certainly with more strength when the paity re- 
reiving them is the one purporting to be bound to pay. For he knows better than any 
other whether they are his notes or not; and if he pays them or receives them in pay- 
ment, and continues silent after he has had sufficient opportunity to examine them, he 
should be considered as having adopted them as his own." The law would be the 
same in Delaware, we think. ViJe Corbit v. Bank of Smyrna, 2 Harring. Del. 235. 

[l] Sec cases in preceding note. 


bank js genuine or not.(???) Nor is there any reason to think 
that a bank, in receiving bills on another bank, takes the risk of 
its solvency, any more than an individual would do. But in 
States where the risk is on the taker, it makes no difference 
whether the bank receives the bills in payment or on deposit, as 
is decided in one case.(«) But we do not think the attention of 
tbe courts has been directed particularly to this point, for rea^ 
sons above stated. In our chapter on Lost Bills and Notes, we 
consider the subject of halved notes, and show that in England 
it seems to be the opinion of courts that bank-notes, when sent 
by post, should be remitted in halves by different conveyances. (o) 
We do not find this rule in America, nor do we think the prac- 
tice so common here as in England ; although there are cases in 
which this appears to have been done. The conclusion we have 
come to is, that the owner and holder of half a bank-bill has, 
strictly speaking, no claim against the bank, because he has no 
possession of the bill, and this is necessary to make him a prima 
facie owner. {;?) But as by severing the bill, the negotiability 
of either half alone is destroyed, the holder of one half may 
show that he came by it honestly, as that it was sent him by mail, 
or that the other portion has been lost, and where this appears 
the holder will be allowed to recover ; and it appears that notice 
from the bank that they will not pay a bill unless the whole of it 
be produced, is not binding upon any holder of half of a bank- 
bill, if he prove himself the owner of the other half. (9) But 

(m) Frontier Bank v. Morse, 22 Maine, 88. Here the bills in question were given the 
bank at the request of the cashier ; but as they proved insolvent, the bank was allowed 
to recover. 

(n) Corbit v. Bank of Smyrna, 2 Harring. Del. 235. 

(o) Observations in Lane v. Cotton, 1 Salk. 17. Sec chapter on Lost Note, for a 
full discussion of the questions. See also Hawkins v. Rutt, Peake, 186; Parker v 
Gordon, 7 East. 385. 

(/>) Patton V. State Bank, 2 Nott & McC. 464 ; Armat v. Union Bank, id. 471, note; 
U. S Bank v Sill, 5 Conn 106. In Mayor v. Johnson, 3 Camp. 3^4, Lord Ellenborough 
thourjht that, when one had severed a bill and lost one half of it, he could not maintain 
an action upon the remaining hsilf ; but wliere one set of halves only arrives by the mail, 
the holder will be allowed to recover. Hinsdale v. Bank of Orange, 6 Wend. 378 ; 
Bullet V. Bank of Pennsylvania, 2 Wash. C. C. 172 ; State Bank v. Aersten, 3 Scam. 
135 ; Martin v. Bank of U. S., 4 Wash. C. C. 253 ; U. S. Bank v. Sill, 5 Conn. 106. 
Or if the other half appears to have been lost or destroyed. Commercial Bank v. 
Benedict, 18 B. Mon. 307 ; Northern Bank v. Farmers' Bank. id. .506. 

(q) It seems that the mere holding of one half does not give any rig'it against the 
bank, but that the bank is entitled to have the manner of loss shown, and also, if 


where a number of bank-notes are mutilated and severed for the 
purpose of making others out of them fraudulently, it is said 
that no recovery can be had upon any of the notes so severed, (r) 
We shall quite fully consider, in the chapter on Payment by 
Bill or Note, the questions which are raised when this payment 
is made by forged bank-bills, or by bills of an insolvent bank. 
Here we will only say, that forged bills, if used as a payment 
from one individual to another, can hardly be called a payment 
under any circumstances ; (s) but the receiver is bound by them 
as if they were payment, if he fails to show proper diligence in 
reference to them, or want of notice to the giver, and the giver 
shows that he has thereby lost any opportunity of indemnifying 
himself, or otherwise sustained damage. (<) No doubt the taker 

necessary, to receive indemnity ; but it is plain that the holder of one half of a severed 
bill stands in a much better position tlian the owner of a lost bill. Bank of Virginia 
r. Ward, 6 Munf. 166 ; Farmers' Bank c. Reynolds, 4 Rand. 186. The bank is evi- 
dently entitled to have those prerequisites performed, and if they are not performed, no 
interest or costs will be recovered because of a refusal to pay. 

(»•) See cases cited in last note. 

(s) The transfer of forged bank-bills effects nothing; the transferee may recover 
money paid for them, or perhaps the value of anything given or sold for them, on 
the ground of entire absence or failure of consideration. Jones v. Ryde, 5 Taunt. 488 ; 
Wilkinson v. Johnson, 3 B. & C. 4-28; Young v. Adams, 6 Mass. 182; Phillips v. 
Ford, 9 Pick. 39 ; iMudd v. Reeves, 2 Harris & J. 368. This was a case of a forged 
bank-bill, given for the price of a gelding. Both parties were equally innocent ; the 
loss was held to be that of the transferrer, and the price of the gelding was recovered 
by the transferee. Keenc »». Thompson. 4 Gill & J. 463; Hargrave u. Duscnberry, 2 
Hawks, 326. A counterfeit bank-note may be treated as a nullity. A (ive-dollar bill 
was altered to a fifty-dollar bill. Markie v. Hatfield, 2 Johns. 4.5.5 ; Salem Bank v. 
Gloucester Bank. 17 Mass. 1, 33; Simms i-. Clark, 11 111. 137 ; Ramsdale ?,•. Horton, 3 
Penn. State, 330; Anderson ». Hawkins, 3 Hawks, 568; Pindall v. Northwestern 
Bank, 7 Leigh, 617; Wilson v. Alexander, 3 Scam. 392; Eagle Bank w. Smith, 5 
Conn. 71 ; Thomas v. Todd, 6 Hill, 340. See notes on the chapter on raynient, 
section on Payment by Bank-Bills. 

(t) Gloucester Bank v. Salem Bank, 17 Mass 1,33, was a of counterfeit bank- 
notes, in which notice of the doubtful character of the bills was given fifteen days after 
they were received ; and they were declared counterfeit fifty days after tlicir receipt. The 
decision, as we have before seen, went in part perhaps upon the duty of banks to know 
their own bills ; but negligence was somewhat discussed. " If it be said that the ques- 
tion whether there has been unreasonable delay or negligence is a question of fact for the 
lury, the answer is, that a judge, on the facts in this case, would be bound to instruct the 
jary that, in poitit of law, there bad been negligence, so that a new trial would be alto- 
gether fruitless." See Thomas v. Todd, 6 Hill, 3 10 ; Ramsdale v. Ilorton, 3 IVnn. State, 
^30; Markie v. Hatfield, 2 Johns. 4.55; Fogf,' v. Sawyer, 9 N. II. 365. In Simms r. 
Clark, 1 1 III. 137, it is said : " The law undoulitedly is, that a party who innocently i)ays 
away a counterfeit bill is not bound to take it hack, unless it is returned u[)on him in a 


may, by an oppress or an implied agreement, assume the risk of 
forgery. (^^) 

AVe shall seej in the chapter on Payment, that it is not quite de- 
termined what is the effect of payment in bills of a bank actually 
insolvent at the tune the payment is made (meaning by actual 
insolvency, an avowed failure to redeem its bills), but not known 
to be insolvent or near insolvency by either party. The author- 
ities differ ; and the circumstances of each case must have great 
influence in the decision of it. We should say, however, on what 
seems to be the weight of authority, that the presumption of law 
was in favor of regarding the bills as a conditional payment only, 
which became absolute if any circumstances or evidence showed 
that this was the intention of tiie parties ; or if the receiver 
actually succeeded in cashing them, or failed to use all proper 
diligence to cash them, or to give notice to the payer to save 
himself if he could. (u) Much of the uncertainty arises from the 
difficulty of determining the facts in each case in relation to 
the time or the evidence of the insolvency, or the times and cir- 
cumstances of the bargain, and the further difficulty of sepa- 
rating the law from the fact.(w) The burden is, we think, on 

reasoTiiible time after it is discovered to be spurious, and the reason of the rule is to 
enable him to trace out and fall back upon the person from whom he received it. But 
what shall be considered a reasonable time must necessarily depend on the situation of 
the parties, and the facts and circumstances of the particular c.ise." In this case, the 
notice of the spurious character of the bills was not shown to have been given for 
twenty days. The jury found the time reasonable, and the court would not disturb the 
verdict. The discovery of the spurious cliaracter throws upon the taker the duty of 
notifying his transferrer, and the reasonable time is to be reckoned from the time of 
discovery. It was also held, that an offer to return the note was dispensed with by 
the transferrer's saying that he would not take back the note till compelled to do so 
by law. Raymond v. Baar, 1-3 S. & R. 318. One receiving a counterfeit bank-bill 
kept it about six months after discovering the spurious character thereof, and then 
gave notice to the defendant. This was held such negligence as would prevent a re- 
covery. Thomas v. Todd, 6 Hill, 340. A bill was discovered to be counterfeit about 
May 25, and kept till July 4, following. This was held to be an unreasonable delay, 
and to defeat all remedy It seems that notice should be given the transferrer as soon 
as possible after the spurious character is discovered. We do not think any present- 
ment is to be required in the case of a forged bank-note, although such presentment 
would determine the character of the bill ; but such presentment would be merely 
ceremonial and nugatory. 

(u) See Ellis v. Wild. 6 Mass. 321. 

(!») See supra, pp. 96, 97, notes h and i. 

(w) In regard to this source of confusion. Chief Justice A nes, in Bicknall v. Water- 
man, 5 R. I. 43, 49, remarked as follows : " What was the agreement '>f the parties 


the receiver to prove such diligence and notice ; but when they 
are proved, he will recover the amount from the payer.(;i) And 
perhaps even a want of diligence and notice will not defeat the 
claim of the receiver, without some evidence that the payer has 
been thereby injured. 

with regard to the transfer of a note or bill, that is, whether it was by way of sale or 
exchange, or, in case of a precedent del)t, whether by way of complete payment or as 
mere security for payment of it, is a question of fact, and varies with the proof, direct 
and presumptive, in cases in other respects similar. It is obvious what contrariety of 
decision must necessarily arise, if courts, mistaking their province, undertake to decide 
such questions as if they were questions of law ; and, however they decide them, of 
what little value their decisions must be as precedents." 

(x) With regard to the question whether, where one innocent party makes payment 
to another in bills on a bank at that time actually insolvent, the transferrer or trans- 
feree shall suffer, there is an irreconcilable difference in the American decisions ; but 
we think, tlie better opinion is, and it is the one sustained by the weight of authority, 
that the holder of a bank-bill at the moment the bank becomes insolvent must be the 
loser, and it matters not how distant from the bank or how innocent the parties are, 
provided there be no laches on the part of the taker. See a very full note on the sub- 
ject, under the chapter on Payment. The subject was much discussed, and the rulo 
we have stated was held, in Lightbody v. Ontario Bank, 1 1 Wend. 9, 13 id. 101. It was, 
however, held, that between the receipt of the bank-bill and the failure of the bank 
there must have been an opportunity to present the bill, in order to throw the risk of 
loss upon the transferee thereof The insolvency of the bank is referred to the time 
of actually stopping payment. " It is supposed that any particular note presented 
before that time would have been paid." Roget v. Merritt, 2 Caines, 117 ; Fogg v. 
Sawyer, 9 N. II. 365 ; Thomas v. Todd, 6 Hill, 340 ; Hurley v. Thornton, 2 Hill, S. 
Car. .509; Wainwright v. Webster, 11 Vt. 576; Oilman v. Peck, id. 516; Frontier 
Bank v. Morse, 22 Maine, 88 ; Houg^^ton v. Adams, 18 Barb. 545. In several of the 
States the risk seems to be on the transferee, when the transferrer is innocent. Bayard 
V. Shunk, 1 Watts & S. 92, per Gihson, C. J., et curimn ; Scruggs v. Gass, 8 Yerg. 175 ; 
Edmunds v. Digges, 1 Grat. 359 ; Lowrey v. Murrell, 2 Port. Ala. 280. Young v. Ad- 
ams, 6 Mass. 182, hints at the same doctrine as prevailing in that State, and goes further 
than the English law in favor of bank currency. Corbit v. Bank of Smyrna, 2 Ilar- 
ring. Del. 235, is the strongest and most ably argued and decided case on the subject ; 
but the court were not unanimous. In the case of Snow v. Perry, 9 Pick. 539, the 
bank became insolvent the next day, as was the case in Turner ». Stones, 1 Dow. & L. 
122. See Imbush v. Mechanics', &c. Bank, 1 West. Law Jour. 49. The English cases 
seem to hold that there must be implied, in the al>sence of express agreement, an 
understanding that at the time of transfer the note will be paid at the counter of the 
bank, and the time after the transfer during which the solvency of the bank i.s still at 
the risk of the transferrer is until the transferee has time to present the bill which is 
taken, and possibly tire risk of the transferrer may continue so long as the bill con- 
tinues in active circulation ; i. e. no one holding it more than twenty-four hours. Ca- 
nidge v. AUenby, 6 B. & C. 373, 9 Dowl. & K. 391 , is a very leading case. Goods were 
sold, and a few hours afterwards bills on a bank given in payment for them, which bank 
aad stopped payment a few hours before the bills were transferred. This was unknown 
to either party. The notes were not presented for a week, when the defendant was 


The question as to -the rights of innocent parties, between 
whom a bill on a bank already insolvent has passed, is involved 
with two others, which are also not without their difficulty. 
The first is, whether the entire or partial insolvency of the bank 
has any bearing upon, or makes any ditference with, the responsi- 
bility of the transferrer. Of course, where the risk is held to be at 
any rate upon the transferee, the question is of no importance ; 
but in these very jurisdictions this question has been raised. In 
some cases, it is said that most bank-bills are circulated more or 

required to take them back. The case went upon the laclies of the plaintiff, but 
the payment by bank-notes was much discussed. Bai/lei/, J. made a distinction be- 
tween contemporaneous and precedent debts, which is fully discussed under Payment, 
and thought that if at the time of a sale hills of an insolvent bank are passed as pay- 
ment, that the taker must run the risk of the bank's insolvency ; but put his decisiou 
on the ground that, if a holder of notes given for a prior debt were not diligent, he 
would make the notes his own property by these laches. He said, however, that bills 
were for circulation, and that the taker was not bound to circulate immediately, but in 
a reasonable time, namely, the next day. He seems to regard presentment as unneces- 
sary, but that it is the duty of the holder to give notice to the transferrer. Holroyd, 
J., in the same case, regards the notes as payment, but says that if they are mere 
promissory notes they are still payment, on account of the laches of the plaintiff. 
Lktkdale, J. regards the bank-notes as payment and at the risk of the taker, but rests 
the case upon the laches of the plaintiff. He distinguishes bills on a broken bank from 
forged bills, and denies any guaranty of the solvency of the maker of a note payable 
on demand to bearer. This case seems to hint that the rights of the transferee would 
be preserved by circulating the bank-bill as much as by presenting it, or, as it seems 
he may do, by giving notice of insolvency and tendering the bill. We do not think 
with regard to bank-bills there is any distinctioi^ between prior and contemporaneous 
debts. The intention of the parties and their understanding must if possible be 
discovered, and it seems to us that it is not different in one case from another. 
In Timmins ». Gibbins, 18 Q. B. 722, 14 Eng. L. & Eq. 64, Lord Camphdl, C. J. 
says : " I feel great difficulty in seeing any distinction between payment for goods 
sold at the time and payment for them at a future day. In both cases it is a 
transaction of buying and selling, and even where the money is paid over the 
counter there must be some interval during which the buyer wife debtor." But thir» 
point was unnecessary to the decision, per Wightman, J. In Rogers v. Langfonl, 
1 Cromp. & M. 037, it appeared that on the 23d of November A paid for goods 
in a bank-note ; on the 28th instant B got A's servant to change the country bank- 
notes he had taken for money. The bank stopped payment the same day. A heard 
of it the 28th, and on the 29tli gave notice of the failure, and desired an exchange 
of the notes, which, however, were not tendered back till long afterward.s. Nor 
were they ever presented at the bank. A was not allowed to recover against B 
the value of the notes. Ic was thought that the bills ought to have been presented 
or returned without delay, per Bmjley, J. Turner r. Stones, 1 Dow. & L. 122, seems 
to determine whether the holder at the time of failure must bear the lo.''S. The 
plaintiff, late on Saturday, changed for the defendant a .£ 5 note ; the bank had then 
virtually stopped payment. The loss was the transferrer's. See beginninp- of the 


less at a discount ; and so long as they were worth anything, th^ 
risk must be on the transferee, who, as it were, bought the bills, 
and took the risk of depreciation. But it is not clear that, in 
the purchase of a note, a partial depreciation is any more at the 
taker's risk than a total loss by the maker's insolvency. When 
he purchases a note, he runs the risk of both ; but not so with a 
bank-note, because that is taken with the understanding that it 
is current and redeemable, and if so, there is no more risk of 
partial than of total insolvency. (3^) 

note. In this case the authorit_v much relied on was Henderson v. Appleton, cited in 
Chitty on Bills, 9th ed , p. 336, note t. In this case the bills were not presented, but on 
the day they nii<^ht, in course of post, have been presented, the plaiiititt' offered them 
to the defendant, who refused them. The verdict for the plaintiff was allowed to stand. 
See also Ward v. Evans, 2 Ld. Kaym. 928 ; Ex parte Blackburne, 10 Ves 204 ; Brown 
V. Kewley, 2 Bos. & P. 518 ; Owenson v. Morse, 7 T. R. 64; Emly v. Lye, 15 East, 
7, 13, per Bciylcy, J.; Ex parte Blackburne, 10 Ves. 204 ; Camidge v. Allenby, 6 B. & 
C. 373 ; Puckford v. Maxwell, 6 T. R. 52 ; Fenn v. Harrison, 3 T. R. 757 ; Lijjhtbody 
y. Ontario Bank, U Wend. 9, 13 id. 101; Harley v. Thornton, 2 Hill, S. Car. 509; 
Thomas v. Todd, 6 Hill, 340; Fogg v. Sawyer, 9 N. H. 365 ; Magee v. Carmack, 13 
III. 289; Wainwright v. Webster, II Vt. 576; Oilman v. Peck, 11 Vt. 516; Frontier 
Bank v. Morse, 22 Maine, 88 ; Commonwealth v. Stone, 4 Met. 43. 

(y) In Lightbody v. Ontario Bank. 11 Wend. 9, 13 id. 101, after offering to return 
the bills, the defendant having refused to receive them, the plaintiff, the transferee, re- 
ceived thirty-tln-ce per cent of their value from the receiver who was appointed. This 
was not regarded as making any difference. Oilman v. Peck, 11 VI. 516; Frontier 
Bank v. Morse, 22 Maine, 88. Lowrey v. Murrell, 2 Port. 280, while it seems to make a 
distinction between bills worth less than par and those which are entirely worthless, nev- 
ertheless decides that the bill is at the risk of the tiiker, so far as the insolvency of the 
maker is concerned. This being the determination, the distinction is unavailing, and 
so far ointer. In Bayard v. Shunk, 1 Watts & S. 92, which decided that the risk is on 
the taker of a bill on an insolvent bank, a strong distinction is taken between bills on 
banks which are insolvent and counterfeit bills. The latter are distinguished from the 
former, from the fact that they are usually not worthless, but depreciated in value, — al- 
though in the particular case every vestige of the bank had disappeared in a few hours 
after payment was stopped, yet it was suggested that bills on an insolvent bank are 
usually worth something. This distinction on the ground of partial value is well met 
by Parker, C. J., in Fogg v. Sawyer, 9 N. H. 365, who suggests that no counterfeit is 
pas.sed which has not some intrinsic value, and that many are worth a large per cent 
of the coins they purport to be. The distinction between prior and contemporaneous 
debts was taken by one of the judges in the famous case of Camidge v. Allenby, 6 B. 
& C. 373, 9 I). & R. 391. A quantity of corn was sold the defendant in the morning 
of the 1 0th of September. In the afternoon of the same day the notes were delivered 
which proved bad. Baijhy, J. said : " If the notes had been given to the plaintiff at 
the time when the corn was sold, he could have had no remedy upon them against the 
defendant. The plaintiff might have insisted uimn payment in money. But if he con- 
gented to receive the notes as money, they would have been taken by him at his peril. 
. . Here the not-^s were given to iiiin in payment siili.sei^uently, and the flut^stion is, 


The question, whether it makes any difference as to the risk 
of iusulvency if the bill be transferred for a prior or contempo- 
raneous debt, is raised in courts of the highest authority. If the 
bill or note of a third person be passed at the time of a sale, i. e. 
for a contemporaneous debt, as we shall see in our chapter on 
Payment, the risk of the maker's solvency is upon the transferee, 
provided both parties are innocent. This we believe to be the 
rule everywhere. If tlie note of a third person be passed for a 
previous debt, the presumption is that it is intended as a con- 
ditional payment only ; to be an absolute payment, in case the 
holder obtains payment on it, or is guilty of laches, which makes 
the bill his own. This, however, as we shall also see in the 
chapter on Payment, is not the law of Maine, Vermont, or Mas- 
sachusetts, in which States the note, whether for a precedent or 
contemporaneous debt, is presumed to be payment, and the risk 
of the maker's solvency is on the transferee. In most of the 
courts a note for a previous debt may operate as payment by 
agreement, which may be express or implied ; but some courts 
hold that it must be express. 

So far as bank notes or bills are regarded as the notes of 
third persons, and coming under the ordinary rules of nego- 
tiable paper, these distinctions must be understood to apply. 
But in the 'case of bank-notes, we think the obligation is en- 
tirely independent of the fact whether passed for a prior or con- 
temporaneous debt, and that tliis makes no difference whatever ; 
because, as we have already said, there is a general understand- 
ing that the bill is current, and will be redeemed at the counter 
of the bank, if presented. 

The law everyw^here will protect one who receives bUls on a 

whether they operate as a discharge of the debt due to the plaintiff in respect of the 
coiTi." The other judges did not assent to the distinction, but decided that, if the notes 
were money, they were payment ; if common promissory notes, there was negligence. 
This distinction, taken by Bayley, is discountenanced by Lord Campbell, in 'I'immins ». 
Gibbins. 18 Q B. 722, 14 Eng. L. & Eq. 64, who says that he could never see any rea- 
son in making the distinction ; and remarks, that in all cases, even in those of payment 
over the counter, there must be some time elapsing between debt and payment, which 
makes the debt a precedent one. In Lightbody v. Ontario Bank. 11 Wend. 9, 13 id. 
101, the distinction is mentioned with approval. See also Scruggs v. Gass, 8 Ycrg. 
175. The distinction is discarded in the American cases Lowrey v. Murrell, 2 Port. 
Ala. 280 ; Edmunds v. Digges, 1 Grat. 339, and per Layton, in Corbit v. B'iik of 
Smyrna, 2 Harring. Del. 235. 


broken bank, on representation that they are good ; and passing 
a bill of a bank known to be broken is a fraud. (s) 

Post-notes seem to occupy a position between the bank-bill, on 
the one hand, and the promissory note, on the other. They are 
payable on time, and are still intended to circulate as money. 
They are not generally subject to the rules of promissory notes, 
but are like bank-bills. (a) It has been held that a power to 
issue paper for circulation includes tliem.(6) The general rules 
of demand and notice are not applicable to them.(c) In some 
of the States they are void by statute. (g?) We would add, that 
bank-bills issued contrary to law or statute, or under an uncon- 
stitutional law, are void ab initio. {e) Li suing a bank-bill, it is 
unnecessary to describe it by its letters or numbers. (/) The 
word " bank-notes," in a penal statute, was held to include those 
of banks of England and Scotland. (^) 

(z) He who receives bills on a broken bank, on representation made to him that 
they are worth their nominal value, does not take them at his own risk. The ques- 
tion whether passing a bill on a broken bank, and receiving good money in exchange, 
without any words, is a representation that the bill is worth what it purports to be, 
depends on the attendant circumstances. If the bill is known to be nearly or wholly 
worthless, the fraud is a punishable offence. Commonwealth v. Stone, 4 Met. 43; 
Young V. Adams, 6 Mass. 182. "When innocently passed with representations that it 
is good, the risk is on the transferrer. Aldrich v. Jackson, 5 R. I. 218. Even in 
tbose States where ordinarily a bank-bill is at the risk of the taker. Gilnian v. Peck, 
11 Vt. .516; Jefferson v. Holland, cited in Corbit v. Bank of Smyrna, 2 Ilarring. Del. 
2.35, 260, which is to the same effect. Alexander v. Dennis, 9 Port. Ala. 174. Of 
course tbe case is stronger where the representation is fraudulent. Id. ; Hellings v. 
Hamilton, 4 Watts & S. 462. 

(a) Fulton Bank v. Phoenix Bank, 1 Hall, 562, 577. 

(b) Campbell v. Mississippi Union Bank, 6 How. Miss. 625. 

(c) Key V. Knott, 9 Gill & J. .342. 

(d) Stat. N. Y. 1840, p. 304, § 4; Swift v. Beers, 3 Denio 70; Tyler v. Yates, 3 
Barb. 222; Bank of Chilliootlie *'. Do<lge, 8 Barb. 23.3. 

(c) Root V. Wallace, 4 McLean, 8; Davis v. Bank of River Raisin, 4 McLean, 
387 ; Skinner v. Deming, 2 Ind. 558. 
(/) Carey v. Greene, 7 Ga. 79. 
(^) Case of Gray, 1 Hume, Comm. 145, note 1. 




Letters of credit are not bills of exchange, although they 
resemble thera in some respects. A person in New York, for 
example, who proposes to purchase goods in Calcutta, takes with 
him to that place, or sends in his ship, or by his agent, a letter 
to a house established there, in which some one duly authorized 
by that house writes to them to furnish the bearer, or sender, 
with whatever money he may desire to a certain amount ; or 
perhaps he takes a letter from an agent of Baring, Brothers, & 
Co., in New York, authorizing drafts or opening a credit upon 
them. The writer of the letter of credit may be only the agent 
of the house to which he writes, and then he takes security for 
that house from the person in whose favor he writes, or he may 
be a merchant who has funds in the hands of that house, in 
which case he takes security to himself. In either case, it is a 
transfer of funds from one place to another for purposes of 
trade, without actual transfer of money ; and in so far it is like 
a bill of exchange. It differs from it, however, in not bemg 
payable absolutely, and for a certain amount. It is more con- 
venient, in many cases, for the reason that he who is to receive 
and employ the funds cannot tell, until he learns upon the spot, 
the prices which rule in the market, and otlier circumstances, 
or how 'much he shall want, or indeed whether he sliall conclude 
to use any. And as he only engages to pay for so much as he 
takes, he is not obliged to pay the cost of more than he may 
need, in order to secure all that he shall find necessary. This 
transaction approaches in character to the purchase of bills of 
exchange, in proportion as it provides for him who takes the 
letter a specific sum, payable at all events, and as he pays a spe- 
cific sum on this side to secure tliis provision. Still, unless it 
assumes the form of a sale and purchase of bills of exchange, it 


does not come under those peculiar rules of the law merchant 
which relate to negotiable paper, but is governed by the general 
principles of the law of contracts, (a) 

Circular notes, as they are called, are a still more recent in- 
vention, and are now iised extensively, both in this country and 
in Europe ; but by travellers almost exclusively. They are gen- 
erally, but not always, for specific sums, and are in fact letters 
of credit, which a banking-house gives to a traveller, and whicJi 
are made available on presentation to any of the agents or cor- 
respondents of the house in a long list of places, the names both 
of the places and of the agents in them being usually stated in 
the instrument itself. A principal object of this is to enable 
a traveller to supply himself with funds frequently and at vari- 
ous points, and thus to prevent the necessity of carrying with 
him large sums of money, or depositing them at the principal 
centres of business along his route. These are usually trans- 
ferable by indorsement, and are perhaps more like bills of ex- 
change than ordinary letters of credit, but are not the same, 
nor would they be in all respects governed by the law of nego- 
tiable paper. 

There are also several other instruments, which, from their 
entering largely into the business of commerce, and passing rap- 
idly from hand to hand, have become subject, in some respects, 
to the peculiar rules which govern negotiable paper. "We have 
remarked repeatedly that the reason of these rules must be 
sought in the purpose and object of negotiable paper, which is to 
take the place of, and represent, money. The truth of this is 

(a) In Orr v. Union Bank of Scotland, 1 Macq. H. L. Cas. 513, it was held, in the 
House of Lordn, on appeal from Scotland, that the rules applicable to negotiable sccii- 
riries do not hold with respect to letters of credit. The letter of credit there was in 
this form : " Please to honor the drafts of A to the extent of £460 9s., and charge 
the same to the account of B." Lord Cramvorth said : "I am not at present satisfied 
that there is any distinction between a letter of credit and any other security." Lord 
Broui/liam said : "I am inclined to think that there is no very jrreat novelty or pecu- 
liarity in letters of credit, to take them out of the {general law api)licabic to mandates. 
I am not aware that there is anythinp: in the mercantile law, or the custom of mer- 
chants, to distinj^uish letters of credit from any other authority to pay money." For 
the principles of law apj)iicablc to letters of credit j^enerally, see Hussell v. Wipgin, 2 
Story, 21.3 ; Ulster County Bank v. McFarlan, 5 Hill, 4.32; Barinp: !'. Lyman, 1 Story, 
396; Lonsdale ?;. Lafayette Bank, 18 Ohio, 126; Beach v. State Bank, 2 Ind. 488; 
Birckhead v. Brown, .5 Hill, 634, 2 Denio, 375 ; Carnegie r. Morrison, 2 Met. 381 ; 
Union Bank of La v. Coster, 3 Comst. 203. 

VOL. II. 10 


strikingly exemplified by the rule that a bill of exchange or 
promissory note, payable to bearer, or payable to order and in- 
dorsed in blank, passes by delivery, and possession proves prop- 
erty, if the holder obtained possession in good faith and for 
value ; and that, as we liave seen, the law presumes to be the 
case, in the absence of evidence which proves the possession to 
be fraudulent, or, at least, casts suspicion on it. 

By the law of England and this country, a sale or transfer of 
ordinary chattels passes no title to the vendee, if tlie vendor has 
none. One cannot convey to another what he himself does not 
own. Therefore, if a chattel be lost or stolen, or possession of 
it be obtained by fraud, the owner may retake it wherever he 
can tind it, though it may have passed into the possession of a 
bona fide purchaser for a valuable consideration. But this rule 
was never applied to money, that is, the current coin of the 
realm. In regard to that the rule always was, that whoever 
received it in the usual course, in good faith and for a valuable 
consideration, acquired a perfect title, although the person from 
whom he received it should have stolen it, or obtained it by 
fraud, or come to the possession of it by finding. And the rea- 
son of this is not, as has sometimes been said, (6) that money has 
no ear-mark, or nothing by which it may be identified. In many 
cases it can be identified ; but the principle applies equally, 
whether it can be identified or not. The true reason, as said by 
Lord Mansfield, is that it has passed in currency. [c) In 1758, it 

(6) See Higgs i'. Holiday, do. Eliz. 746 ; Maclish v. Ekins, Sayer, 73 ; Ford r. 
Hopkins, 1 Salk. 283. 

(c) Miller v. Race, 1 Burr. 452. 457. Lord Mansjield said: "'Tis pity that report- 
ers sometimes catch at quaint expressions diat may happen to be dropped at the bar or 
bench, and mistake their meaning. It has been quaintly said, 'That the reason why 
money cannot be followed is, because it has no enr-mark\- 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 currencji. 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 in currency, an action may be brought for the monev 
itself." In Clarke r. Shee, Cowp. 197, it was held, that an action for money had and 
received would lie by ihe true owner of money Or notes against a third person, into 
whose hands they had come v\nJa fide; provided their identity could be traced and as- 
certained. And Lord Mansfield said : " Where money or notes are paid bona fide, and 
upon a valuable consideration, they never shall be brought back by the true owner; 
but where they come m<da fide into a person's hands, they are in the nature of specific 
property; and if their identity can be traced and ascertained, the parrv has a right to 
recover. It is of pul)lic benefit and example that he should ; but otherwise, if they 


was decided by Lord Mansjield, upon great consideration, that 
the same principle was applicable to Bank of England notes, pay- 
able to bearer, upon the ground that such notes wera.not goods 
nor securities nor documents for debts, nor were so esteemed ; 
but were treated as moneij, in the ordinary course and transac- 
tion of business, by the general consent of mankind, which gave 
them the credit and currency of money, to all intents and pur- 
poses. They were as much money as guineas themselves were, 
or any other current coin that was used in common payments as 
money or cash.(c?) A few years later, Lord Mansfield took an 
other step, and applied the same principle to a check upon a 
banker, payable to bearer, saying, " There is no distinction be- 
tween a bank-note and such a note as this is. "(e) And finally, 
in 1781, he applied the principle to an ordinary bill of exchange, 
payable to order and indorsed in blank. In this last case, his 
Lordship said : " I see no difference between a note indorsed 
blank and one payable to bearer. They both go by delivery, 
and possession proves property in both cases." (/) Questions of 
this kind must frequently arise in cases where the bill or note 
was lost or stolen, and in our chapter on a Lost Bill or Note we 
shall consider these questions, and tlie authorities which decide 
them, at much length. The history of this branch of the law is 

cannot be followed and identified, because there it might be inconvenient, and open a 
door to fraud." Miller v. Race, 1 Burr. 452. And in Golightlj v. Reynolds, the iden- 
tity was traced through different hands and shops. The case of Golightlv v. Rey- 
nolds, cited by his Lordship, is re[)orted in Lofft, 88. And see, per Le Blanc, J , in 
Glyn V. Baker, 13 East, .510 ; per Best and Holroijd, ,JJ., in Wookey i'. I'olc, 4 B. & 
Aid. 1. See also Le Breton v. Pierce, 2 Alien, 14. 

(t/) Miller v. Race, 1 Burr. 4.52. This was an action of trover to recover a Bank 
of England note. It appeared that the note had been enclosed in a letter and deposited 
in the mail on the 11th of December, 1756; that on the same night the mail was 
robbed, and the bank-note in question taken and carried away by the roblfcr; that on 
the following day it 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 it> having been taken out of the mail. On the 13th of De- 
cember, the former owner, having notice of the robbery, applied to the bank to stop 
the payment of the note, which was ordered accordingly, upon his entering into proper 
security to indemnify the bank. Shortly after, the plaintiff applied to the bank fur the 
payment of the note; and for that purpose delivered it to the defendant, who was a 
clerk in the bank ; but the defendant refused either to pay the note or to redeliver it to 
the defendant. Held, that the plaintiff was entitled to recover. 

(e) Grant w. Vaughan, 3 Burr. 1516. 

(/) Peacock v. Rhodes, 2 Doug. 633. 


quite interesting ; but all that we will add now is, that the law 
which applies where a finder or a thief transfers a note for value 
to an innocent holder, applies equally to every case where an 
innocent holder receives for value negotiable paper wrongfully 

For more than eighty years there has been a tendency on the 
part of courts and legislators, perhaps even more on that of 
the mercantile community, to extend the same principle to other 
contracts and instruments, upon the ground that they pass cur- 
rent in the same manner as negotiable paper, and thus fall 
within the same reason ; and, undoubtedly, wherever this reason 
certainly exists, it should lead to the same conclusion. Thus, in 
1811, the Court of King's Bench having expressed strong doubts 
whether a bona fide purchaser for a valuable consideration of 
bonds of the East India Company could be protected against a 
former owner, from wiiom they liad been obtained by fraud or 
theft, upon the ground that, being choses in action, they were 
not assignable at law, and so the purchaser acquired no legal 
title, {,.^) Parliament immediately interfered, and declared that 
such bonds should be assignable and transferable by delivery of 
the possession thereof; and upon every such assignment and 
transfer, the money secured by the bond so assigned or trans- 

(g) Glyn r. Baker, 13 East, 510. It was stated by Best, arguendo, that the bonds of 
the East India Company were always made payable to their own treasurer, and in- 
dorsed by him before tliey were issued ; in which state they were afterwards negoti- 
ated, and passed by delivery from one to another. Lord Ellenhorough said : " If it bo 
meant to liken these to the case of bankers' notes, in Miller v. Race, 1 Burr. 452, as 
having acquired in fact a negotiable quality, and being received as cash ; or to ord- 
nance debentures, notes, bills, and other securities of the same description, which are 
circulated daily in the money market, the fact of such negotiability should be stated. 
But supposing it were so stated, how could a right of action upon these securities be 
made to pass by such a practice to the holder of them, where b\' law no such right 
passes? There must always be that impediment existing to the legal negotiability of 
such instraments, which distinguishes them from bills of exchange and securities of that 
nature in which the legal interest passes, under the law merchant, by indorsement and 
delivery to another." Le Blanc, J. : " It is clear that no action could be brought upon 
this bond but by Sibley the obligee, or in his name; or if he died, in the name of his 
executors. Here, then, are persons intrusted with the securities of A and of B, who 
part with the securities of A, and when called on by him for them, give him the secu- 
rities of B. That difficulty can only be met by assimilating such securities to cash, 
which, whether it has an ear-mark set on it or not, if passed by the person intrusted 
with it to a hona fide holder for valuable consideration without notice, cannot be recov- 
ered bv the original owner; but how docs the similitude hold ? " 


ferred, and the property in such bond, should be absolutely 
vested in the assignee, as well at law as in equity, (/t) 

A few years later, in a case where an exchequer bill, payable 
to bearer, had been purchased by the defendant in good faith and 
for a valuable consideration, it was held that the former owner 
could not maintain trover, though the bill had been sold to the 
defendant by a broker, with whom it had been deposited for a 
special purpose, in violation of his trust ; the court holding that 
such an exchequer bill passed by delivery, and that property and 
possession were inseparable, as in case of money, bank-notes, and 
bills of exchange payable to bearer or indorsed in blank, (i) 

{h) .51 Geo. III. ch. 64. 

((■) Wookey v. Pole, 4 B. & Aid. I. The exchequer bill in this case was payable 

to or order, and it had a memorandum at the foot, that if the blank were not 

filled up, it would be paid to bearer. Best, J said : " The question which the court is 
called on to decide is, whether exchequer bills are to be considered as goods, or as the 
representatives of money ; and as such, subject to the same rules, as to the transfer of 
the property in them, as are applicable to money. The delivery of goods by a person 
who is not the owner (except in a manner authorized by the owner) does not transfer 
the right to such goods; but it has been long settled that the right to money is insepa- 
rable from the possession of it. I conceive that the representative of money, which is 
made transferable by delivery only, must be subject to the same rules as the money 
which it represents. It was said by the court in Higgs v. Holiday, Cro. Eliz. "46, 
' that where the owner of money had lost the possession of it, he had lost the property 
in it, because it cannot be known ' ; and Lord Holt, recognizing this doctrine in the 
case of Ford v. Hopkins, 1 Salk. 28-3, adds, ' But if bank-notes, exchequer notes, mil- 
lion tickets, or the like, are stolen or lost, the owner has such an interest in them as to 
bring an action into whatsoever hands they are come.' It is not because the loser can- 
not know his money again that he cannot recover it from a person who has fivirly ob- 
tained the possession of it ; for if his guineas or shillings had some private marks on 
them by which he could prove they had been his, he could not get them back from a 
bonajide holder. The true reason of this rule is, that by the use of money the inter- 
change of all other property is most readily accomplished. To fit it for its purpose, the 
stamp denotes its value, and possession alone must decide to whom it belongs. If this 
be correct as to money, it must be so as to what is made to represent money ; and Lord 
Holt has himself so decided. In an anonymous case, Salk. 126, he held that trover 
would not lie by one who had lost a bill of exchange against one who had given for it 
a valuable consideration. The same judgment was given, in the case of a lost bank- 
note, in Miller v. Race, 1 Burr. 4.52. It cannot be disputed but that this exchequer 
bill was made to represent money, as much as a bank-note or bill of exchange. It 
was given for a debt due from government; it is payable (the blank not being filled 
ip) to bearer, and transferable by delivery; and is on its face made current, and to 
pass in any of the public revenues, or at the receipt of the exchequer. But it has been 
said, these bills are not used as negotiable instruments, as hank-bills and bills of ex- 
change are, but are the objects of sale. I do not see why they should not be used as 
negotiable instruments : they arc transferred with the same facility as other bills ; and 
I know from the legislature that they may be used in payments, for the statutes direct 
Vol. XL— H lO* 


The f.ame ^loctrine was afterwards applied to a Prussian bond, 
whereby the king of Prussia acknowledged himself and his suc- 
cessors bound to every person v)ho should for the time being- be 
the holder of the bond, for the payment of the principal and 
interest, in the manner therein pointed out.(j) And in this 

that tliey should be received for taxes. We also know that bills of exchange are as 
frequently sold as they are delivered in payment. It is the business of bill brokers to 
negotiate these sales. But the great point is, that they are not like goods taken on the 
credit of the person from whom you receive thetn, but on that of government. The 
receiver never inquires from whom they come, further than to satisfy himself that they 
are genuine bills." Hohoyd, J., after citing Miller v. Race, 1 Burr. 452, Grant v. 
Vaughan, 3 Burr. 1.516, and Peacock v Rhodes, 2 Doug. 633, said : " These authori- 
ties show, that not only money itself may pass, and the right to it may arise by cur- 
rency 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 the like man- 
ner, by currency or delivery. These decisions proceed upon the nature of the prop- 
erty (viz. money) to which such instruments give the right, and which is itself 
current; and the effect of the instruments, which either give to their holders, merely 
as such, the right to receive the money, or specify them a.s the persons entitled to 
receive it. The question then is, whether these principles apply to the present case, 
or whether this exchequer bill and the right thereto follow the nature of goods, which, 
except in market overt, can only be transferred by the owner or under his author- 
ity. In order to ascertain that, we must consider the nature and effect of the instru- 
ment, both as to the property which it concerns and as to its negotiability or cur- 
rency by law. In its original state, it purports to entitle the holder to the sum of 
;£ 1,000 and interest; and the original holder may, if he pleases, secure it to himself; 
but it is payable to the bearer until some name is inserted ; and when that is done, it 
becomes payable to such nominee or his order. But if the original holder parts with 
it or keeps it in blank, he by that very act, or by his negligence if he loses it, author- 
izes the bearer, whoever he may be, to receive the money ; and so, if he were to insert 
his own name, but indorse it in blank, instead of restraining its negotiability, cither by 
not indorsing it at all or by making a special indorsement, he thereby authorizes and 
empowers any person who may be the holder, bona fidf. and for value, to receive it ; and he 
cannot revoke that authority when it has become coupled with an interest. The instru- 
ment is created by the stat. 48 Geo. III. ch. I , and is thereby made negotiable and current. 
.... An exchequer bill is, therefore, an instrument for the repayment of money origi- 
nally advanced to the public, purporting thereby to entitle the bearer to receive the 
money i)Ut into circulation and made current by law. It is not, therefore, like goods 
salable only in market overt, and not otherwise tran-;ferable except by the owner, or 
under his authority, but is, in all those several respects, similar to bills of exchange and 
promissory notes, and transferable in the same manner as they are. The case, therefore, 
stands thus : This exchequer bill was a current and negotiable instrument for the pay- 
ment of money. Now money passes from one j)erson to another, by reason of its curren- 
cy ; and for that reason only, and not because it has no ear-mark, it cannot be recovered 
from the person to whom it has been passed. The exchequer bill, therefore, seems to 
me, upon the same principle, to follow the nature of the money for which it is a security." 
And see Brandao v. Barnett, 1 Man. & G. 908, 6 Man. & G. 630, 12 Clark & F. T87. 

(j) Gorgier v. Mieville, 3 B. & C. 45. In Lang v. Smyth, 7 Bing. 284, the plaintiff 
placed in the hands of his agent Neapolitan bonds, with coupons or receipts ♦or half- 


country it has been extended to State bonds payable to bearer, 
and transferable by delivery ; (k) and in a recent and well- 
considered case, to railroad bonds payable to bearer. (/) Perhaps 
it is not unreasonable to conjecture that the exigencies of com- 
merce will require the principle to be extended still further. 
We see no reason why the courts should not to some extent 
follow the lead of the commercial community upon such a ques- 
tion. It may be said tliat commercial convenience is the only 
rational test by which it is to be determined, and of that the 
commercial community are the best judges. This may be true ; 
and yet it may deserve consideration whether commercial usage 
alone can so extend the rule that possession proves property to 
choses in action, which are not assignable at law, as to vest in 
the assignee a legal title. (m) 

yearly interest, payable to the bearer of the coupon : the coupon referred to a certificate, 
which gave the holder the option of converting his bonds into funded debt ; the interest 
was paid to the holder of the coupon without production of the certificate, but the 
bonds were never sold in the market without the certificate. Plaintiff kept the certifi- 
cate in his own hands, but his agent, without authority and fraudulently, pledged the 
bonds to defendant as a security for a debt. Held, that it was correctly left to the jury 
to determine whether these instruments passed by delivery, and whether defendant had 
acted with due caution in receiving the coupons without requiring the certificate ; the 
jury having found both questions in the negative, the court refused to set aside a ver- 
dict for plaintiff. 

(k) Delafield v. State of Illinois, 2 Hill, 159. And see Craig y. Vicksbnrg, 31 
Missis. 216. 

(/) Morris Canal & Banking Co. v. Fisher, 1 Stockt. Ch. 667. In this case it was 
held that a bonajide purchaser of railroad bonds at a public sale would take a perfect 
title, although the sale were made by a pledgee, and were unauthorized and illegal, as 
between him and the pledgor. And see, to the same effect, Carr v. Le Fevre, 27 Penn. 
State, 413. Sec Mechanics' Bank v. New York & N. H. R. Co., 4 Duer, 480, .5.39, 582. 

(m) See Glyn v. Baker, 13 East, 510. See also Mr. Smith's learned note to Miller v. 
Race, 1 Smith's Lead. Cas. 259. In the case of the exchequer bill and the State bonds, 
those instruments were issued under the authority of government, and the statute 
authorizing their issue made them assignable by delivery. So in the case of the Prus- 
sian bond, it was doubtless assignable, by the law of Prussia, where it was made, 
though the point was not directly taken. So also in the case of the railroad bonds, l)y 
the law of New Jersey, where the case arose, all bonds are assignable so as to vest in 
the assignee a legal title. In the recent case of Partiidge v. Bank of England, 9 Q. 
B. 396, in the Exchequer Chamber, it was held (reversing the judgment of the Queen's 
Bench), that a dividend warrant, which was in the form of a check drawn by the Bank 
of England upon its own cashier, payable to the plaintiff, but which contained no 
words of negotiability, was not by law assignable, and that usage could not make it so. 
Timlul, C. ■^., delivering the judgnient of the Exchequer Chamber, .said : " It is clear that 
such cr. instrument will not, by the general law, give any right of action to any person 
(other than the plaintiff) who might become possessed of it ; and it wa,s not contended, 


in the argument at the bar, that such right of action existed by the general law. But 
it was insisted that the usage and custom of merchants and bankers, stated in the pleas, 
gave such a right of action, and imposed on the defendants the liability to pay the 
dividends to Messrs. Ladbroke & Company. But we are of opinion that the usage 
and custom stated has no such operation. It is not necessary to inquire what the eftect 
of a general immemorial custom in a particular place might be, as this usage is not so 
pleaded, but is described as an usage and custom of bankers and merchants used and 
approved of for divers, to wit, si.xty years, according to which, dividend warrants pass 
by delivery without indorsement, and the bona Jide holder thereof is entitled to receive 
the amount from the defendants, which is rather a practice of trade than a custom prop- 
erly so called ; and such a practice cannot alter the law by which such an instrument 
does not confer any right of action on an assignee." The Chief Justice then refers to 
Glyn t'. Baker, and the note to Smith's Leading Cases which we have above cited, with 
approbation. But see Carr v Le Fevre, 27 Penn. State, 413, where it is held that a 
bond, issued by a corporation, payable to bearer, is capable of passing by delivery, so 
as to vest in the holder a legal title, and enable him to sue upon it in his own name. 
As to the negotiable qualities of bills of lading, certiticates of stock in joint-stock cor- 
porations, dock warrants, delivery orders, wharfinger's receipts, &c , see, in addition to 
cases cited above, Thompson v. Doiuiny, U ^\. & W. 403 ; Howard v. Shepherd, 9 C. 
B. 297, 319 ; Saltus v. Everett, 20 Wend 267 ; Browcr v Peahody, 3 Kern. 121 ; Gurney 
p. Bchrend, 3 Ellis & B. 622 ; Stat, of 18 &, 19 Vict. ch. Ill; Mechanics' Bank v. Ntw 
York & N. H. R. Co. 4 Duer, 480, 3 Kern. 599 ; Zwingcr v. Sainuda, 7 Taunt. 26.'i ; 
Lucas V. Dorrien, 7 Taunt. 278 ; Kingsford v. Merrv, 11 Exch. 577, I H. & N. 50.1. 






Guaranty, which was originally but another form of the word 
warranty, is an undertaking by some one that another shall per- 
form his contract or fulfil his obligation, or that if he docs not, 
the guarantor will do this for him. Now it is plain that this 
is in effect the contract of every indorser and of every surety. 
But the law merchant, which creates and defines the law of in- 
dorsement, applies this law only to the indorser strictly so called. 
The contract of guai-anty is left to the general law of contracts ; 
and this discriminates in some respects, as we have seen, be- 
tween the guarantor and the surety, holding the latter for some 
purposes as makmg an absolute promise to pay the debt, and the 
former a conditional promise. We cannot, therefore, define a 
guarantor of a bill or note any better, tlian by saying that he is 
one who engages that the note shall be paid, but is not an in- 
dorser nor a surety, (a) 

(o) The character of a guarantor was under the consideration of the court in Ox- 
ford Bank v. Haynes, 8 Pick. 42-3, 426. "It is somewhat extraordinary," said Parker, 
C. J., "that the nature of this contract, and the extent of the liahlMty it creates, are 
not very clearly settled in the books. It has been sometinries held to be an absolute, 
sometimes a conditional obligation. Sometimes a guarantee has been deemed a surety, 
and at others, not more than an indorsee. And this perhaps has arisen from the dif- 
ferent forms in which the contract has been made. In several cases, where the party 
put his name on the back of the note, without any words written over it at the time, 
he not being the payee of the note, he has been charged as an original promisor, being 
considered in the light of a surety, and he has been declared against as such ; but in 
these cases his signature was given at the time of making the note, or in so short a time 
afterwards, and tmder such circumstances, as to have relation to the mnkinj; of the con- 
tract orijiinal''- The case of Josficlyn r. Ames, .3 Mass. 274, is of the first class, and 
thai of Moies v. Bird, 11 436, of the second That a guarantee differs in 


It must be remembered that, while a surety of a note is gen- 
erally a maker, a guarantor is never a maker. The surety's 
promise is to pay a debt, which becomes his own debt when the 
principal fails to pay it ; and the surety may therefore be sued 
at once as soon as the note is due and dishonored. But the 
guarantor's promise is always to pay the debt of another. The 
distinction between the two is slight, as the words are commonly 
used. But as a matter of law, and in its legal consequences, the 
distinction is important, and it may be regretted that it has not 
always been carefully observed by courts. 

This engagement or contract of guaranty may be, and often 

character from a surety cannot be questioned, for he cannot be sued as promisor, as 
the surety may ; his contract must be specially set forth. That he differs from an in- 
dorser is equally clear, and for the same reason, and also because he warrants the sol- 
vency of tlie promisor, which the indorser does not, he being answerable on a strict 
com])liance with tlie law by the holder, whether the promisor is solvent or not." " A 
guarantor," says Lord Ellenborough, "insures as it were the solvency of his principal." 
Warrington v. Furbor, 8 East, 242, 24.T " Is the contract," asks Gamble, J., in I'trry 
V. Barret, 18 Misso. 140, "the legal eff'ect of which is a guaranty of the payment of a 
note, different from the contract of a surety 1 When there are no special terms of the 
guaranty set out, and it is merely alleged that the party became guarantor for the pay- 
ment of the note, the contract is collateral to the note itself, and binds the guarantor 
to pay the money specified in the note ; if it has been presented to the maker and he 
has refused to pay it. If the guarantor has not received notice of the dishonor of the 
note in a reasonable time, he is allowed to use such laches to defend himself against 
his contract, to the extent that he has been injured by want of the notice." But a 
surety is liable absolutely, and as an original promisor. In Talbot v. Gay, 18 Pick. 
534, an indorsement by the payee in these words, " I order the within note paid to 
T., and guarantee the payment of the same," was held to be one of guaranty only, and 
that the defendant was not liable as surety. But in Burnham v. Gallentine, 1 1 Ind. 
295, a similar indorsement by the payee of a note in these words, " I guarantee the 
pavment of this note, and costs, if any are made on it," was held to render him lial)lc 
as an absolute promisor. This decision seems to have been founded on some New 
York ca-ses, which are now overruled in that State. In a case in Tennessee, where the 
directors of a bank, after discounting a note, acknowledged, in a writing signed and 
sealed by them, that they had transcended their duty in discounting the note, and that 
tliey "consider themselves individually bound for their equal proportion of said debt, 
should it or any part of it, under any circumstances, be lost to the bank," it was held 
that the instrument was not a guaranty, but an original contract. Bank of Ten- 
nessee V. Barksdale, 5 Sneed, "3. An indorsement on the liack of a note in these 
words, " For value received, we jointly and severally undertake to pay the money within 
mentioned to the said A. B." (the payee of the note), was held to make the indorsers 
liable as original promisors. White v. Howland, 9 Mass. 314. So also Carver v. War- 
ren, 5 id. 545. An indorsement with the words, " Holden on the within," made by one 
not the pavee of the note, makes him a joint promisor. Brett i; Marston, 45 Maine, 
401. So where a party indorsed with the words, " I will stje the within pa'd," he was 
ield as an original promisor. Amsbaugh o. Gearhart, 11 Penn. State, <r2 VThere a 


is, written on tlie back of the note or bill ; but it may as well, so 
far as the guaranty is concerned, be written on a separate piece 
of paper,(6) if it refers to the bill or note in any way which is 
sufficient to identify it. And this is lield to constitute a guar- 
anty of the note, although a part of the description is obviously 
inaccurate and in applicable, (c) 

Tlie contract of guaranty is a separate and independent con 
tract, in most respects at least, and perhaps in all. It is some- 
times implied by the law, as if one who, not being a payee, 
indorses a negotiable note, or if a payee indorses a non-negotialjle 
note in blank. (</) There is much diversity of opinion among 

note was written, '' We, A as principal, and B as surety, promise,'' &c , and the note 
was signed by A and indorsed by B, the latter was held liable as joint maker. Palmer 
r. Grant, 4 Conn. 389. In New York, it was formerly held in several cases where the 
contract was in express terms a guaranty, that it should be upheld as an original un- 
dertaking. See Manrow v. Durham, 3 Hill, 584 ; Lequeer v. Prosser, 1 id. 256, 4 id. 
420; Miller 17. Gaston, 2 id. 188; Hough v. Gray. 19 Wend. 202; Ketchell v. Burns, 
24 id. 4.56 ; Allen v. Rightmere, 20 Johns. 365. But these decisions have since been 
overruled, and there as elsewhere, where the import of the language used by the in- 
dorser is that of guaranty, as when the words, "I guarantee the payment." &c., are 
used, the contract is interpreted in accordance with its apparent meaning, as strictly 
one of guaranty. See Brewster v. Silence, 4 Seld 207 ; Oxford Bank v. Haynes, 8 
Pick. 423. Where a person guaranteed a note good until a specified time, it was held 
that his undertaking was collateral, and not an absolute engagement to pay the note 
at the end of the period ; and that he was to be considered as agreeing that, during the 
period mentioned in the guaranty, the makers of the note should be in such a con- 
dition that payment of the note could be enforced against them, if legal diligence was 
ased for that purpose ; and if at the close of the period the maker were in the open 
and visible possession of property more than sufficient to pay the note, there vas no 
breach of the guaranty. Hammond v. Chamberlin, 26 Vt. 406 ; Bull v. Bliss, 30 id. 
127. See also Marsh v Day, 18 Pick. 321 ; Sage v. Wilcox, 6 Conn. 81. 

(6) Shortrede v. Cheek, 1 A. & E. 57 ; Emmott v. Kearns, 5 Bing. N. C. 559 ; Wat- 
son 0. McLaren, 19 Wend. 557, 26 id. 425. 

(c) Worcester Co. Inst, for Savings v. Davis, 13 Gray, 531. The action in this case 
was upon a guaranty under seal, given by the defendant to the plaintiffs, as follows: 
" Know all men, that, for value received, and waiving all right to demand and notice, 
I hereby guarantee to the Worcester County Institution for Savings, or its assigns, the 
payment, at the office of said institution, of a certain promissory note, hereto annexed, 
for three thousand dollars, dated Dec. 23d, 1850, signed Alpheus M. Merrifield as prin- 
cipal, and Alpheus Merrifield and Wm. T. Merrifield as sureties, payable on demand, 
with interest semi-annually. In witness whereof, I have hereunto set my hand and 
seal, this twentieth day of April, A. D. 1854. Isaac Davis. (Seal.) " Held, that the 
guaranty could not be contradicted by oral evidence of a contemporaneous agreement 
to collect the note from the principal debtor, and of laches in jiurMiing him. See also 
Veazie v. Willis, 6 Gray, 90. 

id) A blank indorsement, by the payee of a non-negotiable note, has been held to 
lie an absolute guaranty, as in Seymour p. Van Slyck, 8 Wend. 403, 421. In Jos- 


the courts of the ditforent States, as to the nature of the con- 
tract to be implied from the bhmk indorsement of one not a 
party to the bill or note, when the paper is negotiable, and the 
indorsement is made before its delivery to the payee. In some 
States, one indorsing in such manner is prima facie regarded as 
a guarantor ; ((?) in others, as an indorser;(/) and in others, as 

selyn v. Ames, 3 Mass. 274, the plaintiff wrote a guaranty over the blank indorsement 
i)f the payee ; but the court held tiiat he could not recover upon that, but might cancel 
the words written, and substitute, " For value received, I undertake to pay the monev 
within mentioned to E. J." The court seem to have regarded the defendant liable on 
such indorsement as an original promisor In Tryon v De Hay, 7 Rich. 12, it was 
held, that where the payee transfers a sealed note, and writes his name upon it in blank, 
sucii indorsement, without more, imports merely an assignment of the note, and not a 
guaranty also. And it is the rule in South Carolina, that no liability is incurred upon 
a simple indorsement by the payee of any instrument, without negotiable words. 
Wilson V. Mullen, 3 McCord, 236; Benton v. Gibson. 1 Hill, S. Car 56, 58; Tratt 
V. Thomas, 2 id. 654, 656. So in Tennessee, Whiteman r. Cl)ildrc,<s, 6 Humph. 303. 
See also Parker r. Kiddle, 11 Ohio, 102; Aldis c. Johnson, 1 Vt. 136 

(e) As in Illinois, Webster r. Cobb, 17 III. 459; Klein v. Currier, 14 id. 237; Car 
roll V. Weld, 13 id. 682 ; Camden v. McKoy, 3 Scam. 437 ; Cushman r. Dement, id 
497; Smith v. Finch, 2 id. 321 ; Blatchford v. Milliken. 35 111. 434. In Ohio, Rob- 
in>on V. Abell, 17 Ohio, 36; Greenongh r. Sinead, 3 Ohio St^ite, 415. In Te.xas, Carr 
«'. Rowland, 14 Texas, 275; Ci ok v. Southwick, 9 id. 615. In Virginia, Watson v. 
Hurt, 6 Gratt. 633. In Nevadii. V.m Doren v. Jjazler, 1 Nev. 380. In Kansas, Fir- 
iMim V. Blood, 2 Kan. 496. In Iowa, \"eacli ?■. Thompson, 15 Iowa. 380. In Connecticut, 
Clark V. Merriam, 25 Conn. 576 ; Beckwith v. Angell, 6 id. 315 ; Perkins v. Cailin, 
11 id. 213 ; Hanson v. Sherwood, 26 id. 437. These cases in Connecticut hohl that 
such indorsement in blank prima facie implies a contract on the part of the indorser 
that the note is due and payable according to its tenor, that the maker shall be of 
ability to pay it when it comes to maturity, and that it is collectible by the use of due 
diligence. In Pennsylvania, it is held, that, where a negotiable note is indorsed by 
one not a party to it, the presumption from the paper is, that he indorsed as second 
indorser for the accommodation of the prior parties, and no liability would attach to 
him so long as the note remains in the hands of the payee ; but when made at the 
request of the payee, who acts upon the faith of it, it imparts a rruaranty. Schollen- 
berger r. Nehf, 28 Penn. State, 189. The rule adopted in Ohio differs from that which 
prevails in Massachusetts in this, that in the former State a stranger indorsing in blank 
is presumed to be a guarantor ; in the latter State he is presumed to be an original 
promi-ior. But in Ohio such person may be charged as maker upon proof that his 
indorsement was made at the time of execution by the other party, or if afterward, 
that it was in pursuance of an agreement or intention that he should become responsi- 
ble from the date of the execution. In Massachusetts, the indorsement is presumed to 
have been made at the time of the execution of the note ; so that the difference in fact 
is only one as to the presumption of the time of the indorsement, though it has not 
been so stated in the Ohio decision. See Greenough v. Smead, supra. 

(/) As in New York, Spies r. Gilmore, 1 Comst. 321 ; Ellis v. Brown, 6 Barb. 282; 
Waterbury v. Sinclair, 26 id. 455 ; Cottrell r. Conklin, 4 Duer, 45 These decisions 
overrule the earlier ones in this State, holding such indorser liable as an original prom- 
isor. Sec Herrick r. Carman, 12 Johns. 159; Campbell r. Butler, 14 id. 349. In 
Indiana, Wells v. Jackson, 6 Blackf 40 ; Cecil c. Mix. 6 lad 478 ; Voro r. Unr^t, 13 


a joint promisor or surety. (r/) But in most of tlie States, the 
effect of" such an indorsement is held to depend upon tlie inten- 
tion of" the parties, which may be ascertained by j)arol evi- 
dence.(/t) In Massachusetts, however, the presumption is said 

id. 551. In Tennessee, Cniiiparrcc v. IJrockway, 11 Hunipli. .355; Clfinston v. liuv 
l>icre, 4 Sn('C(l. ,3.36. In Inwn, I'Viir i'. Duiilii)), 1 (Jiccnc, .3.31. In ("iilildiniji, such 
pnrty is fulled a ^uiu'Hiitor, Imt liis linliility is tlie same as that of an indorscr, and so 
lire his rights. Jones v. (Joodwin, .31» Cal. 4'.».3; Hi^l^s v. Wahlo, 2 (^alif. 485; I'ieree 
p. Keniieilv, 5 iri. 138. Mi.ssi«si])])i, Jenninjis v. Thomas, 1.3 Sniedes & M. 017, 5 id. 
627. In Oic^^on, Ivaniiii v. Ilolhuid, 2 Orc^^on, 59. In Ix^iiisiana, Field r. New- 
Orleans Delta Co., 21 La. Ann. 24. In Wiscon.sin, Heath v. V-an (Jott, '.) Wis, 

(g) In :\Iassacliusetts, Baker?'. Biiirns, 8 I'ick. 122, 1.30; Tenney ». I'rinee, 4 id. .385; 
Austin V. Boyd, 24 id. 04; Ilawkcs r. rhillijis, 7 (Jray, 284 ; Dnijier ii. Weld, 13 id. 
580; Union Bank v. Willis, 8 Met. 504. In this last ease the jirevious eases on this 
suhject in Massaehusetts are carefully reviewed. Maine, Irish v. Cutter, 31 Maine, 536 ; 
Leonard v. Wildes, 36 id. 265 ; Mallion v. Southard, id. 147 ; Childs v. \\'yinan, 44 id. 
433; Adams v. Hardy, 32 id. 339. Vermont, Nash v. Skinner, 12 Vt. 219; Sylvester i^. 
Downer, 20 id. 355. New Hampshire. Martin v. Boyd, 1 1 N. H. 385, Missouri, I'owell 
tr. Thomas, 7 Misso. 440; Lewis »;. Harvey, 18 id. 74; Perry ?'. Barret, id. 140; SclinciiUir 
»,'. Schiffman, 20 id. 57 1. South ("arolina, Stoney v. Beauliien, 2 J\IcM ullnn. 31 3 ; linker 
V. Scott, 5 Uich. 305; (Carpenter v. Oaks, 10 id. 17. Nortli C'iirolina, Baker r. Jiohin- 
son,63 N. C". 191. In l{hode Island, he is a joint promisor as toother parties, hut only 
a surety as to the maker. Perkins v. Barstow, 6 Ilho. Isl. 505. In Louisiana, such 
party is re<rarded as a surety, McGuire v. Boswortli, 1 J..a. Ann. 248; Penny v. Par- 
ham, id. 274; Collins v. 'J'rist, 20 La. Ann. 348. In Minnesota, Moor v. Folsom, 14 
Minn. 340; Hou<rhton v. Ely, 26 Wise. 181. The iiriiici])le upon which one not the 
payee si<^nini; ne;j;otialile paper in blank uixin the hack of it is cliarj;cd as a jironnsor, 
if he does this at the time the note is made, is stated hy Mr. .Justice I'arker, in Moics v. 
Bird, 11 Mass. 436, 440, In Lewis v. Hurvey, 18 Misso. 74, Gmnble, J., delivering 
the opinion of the court, said : "We think the stretifrth of argument is decideilly op- 
posed to the conclusion that the party who puts his name upon the back of a note to 
which he i.s not a party, whether it be net;(jtiable or not, is to be held only as an in- 
dorser. Wo think that he is to be taken to have assumed the ol)li<,nition arising:' from 
the act of putting his name ujion paper as it then was, and upon which he could not 
then he an iiidorser. Shall he, then, be held to be a giuirantor or a nudvcry In the 
absence of all extrinsic evidence, it is but giving effect to liis signature to allow the 
liolder to treat him as a maker, for that is the effect most beneficial to the holder, and 
is entirely consistent with the meaning of his signature." 

(h) Clark v. Merriam, 25 Conn. 576; Scliollenberger v. Nehf, 28 Penn. State, 189; 
Carroll »/. Weld, 13 111. 682; Cottrell v. Coid<lin, 4 Duer, 45; Lewis v. Harvey, 18 
Misso. 74 ; Barrows v. Lane, 5 Vt. 161; luiapp f. Parker, 6 Vt. 642 ; Sandlord v. 
Norton, 14 Vt. 228; Flint v. Day, 9 Vt. 345; Sylvester v. Downer, 20 Vt. 355; 
Beckwith v. Angell, 6 (Vmn. 315; Perkins v. Catlin, 11 Conn. 213; Chamiiion v. 
(iriffith, 13 Ohio, 228; Hobinson v. Abell, 17 Ohio, 36; (Jreenougli »/. Smcad, 3 Ohio 
State, 415; .Jennings i". Thomas, 13 Smedes & M. 617, 5 Smeiles & M. 627; Fear?;. 
Dunlap, 1 (iicene, Iowa, 331 ; Patterson v. Todd, 18 Penn. State, 42<). This (pies- 
tion is discussed at length in I'crkins v. (,'atliii, II Conn. 21.3, by llniil.ivijlnii^ ,].^ who 
said : " The inrlorsement is not coutrcilled by tlie oral testimony, but coni))leled acc<iril- 
ing to the numifest intention of the jmrties. The evidence is offered in confoiinity with 
the familiar rule, that the law does not imjjly a contract where an express one has been 
n)ade." Thus, where a p.-trly guaranteed a note "good," it may be shown tliat the 
])laintiff took tlie note under an express agreement that tlie plaintiff' should run his 
own rivk as to the solvency of the maker, iIk; plaintiff sayin;^. previous to the signing 
of the guaranty, that it was onlv a guaranty, that the note was not jiaid, or that it was 

Vol. IL 11 ' 


to be conclusive, that the party indorsing in this manner intends 
to become liable as an original promisor, and parol evidence is 
not competent to vary that liability, and show that the real 
agreement was that he should be liable only as an indorser or as 
a guarantor ; (i) and especially as against a party who has taken 
the note witliout notice of any modification of this liability im- 
plied by law, evidence will not be received tending to vary that 
liability. (7) If the note is payable to the maker or his order, 
and indorsed by the maker, a person who puts his name on it 
after the maker, but before delivery to a third party, is liable 

genuine, though knowing at the time that it was of different legal effect, and that the 
defendant was ignorant of the legal effect of it, and relied upon the plaintifTs represen- 
tation. Cooke V. Nathan, 16 Barb. 343. See in this connection, the remarks of IVaite, 
J., in Castle y. Candee, 16 Conn. 223. 

(!) In Wright u. Morse, 9 Gra_v, 337, the defendant, whose name was on the back 
of the note, and who was not the payee, offered to show that at the time he signed the 
note it was agreed by the plaintiff, the payee of the note, and the defendant, that if 
the maker of the note should arrive safely in California, the defendant was to be re- 
leased, and the plaintiff was not to look to the defendant for the payment of the note, 
and that the defendant was only a guarantor, that, if the maker should arrive safely 
at California, then the plaintiff was to get his money from the maker. Held inad- 
missible. See also Essex Co. v. Edmands, 12 Gray, 273. 

(j) Draper ». Weld, 13 Gray, 580. In this case the defendant, in order to show 
that he put his name on the back of the note with authority to fill up the bl.^.nk with a 
guaranty only, offered evidence of what was said by one who had signed it on its face, 
to induce him to sign it on the back ; but it was held that any limitation of the author- 
ity to fill up the blank could not affect the right of the plaintiff, to whom it was passed 
in that condition, to recover against him as an original promisor. And so in Schnei- 
der V. Schiffinan, 20 Misso 571, Mr. Justice Leonard, delivering the opinion of the 
court, said : " Negotiable paper, it is said, carries its own history upon its face, so that 
nothing can be alleged against it, while it continues in circulation undishonored, as 
against an innocent purchaser, other than what is there apparent. This defendant has 
placed his name upon the note in such position as, under our law, to impose upon him- 
self the obligations of a maker, and he is irrevocably bound as such to all who take the 
note for value and without notice, upon the faith of what they find upon it, although it 
is otherwise with reference to those who are bound by the real transaction between the 
parties. It is no answer to this to say that it was the duty of the holder, when he saw 
the position of the defendant's name upon the note, to have inquired into the matter, 
and satisfied himself before he took it whether the party was to be considered charge- 
able as maker, or only as indorser. The policy of the law in reference to negotiable 
paper requires that it shall tell its own story, and have effect in the hands of innocent 
holders for value according to what appears upon it." The words, " without recourse " 
written under the signature of one not the payee, upon the back of a note, can have m 
legal effect, and are rejected as surplusage. Childs r. Wyman, 44 Maine, 433 ; Lowell 
v. Gage, 38 id. 35. So with the words " responsible without demand or notice," iddeO 
to such indorsement. Malbon v. Southard, 36 id. 147. 


only as an indorser, and not as a joint maker. (A:) And parties 
who indorse their names on a promissory note before its delivery, 
for the benefit of the maker, are not liable as joint makers, if 
the payee afterwards indorses his name above theirs before the 
note is delivered, and parol evidence is inadmissible to show that 
they were joint makers. (Z) And if several persons indorse their 
names on a note, to enable the maker to get it disconnted, and 
some of them afterwards, on failure of the maker, pay tlie note^ 
they cannot maintain an action against the others for contribu- 
tion, without proving that the relation between them was really 
that of co-sureties. But parol evidence of that fact will main- 
tain such action. (m) 

In New York, the later cases seem to go to the extent of 
holding that a party indorsing in blank is conclusively presumed 
to be liable only as an indorser, in the full legal sense of the 
term, and, whatever may have been the intent, his engage- 
ment cannot be converted into a guaranty, or any other or dif- 
ferent contract whatever, (w) Where the blank indorsement 
of a person other than the payee appears upon the note after 
the name of the payee, parol evidence will not be permitted 
to vary the legal effect of his contract as a second indorser, 
although he was privy to the consideration between the princi- 

(/.-) Bij^elow V. Colton, 13 Gray, 309 ; Lake v. Stetson, id. 310, note. 

(/) Clapp t; Rice, 13 Gray, 403. 

(m) Clapp V. Ric-e, 13 Gray, 403. 

(n) Spies o. Gilinore, 1 Conist. 321. In this case, Bronson, J. said: " There are a 
few cases in the books which hold, in effect, that a written contract of one kind may 
be turned into a contract of a different kind by parol proof concerning the intention 
of the parties ; that the indorser of a promissory note may, under certain circum- 
stances, be chartred as maker or guarantor ; and that the guarantor of a promissory 
note may sometimes be charged as maker or indorser. Although these cases stand 
upon no principle, it has been a work of some time and difficulty to get rid of them. 
The Court of Errors was at first equally divided on the question ; but after a second 
argument, the court decided by a pretty strong vote to uphold contracts as they had 
been made by the parties, instead of making new contracts for them," Sec Hull v. 
Newcomb, 3 Hill, 2.33, 7 id. 416; Seabury v. Hiingerford, 2 Hill, 80; Mnnrow v. 
Durham, 3 Hill, 5H4, per Bronson,,]. In Cottrell v. Conklin, 4 Duer, 4.'), QiinjM/, J., 
remarking upon the above cases, said : " We assent entirely to the observations of Jus- 
tices Bronson and Jewctt, that the doctrine, which the earlier cases strongly favored, (hat 
the indoiser of a promissory note may under certain circumstances be charged as 
maker or guarantor, and the guarantor as maker or indorser, stood upon no ground 
of principle, and must now be regarded as corrected and exploded." And ?io Vore 
». Hurst, 13 Ind 551. 


pal parties to the note, and signed at the time of the execution of 
it.(o) In Arkansas, one not jJflvee, who indorses the paper when 
made, is bound as security. (oo) lu Minnesota he is held to be a 
joint maker, and therefore not entitled to demand or notice. (op) In 
Alabama, one not a party, indorsing a note has the rights of an in- 
d(n'ser.(og) It was held by the Supreme Court of the United States, 
that parol circumstances might be put in evidence. to show the 
intent of the party so indorsing; and where the indorsement was 
made before delivery of the note, the indorsers were held to be joint 
promisors. (or) 

If, however, the blank indorsement is not a part of the original 
transaction, but is made at a subsequent period as a distinct trans- 
action, the indorser is not treated as an original promisor, but as a 
guarantor ;(p) but while the note is in the hands of the payee, the 

(0) Vore V. Hurst, 13 Ind. 551 ; Howe v. Merrill, 5 Cush. 80. 

{oo) Killian v. Ashley, 24 Ark. 511. 

{op) 11 Minn. 410. 

{oq) Price v. Lavender, 38 Alab. 389. 

{or) Key v. Simpson, 22 Howard, 341. 

{p) Benthall -v. Judkins, 13 Met. 265; Mecorney «. Stanley, 8 Cush. 85; Union 
Bank v. Willis, 8 .Met. 504; Tenney v. Prince, 4 Pick. 385; Colburn v. Averill, 30 
Maine, 310; Irish v. Cutter, 31 .Maine, 536. In Tenney v. Prince, 4 Pick. 385, it ap- 
peared that the defendant put his name in blank on the back of the note, about nine 
months after its date, and three months before it became due. There was no evidence 
of the purpose of this act, nor of any consideration for it. The plaintiff wrote over his 
signature an engagement which would make him liable as an original promisor. Mr. 
Chief Justice Parker, expressing the opinion of tlie court, that it was impossible to 
infer an original promise to pay the note, coeval with its date, from a signature put 
upon it nine months after, and not in accoixlauce with any agreement made at that 
time, continued : " But this signature is not without effect; it was intended as security 
to the plaintiff, and it ought to avail as intended. The only form of engagement which 
is consistent with the time and circumstances under which the signature was made, is 
a guaranty of the payment of the note when it should become due, and that is a con- 
tract which may be enforced, if it was made on legal consideration, and not otherwise. 
If within the statute of frauds, it is sufficienth' in writing, with the engagement to that 
eifect, which the plaintiff is authorized to place over the signature, to be sustained. 
But whether within the statute or not, it cannot avail the plaintiff, without proof of 
consideration, because it is a collateral, not an original undertaking. We think the sig- 
nature conveys the authority to superscribe this engagement, as was decided in 1801, 
in a case reported in a note to Precedents of Declarations, 2d ed., 150, afterwards in 
Josselyn v. Ames, 3 Mass. 274, Ulen v. Kittredge, 7 Mass. 233, and many other subse- 
quent cases. The action, in its present form, therefore, cannot be maintained ; but if 
it is supposed that a consideration can be proved, the plaintiff lias leave to amend his 
declaration and his indorsement over the signature, and a new triid is granted." In 
Vermont it is held, that one, not otherwise a party to a note, writing his name upon 
tlie back of it, becomes liable as a maker, although he do this a long time after the 
making of the note. Flint v. Day. 9 Vt. 345; Strong v. Kiker, 16 Vt. 554; Sylvester 
V. Downer, 20 Vt. 355. In the latter case, Jiecljicld, J., said: "What this court has 
repe;itedly held upon this subject is, that he who writes his name upon the back of a 
note, if he were not before a party to it, assumes the same obligation as if he wrote his 
name upon the face of the instrument; and that, although he do this long after the 
making of the note, it shall make no difference; if he consent to be thus bound, and 
induce others to take the note under that expectation, he shall be estopped to deny that 
fact, and is treated to all intents the same, precisely, as if he had signed the note in its 
inception. But the signature being blank, he may undoubteilly show that he was not 
understood to assume anv such (jbiiiiation." 


indorsement of a third person in blank is presumed to have been 
placed there at the time of the execution of the note,(g) and ])arol 
evidence is always admissible to show when the signature was 

In those States where the rule is J^dopted that a third person 
indorsing paper in blank before the delivery of it to tiie payee is 
liable as an indorser only, it is not applied in case the paper be not 
negotiable, inasmuch as a legal indorsement can only be made on 
negotiable paper; but the indorser in such cases is held liable as a 
maker or guarantor.(s) So, as there can be but one acceptor, a 
second acceptor is regarded as a guarantor only;(^) and, as we 
should hold, as a guarantor of the acceptor. Then the question 
might arise, To wdiom does he guarantee the payment of the bill ? 
and we answer, To the payee, and to him only. There niay, how- 
ever, be many makers of a note, and a second maker will be held 
rather as a joint and several promisor, or as a surety, than as a 

AVe should state, as a general rule, that the writing of one's name 
on the back of negotiable paper, is not a complete written contract 
which cannot be affected by parol evidence, as between the original 
parties to it.{uu) It may be stated also, as another general rule, 
that the true relations of parties whose names are upon negotiable 
paper may always be shown, except as against those who have for 
value and without notice, acquired rights dependent upon their 
aj)parent relations.(Mv) 

As a guaranty is an independent contract, it must be made 
upon sufficient consideration. This may be the same considera- 
tion for which the note or bill is given, and will be presumed to 
be the same if the guaranty and the making are simultaneous •,{v) 

i'l) Bentliall V. .Tudkins, 13 Met. 265; Colburn v. Averill, 30 Maine, 310; Lowell 
V. (iiif,'C, 38 Maine, 35; Clark v. Meniaiii, 25 Conn. 576; Webster v. Cobb, 17 111. 
459; Camden v. McKoy, 3 Scam. 437; Carr v. Kowland, 14 Texas, 275; Klein v. Cur- 
rier, 14 III. 237 ; Childs v. Wyman, 44 Maine, 433. 

(r) Draper v. Snow, 20 N. Y. 331, per Selden^ J. 

(^) Griswolfl r. Slocum, 10 Barb. 402; Seabury v. Hungerford, 2 Hill, 80; Hall v. 
Neweonib. 3 Hill. 233, 7 id. 416; Cooley v. Lawrence, 4 Mart. La, 639. 

(t) Jackson r. Hudson, 2 (^amp. 447. 

(n) In Partridge v. Colby, 19 Barb. 248, the action was on a note jiayable to A or 
bearer, which the jiayee before maturity offered to the plaintiff in j)art payment of a; but the plaintiff refusincj to receive it, unless the jmyce would indorse it, or 
guarantee the payment, or put his name uiwm it, tlie payee siij;ned his name ntider the 
maker's, and delivered the note to the plaintiff. It was held, that lie thereby made 
himself jointly liable as maker with the original maker, and that an action could be 
maintaiijcil against bf)tb. And in 'I'ilicr r. Shearer, 20 Ala. 596, it "as held that a 
party Kijitiing a note after due below tlie maker's name was liable as maker. See Ex 
parte Yates, 2 I)e Gex & J. 191. 

(un) Sturtevant v. Randall, 53 Me. 149. 

[uv) Maynard v. Fellows, 4 (irecTie, 567. See, however, Wright v. Morse, 9 Cray, 337. 

(v) Bickford v. Gibbs, 8 Cush. 154; Colburn v. Averill, 30 Maine, 310; (jilligban 
V. Boardman, 29 Maine, 79; Simons v. Steele, 36 N. II. 73; per Seldru. J., in Drajter 
V. Snow, 20 N. Y. 331 ; per Nelson^ C. J., in Manrow r. Uurhatn, 3 Hill, 584; Klein 


and may be so presumed if the guaranty is made at a later date, 
but after such request, and under such circumstances, as may 
make it relate back to the making of the note, as a mere fulfilling 
of a contract, then entirely made, although not written at that 

But if the guaranty, however made, is made after the original 
consideration is exhausted, there is no doubt that there must be 
a new and sufficient consideration. (x) And where the defendant 
shows that he executed the guaranty after the delivery of the 
note, the fact that tliis execution was not previous to or contem- 
poraneous with the delivery of the note rebuts any presumption 
of consideration, and the burden is on the plaintiff of showing a 
new and express consideration. (^) But if the guaranty be un- 
der seal, this, of course, implies consideration. (2) And if it be 
under seal, and the consideration is said to be one dollar, and 
this dollar was never paid, it is still good. (a) The consideration 
may be anything which the law would regard as sufficient to 
sustain a promise. So far as it may be connected with the bill 
or note which is the subject of the guaranty, it may be said that 
an agreement on the part of the holder of a bill or note to forbear 
to sue is a sufficient consideration for a guaranty of it,(6) though 
a mere forbearance to sue, without any such agreement, is not,(c) 

V. Currier, 14 111. 237; Rich v. Hathaway, 18 111. ,548; Higsrins v. Watson, 1 Mich, 
428; Campliell v. Knapp, 15 Penii. State, 27; and see Leonard v. Vredenburgh, 8 
Johns. 29 ; Bailey v. Freeman, 1 1 id. 221 ; Leggett v. Raymond, 6 Hill, 639 ; 2 Smith's 
Lead. Cases, 156. In Bickford v. Gihbs, S Cush. 154, objection was made, that a dis- 
tinct consideration should be proved. "There wouM be force in this ol)jection," 
said Shaw, C. J., " had the guaranty been made after the note bad been made, deliv- 
ered, and received as a complete contract. But when the guaranty is made on the 
note before its delivery by the maker to the proniisee, it must be deemed to be done for 
the benefit of the maker, to add to the strength of the note, and to induce the promisee 
to take it and advance his money on it ; and no other consideration is necessary than the 
credit thus given to the maker. Ami the guaranty being without date, and tliere being 
no direct proof of any time at which it \\as made, we think the court were right in 
leaving it to the jury to find that the guaranty was simultaneous with the note itself." 

(iti) Hawkes v. Phillips, 7 Gray, 284; Moles v. Bird, 11 Mass. 436; Leonard v. 
Wilkes, 36 Maine, 265. 

(x) Ware v. Adams, 24 Maine, 177 ; White v. White, 30 Vt. 338 ; lOein v. Currier, 
14 III. 237. 

{y) Klein v. Currier, 14 111. 237. 

(2) Crocker v. Gilbert, 9 Cush. 131, 134; Bank of Tennessee v. Barksdale, 5 Sneed. 
73, per Cnruthern, J.; Childs r. Barnuni, 11 Barb. 14. 

(a) Childs V. Barnum, 11 Barb. 14. 

(b) Emmott f. Kearns, 5 Bing. N. C. 559; Elton r. Johnson, 16 Conn. 253; Sage 
V. Wilcox, 6 Conn. 81; Russell v. Babcock, 14 Maine, 138; Harwood v, Kiersted. 20 
111. 367. It was said in this last case that the facts showing an intention to bring suit, 
and a forbearance to do so, need not appear by express agreement, but may appear as 
well by implication from the circumstances, the declarations and acts of the parties. 

(c) Mecorney v. SUmley, 8 Cush. 85, See Russell v. Buck, 11 Yt. 166, 14 Vt. 147 ; 


Not only must there be a sufficient and valid consideration for 
the guaranty, but when the contract is collateral, and falls within 
the provisions of the Statute of Frauds, as an agreement to an- 
swer for the debt, default, or miscarriage of another person, it 
must be in writing, and, according to the English doctrine, an 
adequate consideration must also appear, either by express word 
or by just implication, upon the face of the instrument itself. 
In favor of this construction it is said, that, to attain the avowed 
object of the statute, namely, the prevention of perjury, it is 
quite as essential that the consideration of the contract should 
appear in writing, as that any other term or condition of it 
should so appear ; and moreover, that, as the statute requires the 
agreement to be in writing, the rule of evidence, that no parol 
testimony shall be admitted to vary or add to the terms of a 
written instrument, renders it necessary that the whole agree- 
ment should appear in writing, (c/) 

Crofts V. Beale, 11 C B. 172; Walker v. Sherman, 11 Met. 170; Breed v. Hillhouse, 
7 Conn. 523. In Johnson v. VVilmarth, 13 Met. 416, the court thought that an agree- 
ment to forbear a suit might be inferred from the facts of the case, and the guaranty 
was supported on that consideration. 

(d) This construction was first put upon the statute in the case of Wain v. Warl- 
ters, 5 East, 10, decided in 1804. The plaintiffs declared on an undertaking which it 
was alleged the defendant entered into in consideration that the plaintiffs would for- 
bear to proceed at law against the drawer and acceptor of a bill of exchange for the 
recovery of £b6 16s. 6c/., the amount of the bill. In support of the declaration, a writ- 
ing was produced, in these words: "Messrs. Wain & Co., I will engage to pay you, by 
half past four this day, fifty-six pounds and expenses on bill that amount on Hall 
(the drawee). (Signed,) Jno. Warlters, No. 2 Cornhill. April 30th, 1803." It was ob- 
jected, on the part of the defendant, that the writing did not express the consideration 
of the defendant's promise ; that this omission could not be supplied by parol evi- 
dence ; and that consequently it was nudum puctnm, and gave no cause of action. Lord 
Ellejiborouflh, C. J. was of this opinion, and therefore nonsuited the ))laintiffs. Upon 
a rule nisi, the same eminent judge, in the Court of King's Bench, after noticing the 
word cujreemmt, and speaking of the known accuracy of Sir Matthew Hale, who was 
suppo.scd to have drawn the statute, said : " The person to be charged for the debt of 
another, is to be charged in the form of the proceeding against him upon his special 
promise; but without a legal consideration to sustain it, that promise would be nudum 
pactum as to him. The statute never meant to enforce any promise which was before 
invalid, merely because it was put in writing. The obligatory part is indeed the prom- 
ise, which will account tor the word promise being used in the first part of the clause ; 
but still, in order to charge the party making it, the statute proceeds to require that the 
agreement, by which must be understood the agreement in respect of which the prom- 
ise was made, must be reduced into writing." Grose, Lawrence, and Le Blanc, JJ. 
concurring, the rule was discharged. Another leading case is Morley v. Buothby, 3 
Bing. 107. This was an action upon an agreement to this effect ; "Messrs. Morley 


This construction is not universally adopted in the United 
States, (e) and in some States it is now provided by statute that 
the consideration need not be set forth in the writing, but may 
be proved by any other legal evidence. (/) But in some States 
the English doctrine has been adopted by judicial authority, and 
also recognized by statute ; (g) although the authorities in these 
States show various departures from the strict interpretation 
given in the English courts. 

Thus it has been held, that, if the original contract and the 
guaranty are made at the same time, and the guaranty thus 
i)ecomes an essential ground of the credit given to the principal 
debtor, it is not necessary to show any other consideration than 
that moving between the parties to the original contract ; and 
that, whether the guaranty be on the same or a separate paper, it 
need not disclose any distinct consideration. This was the con- 

& Co. We hereby promise that your draft on William Clarke. Son, & Co , due ai 
Messrs. Masterman's, at six months, on the 27th of November next, shall be then 
paid out of money to be received from St. Philip's Church, say amount .£ 174 13s. bd. 
W. Clarke, W. Boothby" The undertaking was held void, no fonsideration appear- 
ing in writing for the promise. See also Jenkins v. Reynolds, 3 Brod. & B. 14 ; New- 
bury V. Armstrong, 6 Bing. 201 ; Allnutt r. Ashenden, 5 Man. & G. 392 ; Hawes v. 
Armstrong, I Bing. N. C. 761, 1 Scott, 661, Hodges. 179. 

(e) This interpretation was rejected by the Supreme Court of Massachusetts, in the 
case of Packard v. Richardson, 17 Mass. 122, Parker, C. J. delivering a very elaborate 
opinion. Remarking that the construction adopted in Wain v. Warlters, 5 East, 10, is 
based upon the technical import of the term agreement, Parker, C. J. thought too much 
stress was laid upon this source of argument See also Reed v Evans, 17 Ohio, 128, per 
Birchard, C. J. This last construction is adopted in Maine. Levy ;;. Merrill, 4 Greenl. 
180; Cummings v. Dennett, 26 Maine, 397; Gillighan v. Boardman, 29 Maine, 79. 
In Vermont, Smith v. Ide, 3 Vt. 290. So in Connecticut, Sage v. Wilcox, 6 Conn. 81. 
Ohio, Reed v. Evans, 17 Ohio, 128. So in New Jersey, Buckley v. Beardslee. 2 South- 
ard, .570. In North Carolina, Miller v. Irvine, 1 Dev. & B. 103 ; Ashford v. Robinson, 
8 Ired. 114. In Mississippi, Wren v. Pearce, 4 Smedes & M. 91. Missouri, Little v. 
Nabb, 10 Misso. 3. 

(/) Gen. Stats, of Massachusetts, 1860, ch. 103, § 2; Rev. St.ats. of Kentucky 
(Stanton's ed.), 1860, Vol. I. p. 265, ch. 22, § 1 ;. Rev. Stats, of Indiana, 18.52, Vol. I. 
p. 300; Rev. Stats, of Maine, 1837, p 631, ch. Ill, § 2 ; Compiled Laws of Michigan, 
1837, Vol. II. p. 913. In Iowa a written guaranty of a note imports a consideration. 
Sabin v. Harris, 12 Iowa, 87. 

{g) It is adopted in New York, first by adjudication. Sears v. Brink, 3 Johns. 210; 
Leonard i'. Vredenburgh, 8 Johns. 29. It is now provided by statute that the consid- 
eration shall be expressed. 2 R. S , 4th ed., p. 317. And ro in Alabama, Code, 18.52, 
^ 1551 ; and California, Wood's Dig. 1858, p. 106. See IJigby v. Norwood, 34 Ala. 
129; Simons v. Steele, 36 N. H. 73. So by adjudication in Maryland and Georgia. 
Elliott I' Giese, 7 Harris & J. 457 ; Wyraan v. t>ray, id. 409 ; Henderson v. Johnson, 
6 Ga. 390. And see cases in New Jersey, Buckley v. Beardslee, 2 Southard, 570, 
Laing v. Lee, Spencer, 337. 


struction formerly given to the statute by the courts of New 
york ; (h) but since the alteration of the statute in that State so 
as to require the consideration to be expressed in writing, a more 
strict interpretation has been given to the statute, and it is now 
held that a contract, to guarantee the payment of a promissory 
note, although made siuiultaueously with the note, and written 
upon the same paper, and upon a consideration advanced on the 
credit of the guarantor, conformably to a previous understand- 
ing, must express the consideration upon which it is made, or it 
will be void.(t) This seems to be the settled law of the State, 
although various efforts iiave been made, at different times, to 
avoid or qualify this interpretation. (j) 

(/j) Leonard v. Vredenburgh, 8 Johns. 29. The doctrine of this case is recognized in 
Bailey v. Freeman, 11 Johns. 221 ; Nelson ». Dubois, 13 Johns. 17.5; and it is ap- 
proved in D'Wolf V. Rabaud, 1 Pet. 4T6. It is adopted in California. liiggs w. 
Waldo, 2 Calif. 48.5. 

(i) Brewster v. Silence, 11 Barb. 144 ; s. c , in the Court of Appeals, 4 Sold. 207. 
This was an action upon a guaranty of a promissory note which was given for value 
received, in the following words, written beneath the note, namely ; " I hereby guaran- 
tee the payment of the above note." The note and guaranty were signed simulta- 
neously, and the consideration was advanced upon the credit of the guarantor, coiiform- 
ably to a previous agreement. But it was decided that the guaranty was void. In a 
later case, upon a like guaranty, the Supreme Court reluctantly submit to the authority 
of the above case. Glen Cove Mut. Ins. Co v. Harrold, 20 Barb. 298. And in Draper 
». Snow, 20 N. Y. 3-31, decided in the Court of Appeals, in 1859, the principle involved 
in Brewster c. Silence was fully adopted by the court, Justice Strong dissenting. In 
this case the principal contract and the guaranty were executed at the same time, u[ion 
the same jiaper, and to the same promisee ; and it was insisted by the plaintiff's coun- 
sel that they should " be deemed to have been parts of the same transaction" , and that 
" the two instruments may be read together as one contract." But Selden, J., deliver- 
ing the opinion of the court, said, that in order to be read together as one contract, 
they must be between the same parties, and it was not sufficient that they were executed 
to the same party ; and that the guaranty could not be sustained under the Statute of 
Frauds, unless it referred expressly, or by dear implication, to the consideration ex- 
pressed in the principal, as that of the collateral undertaking. 

( /) In Manrow v. Durham, 3 Hill, 584 ; 8. c, in the Court of Appeals, 2 Comst. 
533, a pre-existing note was transferred by the payee for a valuable consideration, 
on which, contemporaneously with the transfer, the payee and another indorsed the 
following guaranty : "' We guarantee the payment of the within note." The major- 
ity of the Supreme Court held the guaranty to be in effect a promissory note, import- 
ing a consideration, and not within the Statute of Frauds. In the Court of Appeals, 
there being no legal majority for a reversal, the decision of the Supreme Court was 
affirmed. The dissenting judges in both courts considered the guaranty a collatorai 
undertaking, and void within the Statute of Frauds, for want of a consideration in writ- 
ing. But in another case, where a note was made by debtors payable to the order of a 
third person, to be transferred in payment of a pre-existing debt, and, at the lime of 
the making and transfer, the third person to whom the order was payable indorsed on 
Vol. II.— I 


It seems, however, that, altliough the consideration must be 
expressed, it need not be defined; and therefore it is a sufficient 
expression of the consideration if the guaranty is stated on its 
face to be for value received; (k) and it is sufficient if the con 
sideration is so expressed, or so far defined, that it must be 
necessarily inferred that such, and no other, consideration was 
intended by the parties to be the ground of the promise. (/) 

the note a guaranty of the payment thereof, it was held that the undertaking was col- 
lateral and void within the statute, because the consideration was not expressed iu 
writing. Hall v Farmer, 5 Denio, 484, 2 Comst. 5.53. The Court of Appeals was 
divided on this case. In Lequeer v. Pro.sser, 1 Hill, 256, a guarantor was converted 
into a joinc maker of a note ; and in Oakley r. Boorman, 21 Wend. 588, a contract 
of guaranty was upheld by calling it an indorsement, thus dispensing with the ne- 
cessity of expressing the consideration. In several otiier cases, in New York, where 
the contract indorsed upon the note was in express terms a guaranty, it was construed 
as an original undertaking. Hough v. Gray, 19 Wend. 202 ; Miller v. Gaston, 2 Hill, 
188 ; Allen v. Rightmere, 20 Johns. 365 ; Ketchell v. Burns, 24 Wend. 456. These 
cases, however, have since been disapproved in the same State, in Brewster v. Silence, 
4 Seld. 207, and subsequent cases. 

(k) Per ii'iUard, J., in Brewster v. Silence, 4 Seld. 207 ; Watson v. McLaren, 19 
Wend. 557, 26 id. 425 ; Douglass v. Howland, 24 id. 35 ; Miller v. Gaston, 2 Hill, 
188; Manrow r. Dunham, 3 id. 584; Cooper v. Dedrick, 22 Barb. 516; Day ». El- 
more, 4 Wise. 190 ; Hart v. Hudson, 6 Duer, 294. 

(/) Hawes v. Armstrong, 1 Bing. N. C. 761, I Scott,, 661 ; Rogers v. Kneeiand, 10 
Wend. 218; Simons v. Steele, 36 N. H. 73; Edwards v. Jevons, 8 C- B. 436. In 
Emmott V. Kearns, 5 Bing. N. C 559, where the plaintiff, having pressed W. for pay- 
ment of a debt, the defendant, W.'s attorney, sent to the plaintiff a bill accepted liv W. 
at two months, enclosed in a letter, in which the defendant said, " W. being again dis- 
appointed in receiving remittances, and you expressing yourself inconvenienced for 
money, I enclose you his acceptance at two months " ; and the plaintiff refusing to take 
the bill unless defendant put his name to it, the defendant wrote on the back of the letter, 
" I will see the hill paid for W." It was held that the consideration (the forbearing 
to sue) sufficiently appeared upon the guaranty, and that the defendant was liable. 
And so it seems that an agreement in the following words is sufficient : '" In consider- 
ation of your being in advance to Messrs. Lees and Sons iu the sum of X 10,000 for the 
purchase of cotton, I do hereby give you my guarantee for that amount on their behalf. 
J. Brooks." Haigh v. Brooks, 10 A. & E. 309. Lord Denman, C. J., in delivering the 
judgment of the court, said : " It was argued for the defendant, that this guaranty is 
of no force, because the fact of plaintiff's being already in advance of Lees could form 
no consideration for defendant's promise to guarantee to plaintiff the payment of Lees's 
acceptances. In the first place, this is by no means clear. That ' being in advance ' 
must necessarily mean to assert that he was in advance at the time of giving the guar- 
anty is an assertion open to argument. It may possibly have been intended as pros- 
pective " At all events, the plaintiff's giving up such guaranty was a sufficient con- 
sideration for the defendant's promise to see certain acceptances paid. The court said 
they had no concern with the adequacy or inadequacy of the price paid or promised 
for the guaranty, unless actual fraud were imputed. So, where A wrote to B, " Yea 
will be so good as to withdraw the promissory note, and I will sc" vou at ChristMias, 


In those States where the consideration is not required to be 
expressed, it seems that the agreement is, sometimes at least, 
sufficiently in writing to satisfy the Statute of Frauds, if the 
name of the party to be made liable is written in blank only, and 
the time and circumstances of the signing be such that the law 
implies a contract of guaranty ; as where one not the payee of a 
note indorses it at a time subsequent to the making of it, for a 
valuable consideration. (w) Where an undertaking, although in 
form a guaranty, or promise to answer for the debt of another, 
is in substance an engagement to pay the guarantor's own 
debt in a particular way, or is a transaction distinct from the 
original liability, by which some new consideration moves be- 
tween the newly contracting parties, such undertaking is not 

when you shall receive from me the amount of it, together with the memorandum of my 
son's, making in the whole £4.5," it was held that parol evidence was admissible to 
prove that the note referred to was for £ 35, and that the withdrawal of the note was suf- 
ficient to satisfy the Statute of Frauds. Shortrede v. Cheek, 1 A. & E. 57. The follow- 
ing memorandum was held to show the consideration of the guaranty sufficiently upon its 
face : " I hereby guarantee tiie present account of Miss H. M., due to R. T. S. & Co., of 
£ H2 4s. Ad., and what she may contract from this date to the .30th of September ne.\t." 
Russell i\ Moseley, 3 Brod. & B. 211. And so in Bainbridgc v. Wade, 16 Q. B. 89, 
per Coleridge, J. " There is no doubt as to the general rule which results from putting 
together Wain v. Warlters, 5 East, 10, and Stadt c. Lili, 9 East, 348. There must be 
an agreement, or a memorandum of one, to satisfy the Statute of Frauds ; and the con- 
Bidenition is part of the agreement; it must, therefore, appear on the instrument, either 
in express terms or by implication, such as to leave no ambiguity. It is not to be sup- 
plied by extrinsic evidence ; that is one rule. But there is another rule : that you may 
e.xplain the meaning of the words used by any legal means. Of such legal means, one 
is to look at the situation of the parties. Till you have done that, it is a fallacy to say 
that the language is ambi<xuous : that which ends in certainty is not ambiguous." Lord 
Campbell, C. J. expressed himself in similar terms. In Bell r. Welch, 9 C. B. 1.54, 
the action was upon the following guaranty : " We, the undersigned, hereby indemnify 
the National Provincial Banking Co. to the extent of £ 1,000, advanced, or to be ad- 
vanced, to R. P. by the said company." It appeared, however, that, at the time the 
guaranty was given, R. P. was indebted to the bank in a sum exceeding £ 1,000; and 
it was held that the guaranty did not, upon the face of it. or construed with reference 
to the extrinsic circumstances, disclose a sufficient consideration. And sec the late 
case of Broom v. Batchelor, 1 H. & N. 2.55. 

(m) Ulen r Kittredge, 7 Mass. 2.33 ; Tenney r. Prince, 4 Pick. 385 ; Moies i-. Bird, 
11 Mass. 436 ; Nelson v. Dubois, 13 Johns. 175 ; Turnbull v. Trout, I Hall, 336 ; Per- 
kins r. Catlin, 11 Conn. 213, 229; Parks v. BrinkerhoflF, 2 Hill, 663. Contra, see 
Hodgkins v. Bond, 1 N. H. 284. In Perkins i\ Catlin, 11 Conn. 213, the court say the 
indorsement, being in writing, and in blank, is of itself an authority to write over it tho 
agreement it was designed to express. Proof of the name is proof of the indorsement. 
There was a mpinorandum of the contract, signed by the party to be charged by it ; or 
rather, the contract itself is so signed. 


within the statute as a promise to pay the debt of another, but is 
regarded as an original promise ; and tlierefore it is vahd, al 
though it express no consideration, and need not even be in 
writing. (w) If the terms of the guaranty leave it doubtful 
whether the consideration was an executed consideration or not, 
parol evidence is admissible to explain the guaranty. (o) 



It is a very important question, whether a guaranty of nego- 
tiable paper is itself negotiable. Strong opinions, resting on 
strong arguments, have been expressed in favor of the doctrine 
that the negotiability of the paper attaches to the contract of 
guaranty which is indorsed upon it,{p) and this sometimes has 

(n) Brown v. Curtiss, 2 Comst. 225. In this case the payee and holder of a prom- 
issory note transferred it to his creditor in exchange for his own note held by sucb 
creditor, and at the same time wrote on the back of the note, " I guaranty the payment 
of the within." The undertaking was held not to be within the statute. The principle 
is stated very clearly, and illustrated very ably, by Mr. Justice Bronson, in Johnson v. 
Gilbert, 4 Hill, 178. In Tomlinson v. Gill, Ambl. 330, Lord Hardwicke held that, if 
the consideration for the promise takes its root in a transaction distinct from the origi- 
nal liability, the case is out of the statute. The cases of Gold v. Pliillips, 10 Johns. 
412, Farley v. Cleveland, 4 Cowen, 432, and Olmstead v. Greenly, 18 Johns. 12, are 
to the same effect. So where the owner and holder of a promissory note sells the 
same, and as a condition of the sale guarantees its payment, his contract of guaranty 
is an original undertaking, and need not be in writing. Meech v. Smith, 7 Wend 31.5 ; 
How V. Kcmball, 2 McLean, 103. See also Leonard v. Vredenburgh, 8 Johns. 29 ; 
Bailey v. Freeman, 11 id. 221 ; Watson v. Randall, 20 Wend. 201 ; Leland v. Creyon, 
1 McCord, 100; Tyler v. Stevens, 11 Barb. 485; Johnson v. Gilbert, 4 Hill, 178; 
Union Bank v. Coster, 3 Comst. 203 ; Hunt v. Adams, 5 Mass. 358 ; White v. How- 
land, 9. id. 314 ; Simons v. Steele, 36 N. H. 73, 82 ; Anderson v. Davis, 9 Vt. 136 ; 
Elder v. Warfield, 7 Harris & J 391. 

(o) Weed ». Clark, 4 Sandf 31. And see Draper v. Snow, 20 N. Y. 331. 

{p) Walton V. Dodson, 3 Car. & P. 163; Watson v. McLaren, 19 Wer.d. 557, 26 
id. 425 : Ketchell v. Burns, 24 Wend. 456 ; Dean v. Hall, 17 Wend. 214 ; Leggett v. 
Raymond, 6 Hill, 639 ; Ellis v. Brown, 6 Barb. 282 ; Cooper v. Dedrick, U2 id. 516 ; 
Adams v Jones, 12 Pet. 207; Small v. Sloan, 1 Bosw. 352; Heaton c. fl.ilbert, 3 
Scam. 489 ; Webster v. Cobb, 17 111. 459 ; Partridge v. Davis, 20 Vt. 499. Ir. Cooper 
V. Dedrick, 22 Barb. 516, it was held, that when a guaranty is writte.i upon a note 
payable to bearer, and the note is transferred, nothing being said tou.-hing the guar- 
anty, the sale and delivery of the note with the guaranty upon it furnislies jiriiiia fiicit 
evidence of a sale of the contract of guaranty ; and the possession of tlie ncte and the 


been extended even so far as to embrace a guaranty written on 
a separate paper. (</) But the weight of authority is decidedly 
opposed to the negotiability of a guaranty in either case.(r) 

Our view of this question is this : The negotiability of paper 
payable to order is established by a very peculiar exception to 
the general law of contracts ; and this exception rests upon a 
usage so ancient and universal, as to show a distinct and urgent 
need of it. But the negotiability of a guaranty has no such 
usage in its favor, and is not, therefore, within the exception. 
Moreover, we do not think it likely to be brought within this 
usage, or on other grounds established by adjudication, because 

guaranty is prima facie evidence of a right in the holder to the guaranty. And in 
Small V. Sloan, 1 Bosw. 352, it was said that a guaranty, before the Code, was 
assignable so as to give an equitable title to the assignee, although he could not 
sue thereon in his own name ; but, under the Code, it is not merely assignable, but 
the action thereon must be brought in the name of the assignee, as the real party 
in interest. 

(7) The doctrine that a guaranty of negotiable paper ought to be held negotiable, 
even when it is upon a separate paper, was very ably supported by Mr. Senator Ver- 
filanck, in the case of McLaren v. Watson, 26 Wend. 425. There was a guaranty in 
general terms of the payment of a note written on a separate paper. The court, 
however, were of opinion that the guaranty, being upon a separate paper, was not nego- 
tiable. And see Bell's Commentaries on the Law of Scotland, Vol. I. B. 3, ch. 2, § 4, 
p. 371 -374, .oth ed. 

(r) True v. Fuller, 21 Pick. 140 ; Tyler v. Binney, 7 Mass 479 ; Springer v. Hutch- 
inson, 19 Maine, 359 ; M'Doal v. Yeomans, 8 Watts, 361 ; Ten Eyck v. Brown, 4 
Chand. 151 ; Sandford v. Norton, 14 Vt. 228; Irish v. Cutter, 31 Maine, 536; Tuttle 
P.Bartholomew, 12 Met. 452; Belcher v. Smith, 7 Cush. 482; Miller v. Gaston, 2 
Hill, 188 ; Tinker v. McCauley, 3 Gibbs, Mich. 188. In True v. Fuller, 21 Pick. 140, 
the action was upon a guaranty written underneath the signature of the payee, in these 
words, " I guaranty the payment of semiannual interest on this note, as well as the 
principal" ; and the action was brought by one who subsequently became the holder of 
the note. The court held that he could not recover, because the guaranty in question 
was not made to him, or whilst he was holder of the note ; that it was not negotiable 
in itself, and was not made so by being written upon, and intended to secure a negotia- 
ble instrument. In Osborn v. Hawley, 19 Ohio, 130, it was held that a power of 
attorney, not negotiable, attached to a note, becomes invalid and inoperative, when the 
note is transferred. In Lamourieux v. Hewit, 5 Wend., 307, it was held that a guaranty 
in general terms of the collection of a note did not authorize a suit thereon in the name 
of any subsequent holder of the note, but only in the name of the person with whom the 
contract was made. But now, under the code of New York, the suit may he brought 
in the name of the assignee, who is the party in interest. See supra, note p. And 
this rule against the negotiability of the guaranty applies also where the name of the 
person guaranteed is not mentioned ; for then the party to whom the note is first trans- 
ferred on the faith of the guaranty, acquires a right to recover on it in his own name ; 
but he cannot transfer it so as to vest the right of action in any sub.scqucrt pirty. See 
cases, supra. 

VOL. II. 12 


all exceptions are to be limited by the necessity for them ; and 
we see no n'^cessity for any such rule, inasmuch as all the good 
which could be gained from making guaranties negotiable may 
be deiived, and is now in part derived, from the practice and the 
law of indorsement. 

So a letter of credit, wliich is a species of guaranty, when 
addressed to no particular person, but generally to all, is deemed 
in some respects a negotiable credit, and is binding in favor of 
any one who makes advances upon the faith of it.{s) But if it 
be addressed to a particular person or firm, it will not render 
the guarantor responsible to other parties. (^) 

As a guaranty is not negotiable, so neither is a guarantor r^ 
garded as an indorser, in respect to the effect of a discharge of 
him. A discharge of an indorser, as we have seen, is a dis- 
charge of any and every one to whom all subsequent parties, 
however numerous, might look. For if he be discharged, it fol- 
lows that their security is impaired ; and therefore a discharge 
of him is a discharge of them. It is not so with the discharge 
of a guarantor, for the very reason that no one but the guar- 
antee can look to him. If, therefore, the guarantee chooses to 
discharge him, he impairs the security of no one else, and there- 
fore no one else is discharged. 

Such is the general rule ; there may, however, be circum- 
stances which would call for a qualification of it. If A makes a 
note to B, and B indorses to C upon C"s assurance that A had 
given C security for the note, if G afterwards saw fit to return 
that security to A, he could not be permitted to call on B. But 
if C indorsed to D, D, being ignorant of these circumstances and 
taking the note in good faith, would not lose his claim on B 
because of C's act. And it would be so if the security from A 
to C had consisted in the guaranty of some third party to C, 
which C had discharged. 

A guarantor is always as effectually discharged by a release 
of the principal debtor as he would be by payment of the 
debt.(M) So he is if time be given him without the consent of 

(s) Russell I'. Wiggin, 2 Story, 213; Carnegie v. Morrison, 2 Met. 381, 395; Lr.w- 
rason v. Mason, 3 Cranch, 492 ; Adams v. Jones, 12 Pet. 207 ; Lowry v. Adams, 23 
Vt 160 ; Birckhead v. Brown, 5 Hill, 634, 642. 

it) Bleeker v. Hyde, 3 McLean, 279. 

(!/) Cowpcr r. Smith, 4 M. & W. ."JIQ. 


the guarantor, (y) and so he is by a surrender of collateral secu- 
rity given by the debtor. (iv) But the taking of collateral security 
from him, without any agreement to give liim time, does not 
discliarge the guarantor. (.«) 

The taking a new note from the principal debtor, payable at a 
future day, because it suspends the right of collecting the origi- 
nal note,{y) is in all cases an unwarranted extension of credit, 
and discharges the guarantor. (c) 

. As a guaranty is itself not negotiable, the question has arisen 
whether a guaranty written on the back of negotiable paper, and 
signed by a payee, had the effect of destroying the further nego- 
tiability of the paper. The cases are few on this subject, and 
ill conflict. (a) On principle, we should answer decidedly in the 

(y) Holl V. Hadley, 5 Bing. 54 ; Howell v. Jones, 1 Ciomp. M. & R. 97 ; Bangs v. 
Mosher, 23 Barb. 478; Shook v. State, 9 Port. Ala. 113 ; Chute w. Pattee, 37 Maine, 
102; Crosby v. Wyatt, 10 N. H. 318. 

(w) Mayhew v. Crickett, 2 Swanst. 185, 191. 

(x) Sigourney v. Wetherell, 6 j\Iet. 553, 564 ; Norton v. Eastman, 4 Greenl. 521. 

(y) See post, chapter on Payment by Bill or Note. 

(z) Hart V. Hudson, 6 Duer, 294, 304. The cases upon this point are cited in the 
opinion of Duer, J. 

(a) In Massachusetts it is held that signing of a guaranty upon the back of a note 
is not such an indorsement as will authorize the holder of the note to sue upon it as 
indorsee. Tuttle v. Bartholomew, 12 Met. 452. This was an action upon the follow- 
ing note : " For value received, I ]M-omise Peter Snyder to pay him or order five hun- 
dred dollars on demand. Wyllis Bartholomew." Upon the back of this note was 
indorsed the following: "We guaranty the payment of this note. April 5, 1844. 
(Signed.) Peter Snyder, Samuel Blodget." See Tyler v. Binney, 7 Mass. 479; 
Blakely c. Grant, 6 Mass. 386. This case was decided a year previous to that of 
Tyler v. Binney, but does not appear to have been referred to in the argument or de- 
cision of the latter case. In the case of Blakely v. Grant, it was held that a signa- 
ture of the payee to the following words, " Should the within exchange not be accepted 
and paid agreeably to its contents, I hereby engage to pay the holder, in addition to 
the principal, twenty per cent damages," might operate as a transfer of the bill of ex- 
change, and that the indorsement was good, though no person was named as indorsee ; 
and that a bona fide holder might insert above such stipulation a direction to pay the 
contents to his order." In Upham v. Prince, 12 Mass. 14, the payee, having signed a 
guaranty of the note, expressed to be such, was held liable to the holder of the note 
as upon a common indorsement. The principle of this decision seems necessarily 
to be, that the note was duly transferred by the signature of the payee to the guaranty. 
.... The present case presents all the objections that were stated in the case of 
Tyler v. Binney, 7 Mass. 479, which we are inclined to adopt as the !)cttcr opinion, 
and which were there held 'fatal to the maintenance of the action; with tJiis addi- 
tional one, which we think of great weight, viz. that the guaranty in the present case 
IS a joint guaranty of Peter Snyder, the payee, and Samuel Hlodgct. This is a joint, 
and not a joint and several guaranty. How can it be transformed into a general in- 


negative. Neither does the negotiability of the paper make the 
guaraut}' negotiable, nor the non-negotiability of the guaranty 
make the paper non-negotiable ; but the holder with such in- 
dorsement may himself indorse the paper again, and so may his 

Another question may arise, which is, whether that subsequent 
holder can treat such indorser as any other than guarantor ; that 
is, can hold him on the guaranty without proving consideration. 
On this point we are of opinion, that, as the holder sees fit to 
accept this limited indorsement, he is bound by it. And as it is 
notice to everybody, every subsequent indorsee is equally bound, 
and as much so as he would be by the words "without recourse " ; 

dorsement by Snyder ? The contract or instrument signed by Snyder and Blodget 
is not only filled up and complete in itself, but it is obviously intended as a stipulation 
to which the names of both these persons may properly be subscribed. But a general 
indorsement of this note could only be made, in the first instance, by Snyder, the prom- 
isee. In this Blodget could not join. We are satisfied that no other effect can be 
given to this writing than that of a joint guaranty, and that this note was not trans- 
ferred thereby, as by a general indorsement in blank, by the promisee. This objection is 
therefore fiital to the action." Per Dewey, J., in Tuttle v. Bartholomew, 12 Met. 452. 
In Belcher v. Smith, 7 Cush. 482, it was held that the payee of a note, who signed his 
name to these words written on the back thereof, " I hereby guaranty the within note," 
is not liable thereon as indorser. Dewey, J. also delivered the opinion in this case, and 
referring to the above decision, said that, irrespective of the objection that the guaranty 
was signed not only by the payee, but also by another person, the court were of opin- 
ion that the plaintiff could not enforce the paj'ment of the note by a suit in his own 
name as indorsee. In Van Derveer v. Wright, 6 Barb. 547, it was held that a transfer 
of a note payable to order made by a guaranty, indorsed l)y the payee, was not suffi- 
cient to enable a subsequent holder to sue the guarantor in his own name. See also 
Crenshaw v. Jackson, 6 Ga. 509 ; Hance v. Miller, 21 111. 636; Canfield v. Vaughan, 
8 Mart. La. 682, 697. On the other hand, in Myrick r. Hasey, 27 Maine, 9, it was 
held, that an indorsement by the payee in these words, " I hereby guarantee the pay- 
ment of the within note. R. D. H.," was sufficient to the holder to recover against the 
maker in a suit upon the note, although the court said the guaranty itself was not ne- 
gotiable. The case of Partridge v. Davis, 20 Vt. 499, goes still further. The payee 
had indorsed as in the preceding case, and the plaintiff, who was not his assignee, but 
a subsequent holder, declared against him in one count as indorser, and in another as 
guarantor ; and the court were of opinion that he had a good cause of action in either 
count. Davis, J., delivering the opinion of the court, said that this guaranty was the 
same thing in legal effect, and for every practical purpose, as an indorsement, and might 
be treated as such ; and it operated to transfer the legal title in the note to any subse- 
quent holder, notwithstanding the person to whom the note was first transferred was 
not named in the indorsement, and this is not made, in terms, to order or bearer. He 
was also of opinion that the defendant was liable as a guarantor ; and that any subse- 
quent holder might recover against him upon his guaranty, as well as against the 
maker upon the note. 


and accordingly neither the guarantee nor any subsequent in 
dorsee can hold the indorser without showing that he made this 
guaranty on sufficient consideration. 

But, on the other hand, he may, having shown a consideration, 
hold the guarantor, without proof of presentment or demand or 
notice, unless the guarantor can show negligence in the holder, 
and actual loss sustained by the guarantor from the want of 
such presentment, demand, or notice. (6) Such we take to be 

(6) WaiTington v. Furbor, 8 East, 242, 245 ; Philips v. Astling, 2 Taunt. 206, 211 ; 
HitchcoL-k V. Humfrey, 5 Man. & G 559, 568 ; Walton v. Mascall, 13 M. & W. 72 ; 
Van Wart v. WooUey, 3 B. & C. 439 ; Wri<,'ht v. Simpson, 6 Vcs. 714 ; Gillighan v. 
Boardman, 29 Maine, 79 ; Rhett v. Poe, 2 How. 484 ; Beckwitli v. An<jell, 6 Conn. 
315 ; Gibbs v. Cannon, 9 S. & R. 189, 202 ; Lewis v. Brewster, 2 McLean, 21 ; Foote 
». Brown, 2 McLean, 369 ; Hank v. Crittenden, 2 IMcLean, 557 ; Skofield v. Haley, 22 
Maine, 164; Howe v. Nickels, 22 Maine, 175 ; Thrasher v. Ely, 2 Smedes & M. 139; 
Hall V. Rodgers, 7 Humph. 536 ; Lewis v. Harvey, 18 Misso. 74; Grice i-. Ricks, 3 Dev. 
65; Wildes v. Savage, 1 Story, 26 ; Rich v. Hathaway, 18 HI. 548; Jones v. Pierce, 35 
N. H. 295 ; Clark v. Merriam, 25 Conn. 576 ; Farmers & Mechanics' Bank v. Kercheval, 
2 Mich. 504 ; Green v. Dodge, 2 Ohio, 430; Huatoii v. Hulbert, 3 Scam. 489 ; Murray 
C.King, 5 B. & Aid. 165; Johnson v. Wilmarth, 13 Met. 416; Simons*. Steele, 36 
N. H. 73. The question, whether a guarantor is liable at all events, or only upon con- 
dition, was first decided in Massachusetts in the case of the O.xford Bank v. Haynes, 8 
Pick. 423, where a guaranty was held to be a conditional engagement, from which the 
guarantor will be discharged by the neglect of the holder of a note guaranteed to de- 
mand payment of the maker, and to give the guarantee notice of non-payment, pro- 
vided the maker was solvent when the note fell due, and afterwards became insolvent. 
The distinction is taken, that the guarantor is discharged only by the joint effect of 
negligence on the part of the holder, and actual loss or jjroju<lice to the guarantor in 
consequence of that negligence. The guarantor was held discharged where no demand 
was made on the promisor to pay the note guaranteed, which was secured to the plain- 
tiff by mortgiige, and the promisor remained solvent for six months after the last in- 
stalment became due, and was permitted to receive the profits of the mortgaged prop- 
erty for three years after that time, and the defendant received no notice of the non- 
payment till two years afterwards. Talbot v. Gay, 18 Pick. 534. " The same sti-ict- 
ness of proof, as to the demand and notice," said Wilde, J., in this case, " is tiot neces- 
sary to charge a guarantee, as is required to charge an indorser ; but the demand on 
the maker, if he be solvent at the time the note falls due, must be made in a reasonable 
time ; and if the holder shall unreasonably delay so long as to cause an injury to the 
guarantee, he will he dis-charged." In the case of Bickford v. Gibbs, 8 Cusli. 154, tiic 
action w;is u[ion a guaranty containing an express waiver of demand and notice. S/uiir, 
C. J. reviewed some of the leading cases on the general liability of guarantors, and 
deduced from them the principle, " That, in order to maintain an action against a 
guarantor, a demand of payment must be made in a reasonable time of the principal, 
and notice of non-payment given to the guarantor ; and if in consequence of want of 
such notice the guarantor suffers loss, lie is exonerated " But in the case before the 
court, the guarantor had expressly agreed to waive demand and notii-e, and conrmlio 
letfem vincit. " The eft'ect of that waiver is," continued the eminent juilge, " to put the 
ilaintiffin t'-e same situati'>n as if he had proved tha: he .seasonably demanded llio 


the decided weight of authority, although the citations in our 
notes will show that the authorities are not in harmony on this 

So, tou, we should hold, although here also there is some con- 
flict, tliat if a guarantor calls on the creditor or holder to proceed 
against the principal, and the principal delays or refuses to do so, 
this does not discharge the guarantor, because he has the power 
of paying the debt himself, and then acquiring the creditor's 
power of proceeding against the principal debtor. Still it is true 
that a guarantor is entitled to reasonable care and diligence on 
the part of the guarantee to collect tlie debt of the principal, and 
save tlie guarantor harmless, (c") The guarantor will be dis- 

money of the promisor, who did not pay it, and gave reasonable notice thereof to the 
defendants." In Worcester Co. Inst, for Savings v. Davis, 13 Gray, .'331, it 
was decided that such a guaranty, expressly " waiving all right to demand and 
notice," cannot be contradicted by oral evidence of a contemporaneous agreement 
to collect the note from the principal debtor, and of laches in pursuing him. In 
New York, a guaranty of payment is considered an absolute, and not a condilioual, 
undertaking. Allen v. Rightmere, 20 Johns. 365. This was an action upon a special 
guaranty indorsed on a note in these words : " For value received, I sell, assign, and 
guaranty the payment of the within note, to John Allen, or bearer." By the court, 
Spencer, C. J. : " It is the duty of the debtor to seek the creditor, and pay his debt on the 
very day it becomes due. As regards the maker of the note, and to render him liable, 
no demand is necessary. A demand of payment is necessary only to fix an indorser, 
or a surety, whose undertiiking is conditional. An indorser does not absolutely en- 
gage to pay. It is a conditional undertaking to pay, if the maker of the note does 
not, upon being required to do so, when the note falls due, and upon the further con- 
dition that the indorser shall be notified of such default. The defendant insists 
that he stands in the situation of an indorser merely ; but such is not the fact. The 
undertaking here is not conditional ; it is al)solute tlffit the maker shall pay the 
note when due, or that the defendant will himself pay it.'' This is declared to be 
the settled law of the State, in Brown v. Curtiss, 2 Comst. 22.5, 228. And so held 
in Wisconsin, Mallory v. Grant, 4 Chand. 143; Ten Eyck r. Brown, id. 151. And 
in Alabama, Donley v. Camp, 22 Ala. 6.i9 ; Towiisend v. Cowles, 31 id. 428. 

(c) Talbot V. Gay, 18 Pick. 534; Gamage v. Ilutchins, 23 Maine, 565; Miller ». 
Berkey, 27 Penn. State, 317; Moakley v. Riggs, 19 Johns. 69; Kies v. Tifft, 1 
Cowen, 98 ; Lamourieux v. Hewit, 5 Wend. 307. In Isett v. Iloge. 2 Watts, 128, 
payment of the note guaranteed was not demanded in the lifetime of the maker, who 
lived nearly eight years after the note fell due ; and this was held to be such gross ncg 
ligence as to discharge the guarantor. So, also, where a note payable on demand was 
guaranteed, and it appeared that the maker continued solvent two years, during which 
time no attempt was made to collect it, the guarantor was held discharged. Gamago 
V. Ilutchins, supra ; and so the notice of demand and non-payment was not given to 
the guarantor till fourteen months afterwards, when the maker was insolvent. Whiton 
V. Mears, 1 1 Met. 563. Where the holder of a guaranteed note liad bon guilty of 
such laches as deprived him of any legal claims on the guaranty, and the guarantor, 


charged if he can show actual loss or an actual presumption of 
loss from the want of such care and diligence ; but there is not 
in his case a legal and absolute presumption of negligence and 
injury, as there is in the case of an indorser. 

Where the principal debtor is wholly insolvent when the debt 
becomes due, and so continues, there seems to be a presumption 
against any injury havhig occurred to the guarantor from the 
holder's want of diligence in seeking satisfaction for the original 

afterwards, on the demand of the holder, paid him the interest on the notes, knowing 
and protesting that he was not liable on his guaranty, it was held that he waived the 
holder's laches, and continued to be liable to him on the guaranty, and that the effect 
of such payment was not avoided by the holder's threat to sue the guarantor for other 
large debts which he owed the holder, unless he would pay such interest. Sigourney 
V. Wetherell, 6 Met 553. And so held also in Ashford v. Kobinson, 8 Ired. 114. 
But it was held in Van Derveer v. Wright, 6 Barb. 547, that, after the guarantor of a 
note has been discharged by the laches of the holder, there is no moral obligation to 
pay it, and he cannot be again made liable, even upon an express promise. Willard, 
J. thought otherwise, and also that to support a waiver it was not necessary for the 
plaintiff to prove affirmatively that it was made with full knowledge of the laches, but 
tliat this might be inferred from the promise, under the attending circumstances. In 
Tinkum v. Duncan, 1 Grajit's Cas. 228, it was held that a promise by a guarantor, after 
the failure of his principal to pay the debt, is an admission that there has been no such 
want of diligence as is prejudicial to his interest. The law in Connecticut in regard to 
the diligence required to charge the guarantor is peculiar. In Clark v. Merriam, 25 
Conn. 576, 582, it was said that the diligence required by law is the immediate institu- 
tion of a suit by attachment, if the maker of the note guaranteed is possessed of prop- 
erty ; and in case of a note payable on demand, what is unreasonable deUiy in bring- 
ing suit must depend on circumstances indicating the intention of tlie parties. In Cas- 
tle V. Candee, 16 Coim 223, IVai'.e, J. tliought the rule ought to be in such case that, 
until a request to bring suit was made by the guarantor, the delay was not unreasona- 
ble ; but the court declined to lay down any absolute rule. See also Uanson v- Sher- 
wood, 26 Conn. 437, where it was further held, that, in a suit brought by the holder of a 
note against one who had guaranteed it by a blank indoi'sement, the mere fact that the 
maker of the note provided no funds to pay it at the time and place of payment, but 
suffered it to be protest<d for non-payment, does not furnish prima facie proof that the 
maker was insolvent when the note fell due ; and the mere fact that the holder pre- 
sented it lor payment, at the place of jiayment wlien it fell due, and caused it to be 
protested for non-payment, and caused notice thereof to be given to the indorser, does 
not furnish prima facie proof that the holder used duo diligence to collect the note 
when due. 

(rf) Warrington i-. Fmbor, 8 East, 242 ; Ilolbrow v. Wilkins, 1 R. & C. 10; Piiilips 
V. Astling, 2 Taunt. 206 ; Van Wart i'. Woolley, 3 B. & C. 439 ; Keynolds v. Doug- 
lass, 12 Pet. 497 ; Rhett v. Foe, 2 How. 457 ; Wildes v. Savage, 1 Story, 22 ; Lent v. 
Padelfjnl l(j Mass. 2.30; Basbford v. Shaw, 4 Ohio State, 263, 268; Walker v. 
Forbes, 31 Ahi. »> ; Lamouricux v. Ilewit, 5 Wend. 307 ; Thomas v. Woods, 4 Cowcn, 
173; Van Derveer v. Wright, 6 Barb. 547, 552; Ilance v. Miller, 21 111. 636; Gibbs 


Notice; of the acceptance of a guaranty is requisite to complete 
the obligation of it when it is prospective or contingent. (e) And 
where the guarantor's liability is made to depend upon the 
choice or option of tlie other party, or upon any act or event 
peculiarly within his knowledge, notice of the matter that fixes 
the liability of the guarantor must be given him.(/) 

If the undertaking of the guarantor be to pay on request or 
on demand, tlie request or demand is an essential part of the 
contract, and must be specially alleged and proved. (^j-) 

One who has guaranteed the payment of a bill or note is liable 
for interest from the time of the default of the maker or acceptor, 
at least if he has received notice of such default. (A) 

A guarantor is not liable for contribution to a maker, or any 
other party on a note or bill, or to any person except one who is 
a joint guarantor with himself. (t) 

A distinction is made between a guaranty of the payment of a 

V. Cannon, 9 S. & R. 198. And see 2 Am. Lead. Cas. 3-3 - 138, under the cases Lent v. 
Padelford and Dou^riass v. Re^-nolds. 

(e) Lee v. Dick, 10 Pet. 482. The suit in this case was brought upon a guaranty, 
contained In a letter addressed to the phiintiffs, and worded as follows: "Gentlemen, 
Nightingale & Dexter, of Maury Co., Tennessee, wish to draw on you at six and eight 
months ; you will please accept their draft for $ 2,000, and I do hereby guarantee the 
punctual repayment of it." A letter addressed to P. B. Dexter, one of the firm of 
Nightingale & Dexter, and written on the same paper with the guaranty, showed that 
the guarantor intended to make himself answerable to the extent of $2,000, for the 
payment of a bill for a larger sum, which they proposed to draw, and which was 
drawn accordingly. It was held, that, although a guaranty of an existing debt might 
be good without notice, tlie case was different where the engagement was for the re- 
payment of future advances which might be given or withheld, at the option of the other 
party to the contract, who was said to be bound to give information of his mtention to 
accept and act under the guarauty, if not immediately, at least within a reasonable 
time after he received it. See Wildes v. Savage, 1 Story, 22 ; Bradley r. Gary, 8 
Greenl. 234 ; Douglass v. Howland, 24 Wend. 3.") ; Union Bank v. Coster, 3 
Comst. 212. 

(/) See 2 Am. Lead. Cas. 33, el seq. In Lewis v. Bradley, 2 Ired. 303, upon an 
agreement to make good all sums which could not be collected on certain notes as- 
signed in payment of a debt, as soon as they should be returned by any constable 
chosen by the assignee as incapable of collection, it was held that there could be no 
recovery without an averment and proof that notice of the failure of the officer in 
whose hands they were placed to obtain payment upon them had been given to the 
defendant. So in a similar case in Vermont, Sylvester v. Downer, 18 Vt. 32. 

((j) Nelson v. Bostwick, .5 Hill, 37 ; Douglass ». Rathbone, id. 143. 

(A) Washington Bank v. Shurtleff, 4 .Met. 30; Ackermaun v. Eliren.<pergcr, J6 M. 
& W. 99. 

(/) Longley v. Griggs, 10 Pick. 121. 



bill or note, and a guaranty of its collection ; the guarantor in 
the latter case being liable only after a regular prosecution 
against the principal party liable upon the paper, and the use 
of due and reasonable diligence on the part of the plaintiff to 
collect the same by due course of la.w.{j) And for this purpose 
a warranty that " the note is good " has been held as only a war- 
ranty that it is collectible. (/c) 

Notice that the bill or note cannot be collected should also be 

{j) Moakley v. Riggs, 19 Johns. 69. In thi.s case the guarantor, in consideration 
of a sale of goods to the maker of the note, " undertook and faithfully promised that 
the note was good and collectible after due course of law " ; and it was held that the 
use of diligence in attempting to collect the note by due course of law was a condition 
precedent, to be performed by the plaintiff; and that a neglect for the space of seven- 
teen months to proceed against the maker of the note operated as a discharge of the 
guarantor. So where a party " guaranteed the collection of the note." Cumpston v. 
McNair, 1 Wend. 457. And where such a guaranty was written on the bat-k of a note 
already indorsed, it was decided in an action on the guaranty that the plaintiff n.ust 
show a diligent attempt to collect the note, both as against the indorser and maker, 
before he could recover. Loveland v. Shepard, 2 Hill, 139 ; Moakley v. Riggs, 19 
Johns. 69; Day v. Elmore, 4 Wise. 190; Hart v. Hudson, 6 Duer, 294, 303 ; and 
cases in next note. 

{k) Curtis V. Smallman, 14 Wend. 231 ; Cooke i'. Nathan, 16 Barb. 342. But see 
contra, Koch v. Melhorn, 25 Penn. State. 89 ; Hammond v. Chamberlin, 26 Vt. 406. 
J?ut a guaranty that "all drafts drawn by G. C. H. will be duly honored and paid 
hy me, should he meet with any misfortune that he will not be able to do it himself, ' is 
a guaranty of payment, and it is not necessary first to exhaust all legal remedy upon 
the bills against G. C. H., before the guarantor is rendered liable. Grant v. Hotchkiss, 
26 Barb. 63. For further cases distinguishing between guaranties of payment and 
those of collection, see Spicer v. Norton, 13 Barb. 542 ; Uwight v. Williams, 4 Mc- 
Lean, 581; Parker v. McKclvain, 17 Texas, 157; Ely v. Bibb, 4 j. J. Marsh. 71. 
See Day v. Elmore, 4 Wise. 190, 194, where Smith, J., delivering the opinion of the 
court, said that the law does not fix any definite time within which suit mu<t be com- 
menced. This must depend upon all the circumstances of the case, and hence what is 
due diligence is a mixed question of law and fact. Where there was a guaranty of the 
collection of a note, and it was shown that the maker of it removed from the State be- 
fore the note became due, it was held that a recovery might be had on the jiuaranty, as 
the contract was thought to imply that the maker would be in a situation to be sued 
within the jurisdiction of the State. White v., 13 Wend. 543 ; Cooke v. Nathan, 
16 Barb. 342. And see Camden v. Doremus, 3 How. 515. Hut this is otherwise 
if the maker resides in a foreign State or country, at the time the guaranty is entered 
into. Burt v. Horner, 5 Barb. 501. The holder must prosecute him there before 
he can have recourse to the guarantor. Id. As the due course of law against the 
debtor is a condition precedent to give the remedy against the guarantor, a suit is as 
essential where the debtor is insolvent as where he is not so. Per McLenn, J., in 
Dwiyht V. Williams, 4 McLean, 581. But .sec contra, cases cited infra, p. 142. note o. 
If the suit fails on account of defective service of the writ, the guarantor is dis 
charged. Beach v. Bates, 12 Vt. 63; Wheeler p. Lewis, 11 id. 265. 


given to the guarantor witliin a reasonable time ; and if this is 
delayed, evidence may be received that the guarantor was preju- 
diced thereby, althoiigh the officer had returned the execution 
unsatisfied for want of property on which to levy.(/) 

Where tlie note guaranteed is secured by a mortgage, the 
holder is not required to proceed under this and obtain a fore- 
closure, after having prosecuted the note to judgment and ex 
ecution, nor to pursue any collateral rights or remedies ; but the 
guarantor is entitled to the use and control of these after his 
liability has become fixed. (/?i) And because a guarantor is en- 
titled to all the security and all the protection which he had a 
right to expect from the circumstances existing when he made 
the guaranty, it is held that if the note be at that time duly 
indorsed, the guaranty is discharged by any laches as to de- 
mand and notice whicli discharges the indorser.(w) 

In case tlie principal debtor is insolvent at the time the bill 
or note becomes due, the collection of which is guaranteed, and 
continued to be so, tlie holder is not obliged to institute legal 
proceedings against him, and to prosecute the same to judgment 
and execution, before resorting to the guarantor. (o) Tiie ob- 
taining of a judgment, and an execution returned unsatisfied for 

{I) Wolfe V. Brown, 5 Ohio State, 304. In this case the plaintiff had omitted to 
give the guarantor notice that he had not collected the note guaranteed for three years 
after the officer had made a return of " No goods " on the execution. The court said, 
that if such notice had heen given within a reasonable time, the return of the officer 
might have been conclusive evidence that due diligence had been used to collect the 
note ; but as it was, the guarantor was entitled to show that he had been injured by 
the delay. And sec Bashford v. Shaw, 4 Ohio State, 263, 267 ; Day v. Elmore, 4 
Wise. 190, 198; Gillighan v. Boardman, 29 xMaine, 79. 

{ill) Day V. Elmore, 4 Wis. 190, 197. 

(«) Loveland v. Shepard, 2 Hill, 139 ; Dana v. Conant, 30 Vt. 246. 

(o) Sanford v. Allen, 1 Gush. 473 ; Perkins v. Catlin, 11 Conn. 213, per Huntingtnn, 
J. ; Ranson v. Sherwood, 26 Conn. 437 ; Wheeler v. Lewis, 1 1 Vt. 265 ; Bull v. 
Bliss, 30 id. 127 ; Dana v. Conant, 30 id. 246 ; Camden v. Doremus, 3 How. 5\5, 533. 
In the latter case, Mr. Justice Daniel said : " The diligent and honest prosecution of a 
suit to judgment, with a return nulla bona, has always been regarded as one of the ex- 
treme tests of due diligence. This phrase, and the obligation it imports, may be satis- 
fied, however, by other means. The ascertainment, upon correct and sufficient proofs 
of entire or notorious insolvency, is recognized by the law as answering the demand of 
due diligence, and as dispensing, under such circumstances, with the more dilatory 
evidence of a suit." And so in M'Doal j^.-Yeomans, 8 Watts, 361, on a guaranty that 
a note was collectible, it was held that the insolvency of tlic maker excusei^ the want 
of an i/ttempt to collect the debt from him by process. 


want of pi'operty, though perhaps tlie most satisfactory evi- 
dence that the debt is not capable of being collected, is not the 
only evidence of that fact, nor would it be so absolute and con- 
clusive as to be incapable of contradiction or explanation. 

A guarantor is entitled to all equities and advantages which 
the guarantee has received. (7>) Thus, if one guarantees a 
seller of goods, and delivers him for that purpose a note on 
which the guarantor is liable, and the seller receives part pay- 
ment, he is entitled to so much only of the note as will satiiify 
the balance, and must return the note if the guarantor tenders 
him this balance ; and if he retains and collects tlie note, he will 
be held as the trustee of the guarantor for all of the proceeds 
over and above what is sufficient to pay the balance remaining 
due on the original purchase. (<?) 

In an action upon a guaranty indorsed upon a note, the signa- 
ture of the maker is sufficiently proved by proving the execution 
of the guaranty, (r) and it is no defence that this signature is not 
genuine ; and even when the guaranty is written upon a separate 
paper, in which the note is identified with certainty, and it is 
proved that the guarantor was shown the note before he made 
the guaranty, it seems that the same rule would apply, if there 
was no fraud or misrepresentation, and it would be no defence 
that the signatures upon the note at the time the guaranty was 
made, or some one of them, were in fact forged. (5) 

{p) Wa^hin^ton Bank v. Shurtleff, 4 Met. 30 ; Crocker v. Gilbert, 9 Cush. 131 ; 
Hidden u. Bi-hop, 5 R. I. 29. 

iq) See Wasliington Bank v. Shurtleff, 4 Met. 30. 

(r) Cooper v. Dedrick, 22 Barb. 516. 

(s) Veazie v. Willis, 6 Gray, 90. This action was upon the followin<r guaranty : 
"Boston, April 2.'Jth, 1850. For and in coti.'sideraiion of eighty dollars received of 
Joseph A. Veazie, I hereby guaranty the payment of a note signed by Edmund Boyn- 
ton, and payable to George Lambert, and by him indorsed; also indorsed by B F. 
Wellington and Charles M. Reed The amount of said note is one thousand ninety- 
eight dollars ^*X. Note dated December 2()th, 1849, and payable in six months. 
Clement Willis." It was proved that the signature of Boynton and the indorsement 
cf Lambert were forgeries; that the indorsement of Wellington and Reed were genu- 
ine; and that the fact of the forgery was only known to Wellington, neither Heed, 
Veazie, nor Willis having any reason to suspect that fact. Held, that the guarantor 
was bound to pay the note, if there was no otiier note in circulation answering to the 
lescription in the guaranty. 




As to other agreements respecting notes and bills, it lias been 
already said, that any private agreement affecting a negotiable 
note may be binding as between the parties to it, unless it be 
oral only, and the evidence of it is excluded by the rule which 
refuses oral evidence, or evidence of an oral contract, when it 
would vary or contradict a written contract. And if the note be 
not negotiable, all who take it by assignment take only the rights 
of their transferrer, subject to the defences which might be 
made at the time of the transfer against him. If the paper be 
negotiable, no parties are aflfected by these bargains but those 
who take the paper with knowledge of them. 

A written agreement to renew the note, or to qualify its obli- 
gations in any way, is good as between the parties to it. But an 
agreement to renew, whether on the note or on another instru- 
ment, is, however, construed as an agreement to renew once 
only ; as otherwise it would be perpetual, and amount to a prom- 
ise never to pay.(i) If, however, the agreement expressly pro- 
vide for a certain reasonable number of renewals, we know no 
reason why it should not be valid. 

From a recent case it might be inferred that, if the bargain be 
between a party to the paper and the other parties, together witli 
other persons, this joinder of others would prevent the bargain 
from being parcel of the note, or directly connected with it ; and 
as it would be collateral, it must rest upon its own considera- 
tion ; and if the effect of the bargain were that the note should 
not be sued until a certain event or period, this bargain would 
have no effect as a defence to a suit on the note, unless under 
the general rule that a covenant not to sue at all may be a bar 
to a suit on the promise, but not a covenant not to sue for a 
time certain, (m) 

It may be said that all agreements intended to affect in some 
way the terms of a bill or note must be written, on the common 

(t) Innes v. Munro, 1 Exch. 473. 
(u) Webb V. Spicer, 13 Q B. 894, 


principle of evidence, which will not permit a written contract 
to be controlled by parol evidence ; but they may be written on 
the same paper with the bill or note, or on a different paper. If 
they are written on a different paper, there is some disposition to 
give to them the same effect as if written on the same paper, 
provided they were written simultaneously with the note. But 
this rule cannot be general. It may apply to a considerable 
extent to the parties to it, and in some cases to distant parties, 
who take the bill or note with notice or knowledge ; but not 
always to them. 

If two parties agree upon a common negotiable note, and also 
apon certain terms in relation to it, which they write on a sep- 
arate paper, it would seem that a purchaser of the note might 
consider these terms as purposely separated from the paper, that 
they might not go with it, and therefore as affecting only the 
original parties. It is obvious, however, that the agreement may 
be such as to make it a fraud on the part of the payee to indorse 
it over so as to liberate the paper from tlie agreement. And if 
so, no party cognizant of the fraud could found any right 
upon it. 

The question has been somewhat discussed whether such an 
agreement, if we suppose it to bo one which affects and binds the 
holder, whether he be an original or remote payee, affects him as 
a part of the note, or only as a defence which the defendant may 
avail of. We think (always supposing the papers to be separate) 
the latter must be generally the case ; and therefore the plaintiff 
need not notice such agreement in his declaration. (?>) 

Where, however, a note is made payable upon some condition 
contained in the note itself, unless the condition l)e merely a de- 
feasance of the contract, it forms a constituent part of the con- 
tract, and cannot be omitted in the declaration as a matter of 
defence. (?/;) 

(v) Smalley v. Bristol, 1 Mich. \^3 See Bowcrbank v. Monteiro, 4 Taunt. 844. 

(w) Woodstock Bank v. Downer, 27 Vt. 482. This was an action on a note pay- 
able in ninety days from date, with a provision that if, at the end of ninety days, the 
makers |)ay one iialf the note and the interest on the other half in advance for ninety 
days, the payment of that half shall he extended for that further length of time. The 
declaration described the note as payable in ninety days from date ; and it was held 
that there was a variance. In Barnard v. Gushing, 4 Met. 2.30, where the payee of a 
note, at the time it was signed by the maker, and as a part of the same transaction, 
indorsi-d thereon a promise not to compel payment thereof, but to receive the amount 

Vol. n.-K 13 


If the collateral agreement be on the same paper, it may be 
written in the body of the note, or on the margin, or at the bot- 
tom, or on the back ; and it is generally held to have the same 
effect as if it had been written in the body of tlie note, (a:) though 
in some courts, when tlnis written, it is not regarded as a part of 
the note.(;^) If written in the body of the note, then it either 
arrests the circulation of the note, or, if it does not, it goes with 
the note, and affects all parties to it, whether original or remote. 
The principal question then is, whether the agreement leaves 
the note still negotiable or prevents this. For only a promissory 
note having certain essential characteristics is, as we have seen, 
negotiable. We apprehend the answer to this question to be 
this : If the collateral agreement be one which destroys or im- 
pairs any of tliese essential characteristics of negotiable paper, it 
prevents the paper from being negotiable. (2:) 

Tluis, if it makes the parties uncertain, or renders the obliga- 
tion contingent or indefinite, either as to amount or time, or by 
reference to any exigency or condition, or if it provides an alter- 
when convenient for the maker to pay it, it was held that the indorsement must bo 
taken as part of the instrument, and that the payee could not maintain an action 
thereon, leaving the defendants to their cross-action for any violation of the collateral 
agreement. In Hey wood v. Perrin, 10 Pick. 228, where, at the bottom of the note, 
payable on demand, was written a memorandum, of the following purport : " One half 
to be paid in twelve months, and the balance in twent3'-four months "; and it was held 
that this was a constituent part of the promise, and could not be regarded as a col- 
lateral and independent contract. For further cases upon this point in the same State, 
see Jones v. Fales, 4 Mass. 245 ; Springfield Bank v. Merrick, 14 id. 322 ; Makepeace 
V. Harvard College, 10 Pick 298; Wheelock );. Freeman, 13 Pick 165. 

(a-) Barnard v. Gushing, 4 Met. 230 ; Shaw v. Methodist Epis. So., 8 Met. 223. 

(y) Sanders v. Bacon, 8 Johns. 485; Tappan v. Ely, 15 Wend. 362; Pool v. 
McCrary, 1 Ga. 319. 

(z) In Davies v. Wilkinson, 10 A. & E. 98, the instrument contained a promise to 
pay to Gharles Davies or order ^695, in four instalments; one of .£200, two of .£ 150 
each, and one of ^ 100 at times specified, and the remaining £95 was to go as a set-off 
against certain matters specified. The court held it not a promissory note. Lord 
Denman, C. J. said : " It is a note, up to a certain point, but it ends, '^95 to go as a 
• set-off for an order of Mr. Keynolds to Mr. Thompson, and the remainder of his debt 
owing from G. Davies to him.' I think that takes from it the character of a promissory 
note, and makes it an agreement." Littledale, J. : " To be a promissory note, the 
writing should be one entire instrument. Here the instrument, as to £ 95, is not a 
promissory note, but an agreement ; therefore the entire instrument is not a promissory 
note." But where a note was in this form, — " I promise to pay, &c. £ 100, as per 
memorandum of agreement," — it was held that the Avords " as per memornndum of 
agreement" did not qualify the promise in the note. Jury v Barker, 1 Ellis. B. & 
E. 459. 



native which the promisee may avail of to his own advantage, we 
should say the paper was no longer negotiable. But if it leaves 
the payment, as to all circumstances of time, amount, and per- 
son, as certain, or at least as obligatory as before, and only pro- 
vides or declares that certain security attaches to the note, or 
that certain rights go with it, or that the amount, when paid, is 
to be appropriated in a certain way, then it leaves the paper still 
negotiable, (a) 

Our notes will show that the cases on this subject are hardly 
reconcilable ; but we think the principle above stated wo\ild 
suffice to determine most of them. Thus, it is not uncommon 
for notes to contain or state the fact, that the promisor appoints 
the payee, or order, or the holder, his attorney, to confess judg- 
ment for him when the note is payable. And we prefer tlie de- 
cisions which consider the note as still negotiable to those which 
regard it as now only a general agreement not transferable by 
indorsement, (i) 

a) Wise v. Charlton, 4 A. & E. 786. The note in this case recited that the maker 
had deposited certain title-deeds with the payee as a collateral security ; and it was 
held that this was no qualification of the absolute character of the note. When a 
railroad company executed a note, with the provision that "this note," up to a time 
six months before the money was payable, mi(.'ht (at the diction of the holder) be sur- 
rendered, and the holder on such surrender should be entitled to receive its amount in 
stock of the company instead of money, it was held that the essential quality, that the 
money must be payable absolutely and unconditionally, was not impaired, and tliat 
the note was still negotiable. Hodges v. Shuler, 2-1 Barb. 68. In Treat v. Cooper, 
22 Maine, 20.3. it was held that the words, " the contents of this note to be appropriated 
to the payment of R. M. N. S.'s mortgage to the payee," were not in restraint of the 
negotiability of the note. And so a note payable to order, and without contingency, 
on a day certain, is not the less negotiable because it purports to be according to the 
condition of a mortgage, the terms of the note and mortgage corresponding. Little- 
field V. Hodge, 6 Mich. .326. Where a negotiable note also states that the maker has 
deposited bonds as collateral security for its payment, and that he agrees, on non-pay- 
ment of the note at maturity, that they may be sold in a manner, and upon a notice 
specified, and he will pay any deficiency necessary to satisfy the note, and the expenses 
of such a sale, the instrument does not thereby lose its negotiable character; for the 
collateral contract relates solely to the money promised to be paid, is in addition to the 
principal contract, and does not modify that part which contains a promise to pay, 
absolutely, to the order of the persons named in it a sum certain, and on the day speci- 
rfed. Arnold v. Rock River Valley Union Railroad Co, 5 Duer, 207. A note, made 
as follows, — " On demand, I promise to i>ay," &c., " and I have lodged with said IL 
the counterpart leases signed by D," &c. ''for ground let by me to them respectively, 
as a collateral security for the said £ .^00. and interest, £ ."iOO," — was held a promis- 
sory note. Fancourt v. Thome, 9 Q. B 312. 

(b) In Osbom v. Hawley, 19 Ohio, 130, it was held that a power of attorney to con 


If, as is J^tiid, the intention of the parties must govern in the 
construction of the note, how can it be inferred from such a pro- 
vision that the note was intended to be not negotiable, if the 
provision itself contained such words as order, liolder, bearer, 
&c., which can have no meaning unless it is negotiable. If they 

fess judgment, attached to the note, and forming a part of the same instrument, does 
not destroy tlie negotiability of the note. The court said that the power does not in 
any way change the legal character of the note, except that it gives a more summary- 
proceeding for its collection. Overton v. Tyler, 3 Penn. State, 346, is a leading case 
against the negotiability of an instrument in the form of a note payable to order or to 
bearer, and having in addition an authority to confess judgment for the amount. The 
instrument upon which this case arose was as follows : "S 1,000. Athens, February 
15, 184.5. For value received, I promise to pay Francis Tyler and Levi Westbrook, or 
bearer, one thousand dollars, with interest, by the first day of June next. And I do 
hereby authorize any attorney of any court of record in Pennsylvania to appear for me 
and confess judgment for the above sum to the holder of this single bill, with costs of 
suit, hereby releasing all errors and waiving stay of execution and the right of inquisi- 
tion on real estate ; also waiving the right of having any of my property appraised 
which may be levied upon, by virtue of any execution issued for the above sum " 
Gibson, C. J. expressed the opinion of the court, that " A negotiable bill or note is a 
courier without luggage. It is requisite that it be framed in the fewest possible words, 
and those importing the most certain and precise contract ; and though this requisite 
be a minor one, it is entitled to weight in determining a question of intention. To be 
within the statute, it must be free from contingencies or conditions that would embar- 
rass it in its course ; for a memorandum to control it, though indorsed on it, would be 
incorporated with it and destroy it. But a memorandum, which is merely directory or 
collateral, will not affect it. The warrant and stipulations incorporated with this note 
evince that the object of the parties was not a general, but a special one. Payment 
was to be made, not as is usual at so many days after date, but at a distant day certain ; 
yet the negotiability of the note, if it had any, as well as its separate existence, was 
instantly liable to be merged in a judgment, and its circulation arrested by the debt 
being attached, as an encumbrance to the maker's land ; and it was actually merged 
when it had nearly three months to run. Now it is hard to conceive how the commer- 
cial properties of a bill or note can be extinguished before it has come to maturity. 
That is not all. A warrant to confess judgment, not being a mercantile instrument, or 
a legitimate part of one, but a thing collateral, would not pass by indorsement or de- 
livery to a subsequent holder; and a curious question would be, whetlier it would sur- 
vive as an accessory separated from its principal, in the hands of the payee, for the 
benefit of his transferee. I am unable to see how it could authorize him to enter up 
judgment, for the use of another, on a note with which he had parted. But it may be 
said that his transfer would be a waiver of the warrant as a security for himself or any 
one else ; and that subsequent holders would take the note without it. The principle 
':s certainly applicable to a memorandum indorsed after signing, or one written on a 
separate paper. But the appearance of paper with such unusual stipulations incor- 
porated with it would be apt to startle commercial men as to their eflfect on the con- 
tract of indorsement, and make them reluctant to touch it. All this shows that these 
parties could not have intended to impress a commercial character on the note, drag- 
ging after it, as it would, a train of special provisions which would materially imnede 
its circulation." 


do not Contain such words, there might be sufficient reason for 
supposing the paper not intended to be negotiable. And it seems 
tbat where a note purports on its face to be negotiable, and the 
payee indorses it in blank, and thus passes it to the holder as a 
negotiable note, lie will be estopped from denying that it is such 
by reason of any collateral agreement connected with it.(c) 

If such agreements are written on the same paper with the 
note, if they are not in the body of the note, it is not material 
where else they are written ; and they are not, strictly speaking, 
a part of the iiote.{d) The law on this subject is as yet a little 
uncertain. It may be said, however, first, that if written subse- 
quently to the note, they are no part of it, and can affect none 
but the parties ; second, that, in the absence of a date or other 
evidence, they will be presumed to be simultaneous with the bill 
or note ; (e) third, that if thus simultaneous with the bill or 
note, they are, as to all parties to whom they thus convey notice, 
obligatory. Still, however, it remains true, that some things, as 
place of payment, <fec., are little more than advisory or permis- 
sive if on the margin or back, and more nearly obligatory if in 
the body of the note. But these clauses have already been con- 

(c) Hodges V. Shuler, 24 Barb 63. 

(d) Where the payee of a note, at the time of taking the note, signed an agreement 
underneath the same " to take the above note " in certain labor, if done within six 
months, there being no evidence that the promisor had ever performed or offered to 
perform the labor, and the six months having expired, it was held that the two instru- 
ments were not to be construed together as parts of the same contract, and that an in- 
dorsee might recover in his own name on the note. Odiome ». Sargent, 6 N. H 401. 

(e) Fletcher ». Blodgett, 16 Vt. 26. 


l50 notes and bills. [ch. vil 




In 1809, the Supreme Court of Massachusetts said, " It has 
long been settled as law in this State, that a negotiable note given 
in consideration of a simple contract debt due is a discharge of 
the simple contract." The reason given was, that, if the original 
creditor or his representative could recover on the original debt, 
the debtor might still be obliged to pay the note to an innocent 
indorsee. (a) At that time (and until 1820) Maine was a part 

(a) Thacher v. Dinsmore, 5 Mass. 299, per Parsons, C. J. The case of Warren, 
Administrator, is referred to, which was decided before the Revolution, by which it was 
determined that " the law will presume a negotiable note is agreed by the parties to be 

payment of a simple contract The reason of the decision was, that the defendant 

might not be held to pay the money twice The case does not. indeed, decide that 

the plaintiff may not encounter the presumption by proving an express agreement that 
the note should be received as collateral security." In Goodenow v. Tyler, 7 Mass. 38. 
(1810,) this is said to have been settled sixty j-ears in Massachusetts. As it is to be 
much regretted that States should differ on so important a point of commercial law, 
(Wriglit V. First Crockery Ware Co., 1 N. H 281, Wheeler v. Sc^hroeder, 4 R. I. 383, 
389,) we think the Massachusetts case deserves some examination. It seems to rest al- 
most entirely on precedent ; for it is noticeable, that the reason given is not that of the 
Chief Justice himself, but is quoted from the early case. It is not clear that it is neces- 
sary to presume that a negotiable promissory note is taken in payment of a simple con- 
tract debt, in order to protect the maker from having to pay tlie debt twice. See Sand- 
ford V. Dillaway, 10 Mass. 52, 2d ed., note by Mr. Rand, the editor. For where such 
transfer of negotiable paper is not regarded as presumptive evidence of payment, the 
debtor is protected by tne credit which the transfer of the bill or note gives him. Okio 
V. Spencer, 2 Whart. 253. See Weakly v. Bell, 9 Watts, 273 ; Hardy i\ Collector-Gen- 
eral, 1 Hawaian, 272; Teaz v. Chrystie, 2 E. D. Smith, 621 ; Bclshaw v. Bush, 11 C. 
B. 191 ; Johnson v. Weed, 9 Johns. 310; Black v. Zacharie, 3 How. 483. It is not 
necessary to plead the taking of a negotiable instrument as payment or satisfaction. 
In defence to an action for the debt, it is sufficient in pleading, that a hill or note paya- 
ble to bearer or order was given for the debt due, which has been or is citstar.ding, o< 


of Massachusetts ; and when it became an independent State, 

in the hands of a third person. Kearslake v. Morgan, 5 T. R. 513 ; Griffiths v. Owen, 
13 M. & W. .58 ; Price v. Price, 16 id. 232. See Mercer v. Cheese, 12 Law J., n. s. 
C. P. 56, 4 Man. & G. 804 ; Crisp v. Griffiths, 2 Cromp. M. & R. 159. And generally. 
in P^ngland as well as most of the United States, the note given must be produced and 
cancelled before a recovery will be allowed upon the original consideration. Cham- 
pion V. Terry, 3 Brod. & B. 295; Davis ». Dodd, 4 Taunt. 602. In Dangertield v. 
Wilby, 4 Esp. 159, Lord Ellenborough held, that under money counts a note given 
must be produced or shown to be lost or destroyed. In Hadwen ». Mendizabel, 10 J. 
B.Moore, 477, a suit was maintained for goods sold without producing the note given 
for the price, it being in the hands of the plaintiff's agent at the time; but it was said 
by Mr. Justice Gaseiee: " The defendant may pay the amount of the verdict into court, 
and move that execution may be stayed until the bills are delivered up ; but it appears 
to me that there is no ground to set aside the verdict of the jury." Though the cred- 
itor may recover when he has indorsed and had to take up the paper again himself, — 
Vice V. Anson, 3 C. & P. 19 ; Burden lu Ilalton, 4 Bing. 454, — it is held almost uni- 
versally that the note given must be cancelled or given up by the holder. Kean v. 
Dufresne. 3 S. & R. 233; Lewis v. Manly, 2 Yeates, 200; Miller v. Lumsden, 16 111. 
161 ; Holmes v D'Camp, 1 Johns. 34; Pintard v. Tackington, 10 id. 104; Steam- 
boat Charlotte ». Lumm, 9 Misso. 63 ; Hughes v. Wheeler, 8 Cowen, 77 ; Schimmel- 
pennich v. Bayard, 1 Pet. 264 ; Rangier ». Morton, 4 Watts, 265. This seems to us 
to afford a perfect protection to the maker. But if tlie note be in the hands of the 
plaintiff at the time of the suit, there is no need to give it up or cancel it ; for the plain- 
tiff could not recover it himself and if it were indorsed after maturity, all equities 
would be open between the maker and such indorsee after maturitv which existed 
between the original parties. The Massachusetts cases decided since Thacher v. Dins- 
more, 5 Mass. 211, are most of them collected wfra. Greenwood v. Curtis, 4 Mass. 
93; Maneely ». M'Gee, 6 id. 143; Goodenow ». Tyler, 7 id. 36; Chapman v. Durant, 
10 id. 47 ; Thurston v. Blanchard, 22 Pick. 18; Whitcomb v. Williams, 4 id. 228; 
Reed v. Upton, 10 id. 522 ; Jones v. Kennedy, 1 1 id. 125 ; Watkins v. Hill, 8 id. 522 ; 
Butts V. Dean, 2 Met. 76 ; Huse v. Alexander, id. 157 ; Ilsley v. Jewett, id. 168 ; Phillips 
V. Blake, 1 xMet. 156 ; Wood v. Bod well, 12 Pick. 268 ; Cornwall v. Gould, 4 id. 444 ; 
Fowler v. Bush, 21 id. 230; French v. Price, 24 id. 13 ; Melledge v. Boston Iron Co., 
5 Cush. 158; Rindge v. Breck, 10 Cush. 43. See Curtis v. Hubbard, 9 Met. 329. In 
both Maine and Massachusetts, the courts show a disposition to make the doctrine of 
payment as limited in its application as possible. In Zerrano v. Wilson, 8 Cush. 424, 
a bill was drawn on the owners by the master of a ship in a foreign port. If not ac- 
cepted and paid and brought into court, it is no bar to the action for supplies against 
the owners. It is held to apjjly only to such paper as is negotiable. Greenwood v. 
Curtis, 4 Mass. 93; Mancely v. M'Gee, 6 id. 143; Trustees, &c. v. Kendrick, 12 
Maine, 381 ; Bartlett v. Mayo, 33 id. 518; Jose v. Baker, 37 id. 465; Edmond v. 
Caldwell, 15 id. 340. The presumption of payment is also limited to cases in which 
the creditor abandons no security which he had before taking the paper. Poinrov v. 
Rice, 16 Pick. 22; Melledge v. Boston Iron Co, 5 Cush. 158; Butts v. Dean, 2 Met. 
76; Fowler u. Ludwig, 34 Maine, 455; Page ». Hubbard, Sprague, 335. It would 
seem also to be limited ro the notes of the party himself See Melledge v. Boston 
Iron Co., 5 Cush. 158, which seems to be followed by the case of Fowler «. Ludwig, 
34 Maine, 455. This seems to be in direct conflict with some late New York cases, 
which hoM that the note of a third party may be payment of a previous dei)t ; and if 
it be net indorsed by the debtor, this i.-, strong evidence of payment. Whitbeck v Van 


the same rule of law continued in force. (6) In all other parts 

Ness, 11 Johns. 409; Breed v. Cook, 15 id. 241 ; St. John v. Purdy, 1 Sandf. 9; 
Noel V. Murray, 1 Duer, 385, 3 Kern 167. But that the debtor's own note cannot 
be payment of a previous debt, even if the parties expressly agree and intend that it 
shall be so. Cole v. Saekett, 1 Hill, 516. ''The promissory note of a debtor, given 
for a precedent simple contract demand, will not operate as payment so as to pre- 
clude the creditor from suing on the original consideration, although given under an 
express agreement that it was to be received in full satisfaction and discharge ; other- 
wise, if it be the note of a third person. In Butts v. Dean, 2 Met. 76, it was held, 
where a note if considered payment would have made void a bond, that it was not 
payment- So in Curtis v. Hubbard, 9 Met. 320, Shaw, C. J- says : " This is a pre- 
sumption of fact which may be rebutted by evidence showing that it was not so in- 
tended ; and the fact that such presumption would deprive the party who takes the 
note of a substantial benefit, has a tendency to show that it was not so intended." 
Coburn v. Kerswell, 35 Maine, 126, holds a statutory lien for personal services waived 
by the receipt of a negotiable instrument. This seems to conflict with the dictum of 
Shaw, C. J., in the Massachusetts case. Elwood v. Deifendorf, 5 Barb. 398. Shaw, 
C. J., in speaking, in Melledge v. Boston Iron Co., 5 Cush. I.tS, of the notes of a third 
party, must refer to a note indorsed, if at all, without recourse by the debtor; for if 
the debtor indorsed the note of a third party, he would be liable, and the creditor would 
have lost no security, since every indorsement is a new promise, and the creditor would 
have in addition to the debtor's liability that of another person. According to this 
dictum it would seem that the creditor is only limited to his better remedy in Massa- 
chusetts, while in other States he has his option. In no jurisdiction would resort 
probably be had to the original consideration, unless it were better than the promis- 
sory note given in exchange for it. It is also held in Massachusetts, that a prom- 
issory note is admissible in evidence to support money counts in a suit against tiie 
maker by the promisee or indorsee, or to support a claim in set-off for money paid. 
State Bank v. Hurd, 12 id. 172 ; Wild v. Fisher, 4 Pick. 421 ; Sargent v. Southgate, 
5 id. 313. In Ramsdell v Soule, 12 Pick. 126, where a new note had been given for 
an old one, and proved worthless on account of usury, it was held that a recovery 
could be had on the original consideration. So Johnson v. Johnson, 1 1 Mass. 359, 
362. In Emerson v. Providence Hat Manuf. Co., 12 Mass. 237, where goods were 
purchased for a company, and a note given by an unauthorized agent, it was held 
that the agent was liable on the note, but that the comijany were still liable on the 
original debt. Slocumh v. Holmes, 1 How. Miss. 139, holds that, where a note is 
given to pay an account, no action will lie on the latter. 

(b) In fact, the earliest case on this subject was decided in Kennebec County, so that 
the Massachusetts doctrine was peculiarly local law in Maine. Thacher v. Dinsmore, 
5 Mass. 299. The later decisions in Maine are to be found in the following reports. 
Varnery. Nobleborough, 2 Greenl. 121 ; VVilkius?;. Heed, 6 id. 220 ; Descadillas v. Har- 
ris, 8 id. 298; Gilmore v. Bussey, 12 Maine, 418; Comstock v. Smith, 23 id. 202; 
Fowler v Ludwig, 34 id. 455 ; Newall i;. Hussey, 18 id. 249 ; Shumway v. Reed, 34 id. 
560 ; Bangor v. Warren, id. 324 ; Gooding v. Morgan, 37 id. 419 ; Cobnrn v. Kerswell, 35 
id. 126. The presumption seems to have been very much weakened in Maine by the later 
decisions. In Varner c. Nobleborough, 2 Greenl. 121, which is the earliest case upon the 
subject, it is said that the acceptance is not an irresistible bar to an action on the original 
contract, for the presumption may be rebutted. In Descadillas v. Harris, 8 Grcenl. 
298, the presumption is founded as in Massachusetts and England, and the rule in 
most States is admitted to be otherwise ; but in Fowler o. Ludwig, 34 Maine, 45.^^. it is 


of this country, except Vermont, (c) and in the courts of England 
and the United States, the rule is otherwise. (c/) 

It is certainly a general I'ule of law, that one simple executory 
contract being substituted for another does not extinguish the 

said : " If tlie paper accepted is not binding upon all parties previously liable, or if tlie 
paper of a tliird person be received not expressly in payment, the presunijjtion n)ay be 
considered as repelled." Page v. Hubbard, 19 Law Reporter, 607, opinion of Spnif/ue, 
J., sitting as referee. There is held to be no difference between bills and notes as to 
their effect in payment. Fowler v. Ludwig, 34 Maine, 455 ; Varner v. Nobieborough, 
2 Greenl. 12 L As to statutory liens, the Act of 1851, ch. 216, provides that " No such 
action or lien shall be defeated by reason of the plaintiff's having liquidated the amount 
due, and received a promissory note therefor, unless it shall have been expressly taken 
in discharge of the amount due, and of said lien." Coburn v. Kerswell, 35 Maine, 126. 

(c) In Curtis v. Ingham, 2 Vt. 287, a note had been given by the debtor and a 
surety. It is not stated in the case, but it is probable, that the note was not negotia- 
ble Hutchins v. Olcutt, 4 Vt. 549 ; Torrey v. Baxter, 13 id. 452. Redjidd, J. said: 
" Where the creditor accepts either the promissory note of his debtor or of a third per- 
son, in settlement of a previously unsettled matter of account or dealing between them, 
this, prima facie, is payment." Follett v. Steele, 16 Vt. 30 ; Farr v. Stevens, 26 Vt. 299 ; 
Dickinson v. King, 28 Vt. 378, per Ishain, J. : " The doctrine is well settled in this 
State, that a promissory note given upon an open account operates as payment of that 
account, and is a bar to an action upon the original indebtedness, provided there is no 
fraud or unfairness in giving the note. The general rule is the same, whether the note 
is that of the debtor or of a third person. The remedy of the party in such case is only 
upon the new security." Collamer v. Langdon, 29 Vt. 32. See Torrey v Baxter, 13 
Vt. 452, which seems a little inconsistent with the previous and subsequent decisions. 
Oilman v. Peck, 11 Vt. 516. In the case of Tracy v. Pearl, 20 Vt. 162, and Heald v. 
Warren, 22 id. 410, it was held that, when an order or draft was drawn on a third 
person by a debtor to pay a given amount to the creditor, that such draft would not 
operate as payment when it was drawn without funds in the hands of the drawee, or if 
it was done as a mere matter of accommodation, such a draft will not merge the origi- 
nal claim, " for the best reason in the world, the parties did not so intend it." The giv- 
ing of such a draft will be treated as a fraud. 

{d) The principal cases on this point are the following. Mooring r. Marine Dock & 
Mut. Ins. Co., 27 Ala. 254; Costar v. Davies, 3 Eng. Ark. 213 ; Brew.ster v. Bours, 8 
Calif. 501 ; Davidson v. Bridgeport, 8 Conn. 472 ; Corbit v. Bank of Smyrna, 2 Har- 
ring. Del. 235; Mims v. McDowell, 4 Ga. 182; Miller u. Lumsden, 16 111. 161 ; Jones 
V. Ransom, 3 Ind. 327 ; Logan v. Attix, 7 Iowa, 77 ; Proctor v. Mather, 3 B. Mon. 
3.53; Walton v. Bemiss, 16 La 140; Berry v. Griffin, 10 Md. 27 ; Jennison v. Parker, 7 
Mich 355; Stam v. Kerr, 31 Missis. 199; Yarnell v. Anderson, 14 Misso. 619; Ward 
V. Howe, 38 N. H. 35 ; Coxe v. Hankinson, Co,xc, 85 ; Vail v. Foster, 4 Comst. 312 ; 
Gordon v. Price, 10 Ired. 385; Merrick ?•. Boury, 4 Ohio State, 60; Mclntyre v. 
Kennedy, 29 Penn State, 448 ; Wheeler r. Schroedcr, 4 R. I. 383 ; Kelsey v. Ros- 
'.Ajrough, 2 Rich. 241 ; Union Bank of Tenn. v. Smi.scr, I Sneed, 501 ; McNeil v. 
McCamley, 6 Texas, 163. In Florida, Minnesota, Wisconsin, and Oregon, we are un- 
able to find that this question has yet been decided. It is to be presumed that those 
States (vill follow the current of the authorities. In Indiana and Iowa the doctrine is 
only implied. The question has been long since considered settled in the courts of the 
United States. Clark c. Yuuiig, I Cranch, 181; Sliccliy it. Mandevillc, 6 id. 253; 


latter. (e) But, nevertheless, a valid bill or note suspends any 
action on the contract in the discharge of which it is given, until 
the note is due ; (/) and if the creditor receive money on the 
instrument, or be guilty of laches, the bill or note (g-) operates 

Peter V. Beverly, 10 Pet. 532 ; Bank of U. S. v. Daniel, 12 id. 32 ; Downey v. Iliek.s, 
U How. 240; Gallagher r. Roberts, 2 Wash. C. C. 191 ; Denniston v. Imhrie, 3 id. 
396 : and in England, Ward v. Evans, 2 Ld. Raym. 928 ; Clark v. Mundal, 1 Salk. 124 ; 
Anonymous, 12 Mod. 408; Anonymous, id. 517 ; Marsh v. Pedder, Holt, N. P. 72 ; 
Puekford v. Ma.\\vell, 6 T. R. 52; Owenson v. Morse, 7 id 64; Barclay r. Gooch, 
2 Esp. 571 ; Mussen v. Price, 4 East, 147 ; Scott v. Surman, Willes, 400; Hickling r. 
Hardey, 7 Taunt. 312 ; Robinson v. Read, 9 B. & C 449 ; Smith v. Wilson, Andr. 
187 ; Bedford v. Deakin, 2 B. & Aid. 210; Champion v. Terry, 3 Brod. & B 295; 
Belsliaw v. Bush, 11 C. B. 191 ; Hadwen v. Mendisabal, 2 C. & P. 20 ; James v. Wil- 
liams, 13 M. & W. 828 ; Griffiths v. Owen, id. 58 ; Maillard v. Duke of Argyle, 6 Man. 
& G. 40. Such also is the French law. No system of law, which is founded upon 
the Roman civil law, considers a bill or note extinguishment of a prior debt, unless 
there be an express agreement to that effect. Wallace c. Agry, 4 Mason, 336, 344; 
Pothier on Ob., p. 3, ch. 2, art. 2; 1 Domat, B. 4, tit. 3, § 1, p. 491. The same rule 
of law seems to be followed in the Sandwich Islands. Hardy r. Collector-General, 1 
Hawaian, 272, which was a case of mandamus against the collector-general of cus- 
toms to show cause why he should not be compelled to grant a passport to the plaintiff. 
The statute provides that no passport shall be granted to any person or persons of 
whose indebtedness notice shall be given to the collector in writing. It was held that 
taking or giving a negotiable promissory note in settlement of an account is not a pay- 
ment or extinguishment of the debt, but merely changes its form, and postpones the 
time of payment. The mandamus was refused. 

(e) Roades *. Barnes, 1 Burr. 9; Cumber v. Wane, 1 Stra. 426. "One simple con- 
tract does not merge or extinguish another." Bill v. Porter, 9 Conn. 23. " It is clear 
that a subsisting simple contract is not discharged or extinguished by the acceptance 
ofanotlier simple contract for the same consideration by the same party. Johnsons. 
Johnson, 11 Mass. 359." See Manhood v. Crick, Cro. Eliz. 716; Higgens's Case, 6 
R. 45; Gregory v. Thomas, 20 Wend 17; Phelps v. Johnson, 8 Johns. 54 ; Preston 
V. Perton, Cro. Eliz. 817. See also cases under note d. 

(f) Putnam v. Lewis, 8 Johns. 389 ; Kearslake v. Morgan, 5 T. R. 513 ; Stcdman v. 
Gooch, 1 Esp. 3 ; Hardy v. Collector-General. 1 Hawaian, 272 ; Teaz v. Chrystie, 2 E. 
D. Smith, 621 ; Belshaw v. Bush, 11 C. B. 191 ; Black v. Zacharie, 3 How. 483 ; Grif- 
fiths V. Owen, 13 M. & W. 58 ; Price v. Price, 16 id. 232 ; Mercer v. Cheese, 12 Law 
J., N. s., C. P. 56, 4 Man. & G 804; Crisp W.Griffiths, 2 Cromp. M. & R. 159; 
M'Dowall v. Boyd, 17 Law J., Q. B. 295 ; James v. Williams, 13 M. &, W. 828 ; Van 
Eps V. Dillaye, 6 Barb. 244. 

(9) Hoar V. Clute, 15 Johns. 224 ; Gordon v. Price, 10 Ired. 385 ; Denniston r. Im- 
hrie, 3 Wash. C. C. 396 , Dougal v. Cowles, 5 Day, 511 ; Smith v. Smith, 7 Foster, 
244 ; Elwood v. Deifendorf, 5 Barb. 398 ; Thompson v. Briggs, 8 Foster, 40 ; Hart v. 
Boiler, 15 S. & R. 162; M'Ginn v. Holmes, 2 Watts, 121 ; Woodcock v. Bennet, 1 
Cowen, 711; Chastain v. Johnson, 2 Bailey, 574 ; Morgan v. Bitzenberger, 3 Gill, 3.50 ; 
Bill V. Porter, 9 Conn. 23 ; Weed v. Snow, 3 McLean, 265 ; Hays v. Stone, 7 Hill, 128; 
Gardner v. Gorham, 1 Doug. Mich. 507 ; Kelsey v. Rosborough, 2 Rich. 241 ; McConncll 
V. Stettii.ius, 2 Oilman, 707 ; Steamboat Charlotte v. Hammond, 9 Misso. 58 ; Cav, u. 
Hall, 5 id. 59 ; Watson v. Owens, 1 Rich. Ill ; Chamberlyn v. Delarive, 2 Wils. a5*? ; 

CH. vil] payment by bill or note. 15^ 

as a complete satisfaction. (/t) Wlieii in payment of a debt the 
creditor is content to take a bill or note, payable at a future 
day, this is, at the least, an agreement for delay ; and he cannot 
legally commence an action on the original debt until that delay 
terminates ; or until the bill or note becomes payable and de- 
fault is made in the payment. But the bill or note received 
must have some value, or there is no consideration for the 
promise of delay. If, for example, it be drawn upon a person 
who has no effects of the drawer's in his hands, and who there- 
fore refuses to accept it, the creditor may consider it as so 
much waste paper, and resort at once to his action on the 
original demand. (i) 

By this rule, taking a note or bill of exchange only gives the 
debtor credit till the paper falls due. (7) And even an unsatis- 
fied judgment on the bill or note will not destroy tlie original 
debt ; (k) nor will a note be payment or a discharge of the origi- 

Smith V. Wilson, Andr. 187, id. 228 ; Tobey v. Barber, 5 Johns. 68 ; Dayton v. Trull, 
23 Wend. 345 ; Clark v. Young, 1 Cranch, 181 ; Livingston v. Radcliff, 6 Barb. 201 ; 
Snyder v. Findley, Coxe, 248. 

(h) Stat.3&4 Anne, ch. 9, §7. Sibree !>. Tripp, 15 Law J., Exch.318, 15 M. & W. 23 ; 
Gray v. Fowler, 1 H Bl. 463 ; Robinson r. Bland, 2 Burr. 1077. See also cases in the 
previous note. The statute quoted ,<;((;;/a declares that, " If any person doth accept any 
such bill of exchange for, and in satisfaction of, any former debt or sum of money for- 
merly due unto him, the same shall be accounted and esteemed a full and complete pay- 
ment of such debt, if such person accepting of such bill for his debt doth not take 
his due course to obtain payment thereof, by endeavoring to get the same accepted 
and paid, and make his protest as aforesaid, either for non-acceptance or non-pay- 

(i) Stedman v. Gooch, 1 Esp. 3 ; Kearslake v. Morgan, 5 T. R. 513 ; Popley v. 
Ashly, 6 Mod. 147. In Tarleton v. AUhusen, 2 A. & E. 32, it was held that, if a judg- 
ment on the bill were unsatisfied, the debt would still remain. Popley v. Ashly, 
6 Mod. 147; Ward v. Evans, 2 Ld. Raym. 928; Hickling v. Hardey, 7 Taunt. 312; 
Bishop V. Howe, 3 Maule & S. 362 ; Buckler v. Moor, 1 Mod. 89. It was held that, if 
the bill given for goods supplied was worthless, by reason of there being no effects 
in the hands of the drawee, the creditor could resort to the original consideration. 
Puckford V. Ma.xwell, 6 T. R. 52 ; Bolton v. Richard, id. 139 ; Ex parte Blackburnc, 
10 Ves. 204 ; Brown v. Kcwley, 2 B. & P. 518 ; Ex parte Dickson, cited 6 T. R. 142; 
Harley v. Greenwood, 5 B. & Aid. 95 ; Tapley v. Martens, 8 T. R. 451 ; Strong v. 
Hart, 2 Car. & P. 55, 6 B. & C. 160, 9 D. & R. 189 ; Wyatt v. Hertford, 3 East, 147 ; 
Marsh v. Redder, 4 Camp. 257, Holt. N. P. 72 ; Taylor v. Briggs, Moody & M. 28; 
Shepard v. De Bernales, 13 East, 565; Bolton v. Reichard, 1 Esp. 106; Robinson v. 
Read, 9 B. & C. 449, 4 Man. & R. 349; Reed v. White, 5 Esp. 122; llslcy v. Jcw- 
eit, 2 Met. 168. 

( ;■) (*kie V. Sre""er, 2 Whart. 253, and cases under note a, p. 150, and passim, supra. 

(^■/ Tarleton v. AUhusen, 2 A. & E 32, supra. 


nal debt, :f the holder discount it, provided he afterwards has to 
pay it,(/) 

The presumption of payment by bill or note may be consid 
ered in two ways : first, as to contemporaneous debts ; second, as 
to prior or precedent debts. When, at the time of sale or of the 
contracting of a debt, a note or bill is given in payment thereof, 
it may be that of a third person, or of the debtor himself. If the 
note of a third person be given,. the presumption would seem to 
be that it was intended as payment absolutely, by the under- 
standing of the parties, unless evidence can be introduced to 
show that it is merely conditional payment, or a collateral secu- 
rity for the debt. 

If the party's own note be given at the time of the sale or 
contract, there is much more doubt, (wi) It seems to be substan- 

(l) Kuan V. Dufresne, 3 S. & R. 233. See also supra, p. 1.50, note a, and cases cited. 

(m) In Clerk v. Mundall, 12 Mod. 203, 1 Sulk. 124, Lord Holt held, that if "A 
Bells B (,^oods, and B gives a bill in satisfaction thereof, then, though this bill be not 
paid, B is discharged, for it is a part of the original contract that B should take the 
bill." So if a party discounts notes with a banker, and others are taken without in- 
dorsement, the banker is not liable if they turn out bad Fydell v. Clark, 1 Esp. 
447. Again, Lord Halt said, in Ward v. Evans, 2 Ld. Raym. 928 : " I agree the 
difference taken by my brother Darnall, that taking a note for goods sold is a payment 
because it was part of the original contract, but paper is no payment where there is a 
precedent debt." The distinction between prior and contemporaneous debts is some- 
times very tine in the English decisions. In Camidge ». AUenby, 6 B. & C. 373, com 
was sold the defendant on the morning of Saturday. On the same day, at three o'clock 
in the afternoon, the defendant delivered bills to the plaintiff, payable by certain bank- 
ers who had failed that morning at eleven o'clock. Buyley, J. said : " If the notes had 
been given to the plaintiff at the time when the corn was sold, he could have had no 
remedy upon them against the defendant. The plaintiff" might have insisted upon pay- 
ment in money. But if he consented to receive the notes as money, they would have 
been taken by him at his peril." But this doctrine does not seem to have been 
always followed. In Porter v. Talcott, 1 Cowen, 359, decided in 1823, which is quite 
a leading case, it was said that there was no difference as to preceding and contempo- 
raneous debts (to the same effect is the dictum of Whittlesey, J., in Monroe v. Hott", 
5 Denio, 362) ; and that the note of the debtor and of a third party stood on precisely 
the same ground, and that there must be an express agreement shown in the case of 
the contemporaneous debt as well as in that of the prior one. But in Rew v. Barber. 
3 Cowen, 272, a little later, it was held that the note of a third person, given at the 
time of the sale of a chattel, was payment and satisfaction. See also Whitbeck v. 
Van Ness, 11 Johns. 409 ; Breed r. Cook, 15 id. 241. But again in Corlies v. Gum- 
ming, 6 Cowen, 181 : " It is well settled that giving a promissory note for goods sold i? 
not a payment or extinguishment of the demand, unless such was the agreement of the 
parties." A late case, Noel v. Murray, 1 Ducr, 385, 3 Kern 167, holds that civing a 
note of a third party, at the time of the sale and delivery of the goods, raises a pre- 
sumption that it is taken in payment, and this may be considered the law of New 


tially selling a note by barter, or exchanging it for goods. And 
we can hardly conceive of a bill being taken at the time of the 
sale, unless it be the understanding of the parties to regard it as 
payment. The remedy on the note or bill, which is more con- 
venient to the creditor, is all that should be allowed him ; for 
there is no sufficient reason for allowing resort to be had to the 
original consideration. 

If, however, cash were agreed upon at the time of the sale, 
and in its stead a check or bill is given, it is then only taken for 
the convenience of the debtor, and if it be not productive, there 
is no payment of the debt.(w) On this principle the peculiar law 
of checks and drafts, which has been fully considered, will be 
found to depend. 

When a note or bill is given for a prior debt, there are several 
cases, presenting slight differences. The debtor may give his 
bill on a third party, and it may or may not be accepted by the 

York at the present time. St. John v. Purdy, 1 Sandf. 9. In Wright v. First Crock 
ery Ware Co., 1 N. H. 281, it was held, " if a creditor receives the note or bill of iiis 
debtor, or of a third person indorsed by the debtor, either for a precedent debt or a 
debt arising at the time, it is not presumed it has been received in satisfaction." 
Mooring v. Marine Dock, &c. Co., 27 Ala. 2.54. The negotiable note of the debtor is 
not payment when taken either at or after the time of contracting the debt. Glbgon, 
C. .J., in Bayard v. Shunk, 1 Watts & S. 92, says : " Where the parties to such a 
transaction are silent in respect to the terms of it, the rules of interpretation are few 
and simple. If the securities are transferred for a debt contracted at the time, the 
presumption is that they are received in satisfaction of it ; but if for a precedent debt, 
it is that they are received as collateral sccmity for it; and in either it may be 
rebutted by direct or circumstantial evidence." With regard to the notes of third 
persons passed at the time of a sale, it seems from the cases in this note that there is 
no warranty, if the notes are not indorsed, of the past or future solvency of the parties 
to the note. Bicknall v. Waterman, 5 R. I. 4.3 ; Burgess v. Cliapin, id. 22.5 ; Beck- 
with V. Farnum, id. 2.30. In Gardner v. Gorham, 1 Doug. Mich. 507, it was held, 
that giving a promissory note or other security for goods sold is no payment, unless it 
is specially agreed to be so taken. But in tliis case, of which we have quoted the sub- 
stance of the head-note, tliere was some evidence offered to show that the plainiift' took 
the notes, relying upon the representations of the defendant. So in Bill ;; Porter, 9 
Conn. 29. Giving and receiving a promissory negotial)le note for goods sold, in the 
absence of any agreement to accept it as payment, is not an e.xtinguislinient of the 
original cause of action. See Dougal v. Cowles, 5 Day, .511 ; Johnson v. Weed, 9 
Johns. 310, per Kmt, C. J. In Gordon t. Price, 10 Ired. 385, a note of a third person 
is said to be payment, if so intended, "as, for exami)le, if passed when a purchase is 
made." But in New York, in 18.54, in Soffe v. GaUagher, 3 E. D. Smith, 507, it is 
said, by Wimdniff, J. : "I understand the rule to be well settled, that taking the note 
of a Dunhaser of goods sold, or the note of a debtor for a pre-existing del)t, is ncvor 
deemed payment." 

(h) (nvenson -. Morse, 7 T. R. 64. 

V(»L. II. 14 


(Ir.'i^ree. He may give the note of a third person, and this may 
or may not be indorsed by the debtor himself. He may give the 
bill of a third party, indorsed or unindorsed by the debtor, and 
this "may or may not have been accepted. There seems to be no 
settled distinction taken by most of tlie cases on this subject with 
regard to the strength of the presumption in the cases supposed. 

In those States where the common-law rule obtains, we should 
think that payment by bill or note, as an absolute satisfaction, 
should be more readily established in the case where the paper 
of a third person is given, than where it is the party's own 
note.(o) For where the note or bill of a third person is given J 
there seems to have passed to the creditor a new security, and a 
new liability is pledged, and the debtor has parted with that 
which may be supposed to have cost him money or value. 

Taking new notes seems to resemble novation in the civil law. 

In the case where a debtor's bill on a third party is not ac- 
cepted, there should be very strong evidence, and stronger than 
in any other case, that the bill was received in payment, and 
taken at the risk of the creditor. If acceptance be refused by 
the drawee, especially if he had no funds in his hands, we doubt 
if the bill, though taken in absolute payment, would not become, 
as already intimated, like waste paper, and leave the creditor to 
his original contract. 

This question comes more properly under Checks and Drafts, 
where we have considered it. 

The bill or note of a third party, unindorsed by the debtor, 
seems to work a novation ; [p) but if it be indorsed, the creditor 

(o) See contra, dictum of Shaw, C. J. in Melledge v. Boston Iron Co., 5 Ciish. 158, 
supra, note a. p. 152 ; but in confirmation, the late New York cases, quoted infra, p. 
159, note t ; Boyd v. Hitchcock, 20 Johns. 76. 

{p) In Bank of England v. Newman, Bull., N P. 277, 1 Ld. Rayra. 442, 12 Mod. 
241, Lord f/olt laid down this rule: "If a man give such a bill for money not due 
before, wil/wut indorsement, it is a sale of the bill." This bill was drawn by Bellamy, 
payable to Newman or bearer. Bellamy did not pay, and assumpsit was brought 
against Newman, who had not indorsed. The case implies that the practice may 
have been different among bankers. Hartop v. lloare, .3 Atk. 51 ; Fydell v. Clark, 
1 Esp. 447. Where, in the discount of notes, other bills and notes were taken without 
indorsement, it was held that the transferee took the latter at his own risk. So if a 
bill or note is delivered without indorsement at the time of a sale, but not in pay- 
ment of a pre-existing debt, such exchange of a note for goods or money amounts 
to a sale or barter of the note, and the rule of caveat et>i/>lor applies. The trans- 
feree takes at his owr risk. Camidge v. Allenby, 6 B. & C 373, 9 D. & R, 39? . 


is certainly no worse off for having the security remaining of the 
debtor himself, besides the new paper ; for it is clear that, if a 
debtor give additional security, it may operate as an accord and 
satisfaction. But some late cases in New York take the ground 
that there is not a novation when the note is indorsed, for the 
reason that the indorsement by the debtor goes far to show that 
the original liability is retained. (^) 

By recent decisions in Massachusetts and Maine, it would 
seem that the rule of those States was only that negotiable paper 
should be deemed payment unless a contrary intention could be 
shown. (r) On the other hand, in New York and the other 
States, it is only held that negotiable paper shall not be deemed 
payment without sufficient evidence that it was so intended or 
so agreed by the parties, or unless the laches of the creditor has 
proved an injury to the debtor. (s) And recently the courts of 
New York seem disposed to deny that the debtor's own prom- 
issory note shall be held to pay or extinguish the debt, even 
where that was intended and agreed upon by the parties, on tlie 
ground of the want of consideration. (^) If we may exclude the 

Ward V. Evans, 2 Ld. Raym. 928 ; Brown v. Kewley, 2 B. & P. 518 ; Patton v. Ash, 
7 S. & R 116; People v. Howell, 4 Johns. 296 ; Dennie v. Hart, 2 Pick. 204 ; Bayard 
i". Shunk, 1 Watts & S. 92. The rule of course is different, where the transferee is 
induced hy the fraudulent representations of the transferrer. Such negotiable paper 
is no payment or satisfiiction. Pierce v. Drake, I.t Johns. 475 ; Martin v. Pennock, 2 
Barr. 376 ; Snyder v. Findley, Coxe, 48. 

(q) See also Soffe v. Gallagher, 3 E. D. Smith, 507, 513; Boyd v Hitchcock, 20 
Johns. 76 ; Shriner y. Keller, 25 Penn. State, 61. 

(r) See supra, notes a and 6. 

(s) See sii/n-a, note g. 

(t) Cole V. Sackett, I Hill, 516 ; Waydell v. Lucr, 5 id. 448 ; Elwood v. Deifendorf, 
5 Barb. 398. A strong opinion is given by Cowen. J., in Cole v. Sackett. Frisbie v. 
Larned, 21 Wend. 450, is a case a little earlier, having been decided in 1839 ; and in 
this tlie same doctrine is laid down by the same judge. In Elwood v. Deifendorf, 5 
Barb. 398, the doctrine of Cole v. Sackett is mentioned ; and in Waydell v Luer, 5 Hill, 
448, it was fully reconsidered and approved, the same judge again delivering the decis- 
ion of the Supreme Court. The case of Waydell v. Luer was carried to the Court of 
Errors, 3 Denio, 410, in 1846, and the decision reversed, but on grounds overruling 
the principle laid down by Judge Cowen, as to the party's own note in j)ayrnent of a 
precedent debt. The same view seems to be taken, in the Court of Appeals, in the case 
of Hill V. Beebe, 3 Kern. 556. The opinion was delivered by Comstork, J., and the 
cases of Cole v. Sackett and Waydell v. Luer were commented on and af»proved, and 
Hawley v. Foote, 19 Wend 516, and Frisbie v. Larned, .s((/»yj, referred to; in which 
case a plea, that an order drawn by the defendant on a third person was accepted, by 
agreement, in full satisfaction, was on demurrer adjudged by lironsnn, J. biid in sub- 
stance. See also Soffe o. Gallagher, 3 E. D. Smith. 507, which is a very strong case, and 


late Xew York cases, the question seems to be reduced to one 
of the burden of proof. And there is no valid objection, as wo, 
think, to the principle which gives to tliis transfer of negotiable 
paper the eiFect which the parties intended ; and the authorities 

Booth V. Smith, 3 Wend. 66 ; Hughes v. Wheeler, 8 Cowen, 77 ; Burdick v. Green, 15 
Johns. 247 ; Conkling'r. King, 10 Barb. 372 ; James v. Hackley, 16 Johns. 273 ; Galou- 
peau V. Ketchum, 3 E. D. Smith, 17.5 ; Vail v. Foster, 4 Comst. 312. The law on this 
point seems to be fully settled in New York ; but, although they hold that a promise 
to receive a promise in satisfaction is a nudum pactum, and that the debtor's own prom- 
issory note cannot be payment, even by express agreement, yet, in the case of Myers ly. 
Welles, .5 Hill, 463, it was decided that receiving the principal debtor's own promissory 
note, negotiable and payable at a future time, was such a giving of time upon the de- 
mand as discharged the surety. Cowen, J., who had delivered the opinion in Waydell 
V. Luer, on page 448 of the same volume, agrees to this. The law, however, is per- 
fectly well established, that the acceptance by a creditor of the note of a third person 
in full satisfaction of an existing debt is an extinguishment of the original indebted- 
ness, though the note so taken be for a less sum than the whole debt. Conkling v. 
King, 6 Seld. 440. It would seem to follow, that these advantages constitute a legal 
consideration ; and if sufficient to sustain an agreement to give time, why are they not 
considerations for any other lawful agreement ? for the existence of a consideration is 
quite sufficient for the court ; of its adequateness the parties are to judge for them- 
selves. In the other States of the Union, though the validity of an agreement to make 
the note of a debtor a bar to any action on the original consideration, it seems gener- 
ally to have been taken for granted. No marked distinction seems to have been made 
between the note of the debtor for the preceding debt, a note in substitution or renewal 
of a former one, or a note of a third person. In all cases the intention of the parties 
seems to control. Bank of the Commonwealth v. Letcher, 3 J J. Marsh. 19.5 ; Letcher 
r. Bank of the Commonwealth, 1 Dana, 82. In some of the New York cases, it is held 
chat a promissory note is " prima facie, sub modo, payment," which may be rebutted by 
producing the note at the trial, to be cancelled. Pintard v. Tackington, 10 Johns. 104 ; 
Waydell v. Luer, 3 Denio, 410. The New York cases are admitted by their courts to be 
irreconcilable with those of England, per Duer, J., Francia ». Del Banco, 2 Doer, 133. 
In almost all the States except New York, we suppose the note or bill of the debtor, or 
of a third party, may be payment by implied as well as express agreement ; for there 
is no reason why the parties should not indicate their intentions by actions as well aa 
words. Where an implied agreement may be shown that the bill or note was taken in 
payment, all the facts are to be considered by the jury. Fulford v. Johnson, 15 Ala. 
38.5 : Hart v. Boiler, 15 S. & R. 162 ; Merrick v. Boury, 4 Ohio State, 60 ; Steamboat 
Charlotte v. Hammond, 9 Misso. 58 ; Bullen v. McGillicuddy, 2 Dana, 90 ; Trotter v. 
Crockett, 2 Port. Ala 401,411 ; Mason v. Wickershani, 4 W. & S. 100. See also cases 
cited infra. In the following cases it has been held that the agreement may be express 
or implied. Fulford v. Johnson, 15 Ala. 384 ; Cocke v. Chaney, 14 id. 65 ; Sanders v. 
Branch Bank, 13 id. 353 ; Slocomb v. Lurty, 1 Hempst. C C. 431 ; Stone ». Chamberlin, 
2U Ga 259 ; Chambers v. McDowell, 4 id 1 85 ; Miller v. Lumsden, 16 III. 161 ; Bnllen 
f. .McGillicuddy, 2 Dana, 90 ; Berry v. Griffin, 10 Md. 27 ; Crawford v. Berry, 6 Gill 
& J. 63, 71 ; Yates v. Donaldson, 5 Md. 389 ; Slocumb v. Holmes, 1 How. Miss. 139 : 
Johnson v. Cleaves, 15 N. H. 332 ; Coxe v. Hankinson, Coxe, 85 ; Gordon r. Price, 
10 Ired. 385 ; Merrick v. Boury. 4 Ohio State, 60; Hart i'. Boiler, 15 S. & R. 162 
Walton i\ Bemiss, 16 La. 140. la the followine: cases it has been held that the agree- 


seem to be coming together in support of this view. There must 
always, or nearly always, be some evidence of this intent in the 
circumstances of the case, or in the conduct of the parties. But 
where there is no evidence outside the paper itself, we cannot 

ment must be express. Brewster v. Bours, 8 Calif. 501 ; Dougal v. Cowles, 5 Day, 
511 ; Girdner v. Gorham, 1 Doug. Mich. 507 ; Jaffrey v. Cornish, 10 N. H. 505 ; Conk 
ling V. King, 10 Barb. 372 ; Van Eps i-. Dillaye, 6 id. 244 ; Artcher v. Zeh, 5 Hill, 
200 ; Hays v. Stone, 7 id. 128 ; Muldon v. Whillock, I Cowen, 290 ; Barelli v. Brown, 

1 McCord, 449 ; Glenn v. Smith, 2 Gill & J. 493. In some cases it is held the agree- 
ment must be " special V Downey v. Hicks, 14 How. 240, 249 ; Chastain v. Johnson, 2 
Bailey, 574 ; Kelsey v. Rosborough, 2 Rich. 241. We state that an express or implied 
agreement between the parties would be sufficient in most df the States to make a note 
or bill payment of a prior debt. Those decisions which hold that the agreement must 
be express will frequently be found to be qualified in later determinations of the same 
courts, and it will be observed that citations from the courts of some States will be 
found in the list of cases requiring an express agreement, and of those also which 
hold that the agreement may be implied as well. Moreover, the cases which determine 
that the agreement must be express go further than their facts justify, and the question 
might, we think, be presented to any court in the United States, except those of New 
York, whether a negotiable instrument may not be payment by the agreement of the 
parties, implied from their acts in the premises. In determining whether or not there was 
an agreement, express or implied, to accept a negotiable promissory note in payment, 
receipts are almost always considered by the counsel and the court. The general 
rule of law, that a receipt may be contradicted, varied, or explained by oral testimony, 
is allowed to obtain to its fullest extent. In some cases, where the receipt given for a 
note expresses that it is " payment in full," " as money," &c., it has been allowed of 
itself to be presumptive evidence of an agreement. See Maine, Massachusetts, and 
Vermont cases, in previous notes. Hutchiiis v. Olcutt, 4 Vt. 549. Where a receipt 
expresses " to be in full when paid," it is clear that the note is not intended as payment 
of the debt, but only a conditional satisfaction. Proctor v. Mather, 3 B. Mon. 353 ; 
Sutton V. The Albatross, 2 Wallace, Jr. 327; Chapman v. Steinmeiz, 1 Dallas, 261 ; 
Smith V. Rogers, 17 Johns. 452 ; Howard r. Thomas, 3 La. 109 ; Goodrich v. Barney. 

2 Vt. 422. So in Thompson v. Briggs, 8 Foster, 40, a receipt of the account of a 
creditor, thus, " Rec'd note of" (the surviving partners), — will not give it the effect of 
a payment. Such receipts are also allowed to have some weight ; but in the case of re- 
ceipts which indicate satisftxction and discharge, the court seem to refuse them even the 
weight to which they are entitled as evidences of the party's interest. In Putnam ;•. 
Lewis, 8 Johns. 389, the plaintiff, having a claim against the estate of the defendants, 
intestate, received the defendant's note for the amount, and gave him the following re- 
ceipt: "Received of Geo. R.Lewis S 53.96, it being in full of all demands which I 
have against the estate of Eber Lewis, deceased." The note was not mentioned in 
the receipt, and therefore might seem to be treated as money, but was held not 
to extinguish the debt. In Glenn v. Smith, 2 G. & J. 493, the following receipt 
was given : " Received of Mrs. Ann Haslett, &c., two promissory notes, &c., in pay- 
ment of the above account." Burhdimn, C J. says : " To give to the acceptance 
of a note the effect of absolute jiayment or extinguishment of a debt, a contract 
that it should be so must be shown ; an express agreement to receive it as (lavment, 
and to run the risk of its being paid, — which is not sufficiently done by the receipt 
In this case to justify us in saying that the claim of John llcslip against the estate 

Vol. II. — L 14 * 


but think that the nature and purposes of negotiable paper would 
lead to the conclusion that it was used as a substitute for money, or 
rather as money, and that payment by such paper should be equiv- 
alent to payment by money. This is not the prevailing view. Re- 
cent cases show a general tendency to the rule, that it is not pay- 
ment unless circumstances show the intention of the parties that it 
should be so regarded, in which case it would be held as payment. (^<) 
Where such transfer is not payment, we have seen that the 
debtor is protected by the credit which the transfer of a bill or 
note payable at a future day gives him. Without putting in the 
plea of payment or satisfaction in answer to an action on a debt 

of William Haslett was extinguished hv his acceptance of Ann Haslett's notes." In 
Berry v. Griffin, 10 Mil. 27, it is said: "If any legal principle can be well settled by 
repeated uniform decisions, the cases which have been referred to must be sufficient to 
show that where an account is due, and the creditor receives from his debtor a promis- 
sory note ' in payment of the account,' giving a receipt in those terms, the pote is not 
a satisfaction or extinguishment of the original claim, unless there l)e evidence in ad- 
dition to the receipt, for the purpose of proving an agreement that the creditor was to 
receive the note as payment, and to run the risk of being paid." So in Muldon v. 
Whitlock, 1 Coweu, 290, Sutherland, J. said : " Nor does the taking a note and giving 
a receipt for so nmch cash in full of the original debt amount to evidence of such ex- 
press agreement to take the note in payment." In Steamboat Charlotte v. Hammond, 
9 Misso. .58, a receipt in full was held not to be decisive. "It might still have been 
understood, consistently with the words of it, that the note was received in full under 
the usual condition of its being a good note"; "and besides," adds the judge, "re- 
ceipts have always been held open to explanation by parol evidence." See .lohnson v. 
Weed, 9 Johns. 310; Tobey v. Barber, 5 id. 68, to the same effect; also Frisbie v. 
Larned, 21 Wend. 450; N. Y. State Bank v. Fletcher, 5 id. 85; Booth v. Smith, 3 id, 
66. In Noel v. Murray, 1 Uuer, 385, it was held that, where the note of a third person 
had been taken as payment at the time of a sale, the legal inference was, that it was in 
final payment, and a receipt in full may be contradicted, if at all, only by showing an 
express agreement to take it only as collateral security. In Dogan v. Ashbey, 1 Rich. 
36, it seems that a receipt was allowed its full weight as evidence, so long as it was 
not contradicted. The law in Louisiana differs from that of the other States with 
regaril to the force of receipts ; for although, as in the other States, the creditors 
receiving other notes in renewal of those due — Hobson v. Davidson, 8 Mart. La. 431, — 
or a bill of exchange for a precedent debt, — Turner v. Hickey, 15 Mart. La. 256, Cox 
V. Baldwin, 1 La. 401, — or for money upon open account or any other contract, — Glas- 
gow V. Stevenson, 18 Mart. La. 568, — does not operate a novation. Yet where the 
creditor '■^receives in payment of his debt'''' either the note of his debtor or that of a 
third person, it is a novation of the debt, which is thereby extinguished, with all its 
accessory rights and privileges; and the remedy of the creditor will be confined to a 
personal action ag^unst the parties to the note or draft. Barron v. How, 14 Mart. La. 
144; Abat v. Nolt^, 18 Mart. La. 636; Hunt v. Boyd, 2 La. 109; Walton v. Bemiss, 
16 id. 140; Cammack v. Griffin, 2 La. Ann. 175; Lee v. Sewall, id. 940; White v. 
McDowell, 4 id. 543. In Ocean Tow Boat Co. v. Ship Ophelia, 11 La. Ann. 28, the 
plaintiffs were directed to apply to the agents of the defendants for payment. The 
agents gave plaintiffs a check, for which it appears a receipt in full was given. The 
check was di>hon()red. Held, defendants were not discharged, checks standing on a 
peculiar ground in this respect, and being held not like notes or bills of a third 

{tt) Palmer r. Elliott, 1 Clifford, 68; Winsted Bank v. Webb, 39 N. Y. 325; Roberts 
V. Fisher, 53 Barb. 69; Gibson v. Toby, 53 Barb. 191 ; Smith v. .Miller. 6 Kob. 413; 
Woodville v. Heed, 26 Md. 179; Myatts v. Bell, 41 Alab. 222; Hardin v. Brainier, 25 
Iowa, 364; McLaren v. Hall, 26 Iowa, 297; Appleton v. Parker, 15 Gray, 173. 


for which a note has been given, it is only necessary to allege 
that such negotiable paper was given for the debt due, and igf 
still running, or is in the hands of a third party. (^/) 

If the note be paid before or at maturity, this would be an 
answer to the action. If not presented at maturity, and nego- 
tiated afterwards^ and then recovery should be had on tlie origi- 
nal debt, these circumstances would open the equities between 
the original debtor and creditor, and the indorsee after maturity 
must stand in the place of the latter, who clearly could not re- 
cover on the note after he had recovered on the original debt. 

Tlie usage and law of Massachusetts, as stated by the supreme 
court, rests upon the hardship of double payment ; and this does 
not seem to be a sufficient foundation. A distinction is also 
made between giving a note in payment of a contemporaneous 
or concurrent debt, — when goods, for example, are delivered at 
the same time a note is given, and a note or bill given for an 
antecedent debt. We have intimated tliat the former is presumed 
to be payment, and it is not supposed that any other contract is 
contemplated by the parties. In the latter case, the paper is only 
payment when honored. A very general statement may be made 
on the authority of the cases already cited, to the effect that 
the note of a third person, given for a debt contracted at the 
time, with no evidence of intent, is presumed to be satisfac- 
tion, (y) When given for a precedent debt, it is presumed to be 
collateral security, except in Massachusetts, Maine, and Ver- 
mont, where the presumption is that it is a satisfaction and 
settlement of the outstanding account. It must, however, be 
remembered that these presumptions may be met by other pre- 
sumptions, or by evidence of intent or contract, and so rebutted. ' 

When a party is bound by a contract under seal, and a note 
or bill is taken by the creditor, the remedy on the specialty is 
not suspended unless the bill be paid ; nor would such a bill 
be an extinguishment, although judgment had been obtained 
upon it.(i/;) 

So a note taken for arrears of rent would not prevent the 

(«) See note a, supra, p. 150. 

(p) Bayard v. Shunk, 1 Watts & S. 92; Butts r. Dean, 2 Met. 76; Maynard i'. 
Johnson, 4 Ala. 116 ; Noel v. Murray, .3 Kern. 167 ; Willson v. Force, 6 Johns. 110; 
Snyder v. J^indlcy, Coxe, 48 ; Bicknall v. Waterman, 5 R. I. 43 ; Burj^ess v. Chapin, 
id. 22.5 ; Bcfkwitli v. Farnum, id. 2.30. 

(w) Drake v Mitchell, 3 East, 251 ; Curtis v. Rush, 2 Ves. So B. 416. 


landlord's distraining. (a;) So in the payment of dishonored bills, 
if notes or other bills are given which are not paid at maturity, 
the liability on the dishonored bill revives. (?/) And it revives on 
the old bill also, if the new bill, though paid at maturity, be not 
large enough to cover the principal and interest of the dishon- 
ored bill.(2r) 

Where the inference that a note or bill received is taken as 
payment rests upon evidence, it would seem from some cases 
that this evidence must be very strong, because it receives no 
help from presumption. Thus, in a case where the cashier of 
a bank, on a note which fell due, accepted a new note, and a 
check of a third person which was dishonored, it was held that, 
though he had surrendered the old note, there was no payment 
of it, and the amount of the check could be recovered. (a) And 
in another similar case, where a bank had entered the note on its 
books as paid, the bank was allowed to sue on the note thus 
entered, and show that the check was not taken as payment. (6) 




Liens at common law depend upon possession ; (c) and when 
the chattel to which the lien attaches is given to the debtor, and 

{x) Harris v. Shipway, 1744, cited by Byles, p. 304, note i ; Ewer v. Clifton, Bull. 
'N. P. 182 ; Palfrey v. Baker, 3 Price, 57-i; Davis i\ Gyde, 2 A. & E. 623, 4 Nev. & 
M. 462. Even a bond given for rent does not extinguish it. Rent, though on a parol 
lease, is of as high a nature as an obligation. Phillips v. Lee, 11 Vin. Abr. 289. 

(y) Ex parte Barclay, 7 Ves. 597. Bills, in lieu of which other bills are given, if 
permitted to remain with the holder, and the latter bills are not paid, may be enforced. 
The Lord Chancellor said : " If two bills are dishonored, and two others are given 'in 
lieu ' of tliem, but the former are allowed to remain in the hands of the bolder, that 
fact will give a construction to the words ' in lieu/ and the meaning will be only in 
case they are paid." 

(z) In Lumley v. Musgrave, 4 Bing. N. C. 9, 5 Scott, 230, where the defendants 
asked time and gave a new bill, the plaintiff retaining the old bill, and claiming that 
something was due on the old bill for interest, it was held the plaintiff could maintain 
assumpsit on the old bill. 

{a) Olcott V. Rathbone, 5 Wend. 490. 

(b) Pratt V. Foote, 12 Barb 209. 

(c) Jordan v. James, 5 Ohio, 88 ; Tooke r. Ilollinswortb, 5 T. R. 21^: Williams v 


credit given to him, the lien is held to be waived. (rf) Because 
as a lien is but the right of continued possession, when the thing 
to which a lien attaches is voluntarily surrendered, the lien is 
gone. But when a thing to which a lien attaches remains in the 
hands of the owner of the lien until a note or bill falls due, if 
the note be then dislionored the lien will be revived. 

For example, if, before goods are delivered, the note of the 
buyer for them in the vendor's hands is dishonored, the lien will 
not be defeated. (e) 

Moore, 5 N. H. 235 ; Bloxam v. Sanders, 4 B. & C. 941 ; Townlev v. Crump, 4 A. 
& E. 58 ; Hostler's Case, Yelverton, Metcalf 's ed. 67 ; Heywood v. Waring, 4 Camp. 
291, per Lord Ellenborough : " Without possession there can be no lien ; a lien is a right 
to hold ; and how can that be held which was never possessed ?" Wolf r?. Summers, 2 
Camp. 631 ; Hartley v. Hitchcock, 1 Stark. 408. See also Chase v. Westmore, 5 M. 
& S. 180 ; HoUis v. Claridge, 4 Taunt. 807. 

(rf) Yelverton, Metcalf's ed. 67, d. In Cowell v. Simpson, 16 Ves. 275, where the 
question how far the taking of a subsequent security was a waiver of the lien of a solici- 
tor on his client's papers for a balance of an account, was much discussed. The whole 
reasoning of Lord Eldon proceeds on the ground, not that an express contract of itself 
destroys the lien, but such an express contract (whether antecedent or subsequent is 
wholly immaterial) as involves terms inconsistent with a lien ; as a contract for taking 
a security payable in future, or for giving credit, or for a particular mode of payment. 
In Hutton v. Bragg, 2 Marsh. 339, Gibbs, C. J. said : " I have always been inclined to 
consider this doctrine as applicable to an agreement which is inconsistent with the right 

of lien If there be an agreement to pay by bills, such agreement takes away the 

right of lien." Ex parte Lewis, 2 Gallis. 483 ; Schooner Volunteer, 1 Sum. 551. 
This rule agrees with that of the civil law. By that law, if credit be given by the ven- 
dor of goods, his lien is gone, upon the ground that a credit is inconsistent with a lien. 
Dig., Lib. 18, tit. 1, ch. 19. So in the Year-book, 5 Ed. IV., 2, pi. 20. Nolu also by 
Harden, that a hostler may detain a horse if his master will not pay for his meat. The 
same law, as if a tailor made a garment for me. he may retain the garment until he is 
paid for his labor. And the same law, if I buy a horse of you for 20.s., liut if I am to 
pay you at Micliaclmas next folloivimj, then you cannot detain the same until you are 
paid. S. P. 17 Ed. IV. 1. Hutchins v. Olcutt, 4 Vt. 549. In this case it was held 
that a lien depending on possession was defeated by taking a promissory note on de- 
mand, which of course is due the moment it is made, without any demand. This must 
rest in part on the peculiar law of Vermont. For exactly the opposite is determined in 
Clark V. Draper, 19 N. H. 419. See, in general, Haitt v. Mitchell, 4 Camp. 146; 
Brook V. Wentworth, 3 Anst. 881 ; Chase v. Westmore, 5 M. & S. 180. 

(e) New V. Swain, 1 Danson & L. 193. A purchaser having agreed to leave the 
;oods in the warehouse of the vendor and pay a certain rent for the room, when the 
bill, which he gave in payment according to the bargain, was dishonored, it was held 
that the vendor had still a right of retainer until payment of the price. Hurry v. Man- 
tries, 1 Camp. 452, was cited, in which, after. a sale, the goods remained in the ware- 
house of the vendor at a rent. It was held by Lord EHenborom/h, that the right of stop- 
/>age in transitu was gone. In this last case the oil in (|uestion was sold to J. S., who gave 
hU acceptances at six months, and on the first dav of Au^'ust following sold out to the 


Yet at any time before the note fell due the vendee might 
have demanded his goods, and the lien of the vendor would have 
been considered as waived by the credit given by taking a bill or 
note, unless the right of possession as a security was expressly 
reserved. For otherwise delivery before payment was contem- 
plated by the parties. But if a note should be negotiated, 
though outstanding dishonored in the banker's hands, this would 
be sufficient evidence of a relinquishment of lien, and the buyer 
could demand the goods, although the note was not paid.(/) 

The negotiation of a note taken for the price of real property 
does not, however, work a waiver of the vendor's lien on the 
land, in those jurisdictions where this equitable lien in favor of 
the vendor exists. (^) 

plaintiff, who brought trover ; the defendants refused to deliver the oil till they were 
paid for it, saying that J. S. had become insolvent before the acceptances were due. 
Harman v. Anderson, 2 Camp. 243. In New v. Swain, supra. Lord Tenterden said ; 
" We are all of the opinion that, on non-payment of the bill, the defendant ought to 
retain the goods." See Owenson v. Morse. 7 T. R. 64 ; Bunney v. Poyntz, 4 B. & Ad. 
568, 1 Nev. & M. 229, per Littledale, J. ; Townley v. Crump, 4 A. & E. 58. It was held in 
BaiTett i\ Goddard, 3 Mason, 107, that when the seller agreed to become warehouseman 
for the vendee his right of stoppage was gone. See Hammond v. Anderson, 4 B. & P. 69. 
In Townley v. Crump, 4 A. & E. 58, it was held, as between the original vendor and 
vendee, a lien is not diverted by the former giving the latter a delivery order for the 
goods sold, but remaining in the vendor's warehouse rent free, although it appeared 
that, by the usage of trade in Liverpool, where the parties dealt, goods sold while in 
warehouse are delivered by the vendor's handing to the vendee a delivery order, and 
that the holder of such order may obtain credit with the purchaser as having possession 
of the goods. 

(/) Bunney v. Poyntz, 4 B. & Ad. 568, 1 Nev. & M. 229, per Denman and Tenterden, 
C. JJ. and Parke, J.; Barrett v. Goddard, 3 Mason, 107. per Story, J.: '-The pay- 
,ment was by a note on time. Now giving such a credit for the price under such cir- 
cumstances is decisive against any implied right of retainer or lien for the price." 

((/) Ex parte Loaring, 2 Rose, 79. A vendor was held not to have waived his lien 
on the estate sold, by taking the promissory note of the vendee, and receiving its 
amount by discount. Lord FJdon, Ch said : " That the note was discounted amounts 
to nothing ; it was incidental to the nature of the security, and did not vary what it in 
substance was, — evidence of an intention to pay at four months. I do not believe that 
either of the parties had this refined equity in their contemplation ; but I do not feel 
that I can refuse to give effect to it." In Grant v. Mills, 2 Ves. & B. 306, a vendor's 
lien was not discharged by taking bills drawn by one member, and accepted by a 
firm. The Master of the Rolls said : " The effect of a security of a third person has 
never been decided, but I concur with Lord Redesdale, that bills of exchange are not 
security, but a mode of payment." A purc+iaser has to show that, from the circumstances 
of the case, no lien was intended to be reserved,— as by taking other real or per.sonal secu- 
ritv, or that the case is one where the oiijcct of the sale is a collateral benefit. Chap- 
man V. Tanner, 1 Vcrn. 267 ; Austen v. Halsey, 6 Ves. 47.1, 483 ; Hughes v Rianey, 

CH. vn.J dischjVkge of liens by bill or note. 16t 

A somewhat similar question has arisen in the case of mari- 
time liens. It is not unusual for the debtor to give bills or 
notes, and then it may be doubted whether the giving and ac- 
cepting of negotiable paper has not converted the debt into a 

I Sell. & L. 132; Meigs v. Dimock, 6 Conn. 458; Stafford ». Van Rensselaer, 9 
Cowen, 316; Marsh v. Turner, 4 Misso. 253; Deibler r. Barwick, 4 Blackf. 339; 
Bayley v. Greenleaf, 7 Wheat. 46; Magruder v. Peter, 11 Gill & J. 21" ; Carroll v. 
Van Rensselaer, Harring. Ch. Mich. 226. Tlie jurisdictions where the equitable lien 
of the vendor on land exists are indicated hy the following cases. Cole v. Scot, 2 
Wash. Va. 141 ; Co.k v. Fenwick, 3 Bibb, 183; Garson v. Green, 1 Johns. Ch 308; 
Fish V. Rowland, 1 Paige, 20 ; Warner v. Van Alstyne, 3 id 513 ; Bayley »• Greenleaf, 
7 Wheat. 46 ; Gilman v. Brown. 1 Mason, 191 ; Watson v. Wells, 5 Conn. 468 ; Jack- 
man V. Hallock, 1 Ohio, 318 ; Patterson v. Johnson, 7 id. 225 ; Sheratz v. Nicodcmus, 
7 Yerg. 9 ; Wynne v. Alston, 1 Dev. Eq. 163 ; Lagow v. BadoUet, 1 Blackf. 416 ; Vaii- 
doren v. Todd. 2 Green, Ch., N. J. 397 ; Burns v. Taylor, 23 Ala. 255 ; Pinchain v. CoUard, 
13 Texas. 333 ; Salmon v. Hoffman, 2 Calif 138 ; Truesdell c. Callaway, 6 Misso. 605 ; 
Marsh v. Turner, 4 Misso. 253 ; Fisher v. Johnson, 5 Ind. 492 ; Kennedy v. Woolfolk, 
3 Hayw. 199. But the doctrine in Pennsylvania is, that the lien does not exist against 
a judgment creditor. Semple v Burd, 7 S. & R. 286. It is said not to be adopted to 
its full extent in Connecticut. Atwood v. Vincent, 17 Conn. 583 It docs not exist 
in Massachusetts, Gilman v. Brown, 1 Mason, 191 ; or in North Carolina, Womble v. 
Battle, 3 Ired. Eq. 182. In Vermont, there is no lien by law (1851, p. 42), unless given 
by deed. Much discussion has arisen as to what facts or what security would amount 
to a waiver of the lien. It has been held, that taking a bond from the vendee for the 
purchase-money, or the unpaid part of it, operated as waiver ; the weight of authority 
seems to be, that taking a note, bond, or covenant for the payment of the note, is not 
of it.'ielf an act of waiver of the lien. Winter v. Anson, 3 Russ. 4S8 ; Lagow v. BadoUet, 
1 Blackf 416; Vandoren » Todd, 2 Green, Ch., N.J. 397 ; Eskridge y. M'Clure, 2 Yerg. 
84 ; Ross v. Whitson, 6 id. 50 ; Magruder v. Peter, 1 1 Gill & J. 2 1 7. Fawell v. Heelis, 2 
Amb. 724, decided that taking a bond waived the lien. Lord A/Jslei/, Chancellor, said : 
" If a vendor parts with his estate, and takes a security for the consideration money, 
there is no reason for a court of equity to assist him against the creditors of the pur- 
chaser." In Hughes v. Kearney, 1 Sch. & L. 132, it was held that the note was not a 
waiver of the lien, and the case was distinguished from Bond v. Kent, 2 Vern. 281, on 
the ground of intention of the parties varying. Mackreth v. Symmons, 15 Ves. 329 
By the Roman law, taking a security for the debt was of itself a waiver and extinguish 
ment of the lien ; but this is not so in America. 2 Story, Eq. Jur. § 1226 ; Hatc'her o 
Hatcher, 1 Rand. 53 ; Johnson v. Thompson, 4 J. J. Marsh. 380 ; Garson v. Greene, 1 
Johns. Ch. 308; Cox v. Fenwick, 3 Bibb, 183. Taking a note, bill, or bond with dis- 
tinct security, or taking distinct security alone, as real or personal property, or taking 
the responsibility of a third person, is evidence that the seller did not repose on the lien. 
Gilman v. Brown, 1 Mason, 191, 4 VVheat. 255 ; Capper v. Spottiswoode, Tamlyn, 21 : 
Williams v. Roberts, 5 Ohio, 35; Eskridge v. M'Clure, 2 Yerg. 84; Foster v. Trustees 
of Alhena;um, 3 Ala. 302 ; Wragg r. Comptroller-General, &c., 2 Desauss. .509. In 
Winters. Anson, 1 Sim. & S. 434, it was held that there is no lien when a bond is given, 
payable at a future day, for the purchase-money, with interest. See cases sii/jia. Contni, 
White V. Casanave, 1 Harris & J. 106 ; Cox v. Fenwick, 3 Hibb, 183. In Kenny v. Col- 
lins, 4 Littell, 289, it was held that a bond for the purchase-money, when assigned. inni<- 
fers the lien of the assignor to the assignee, if the former has any. Euoank r. Po.-ioii 


mere personal debt, and discliarged any maritime lien upon the 
ship or cargo as security. It would seem that the acceptance of 
negotiable paper would operate to destroy such maritime liens 
only so far as they depend on possession ; as, for example, the 

5 T. B. Mon. 285 ; Johnson v. Groathney, 4 Littell, 317. But see Injrlehart v. Armiger, 
1 Bland, 519. So a note, Edwards v. Bohannon, 2 Dana, 98; Woods v. Bailey, 3 
Fla. 41. But not so where the note was indorsed without recourse. If a vendor 
transfers the note taken, and guarantees the payment, no lien passes. Taking the 
guaranty is such additional security as defeats the lien. Woods v. Bailey, 3 Fla. 41 ; 
Schnehly v. Ragan, 7 Gill & J- 120. The distinction seems to be taken between the 
promise by note, bond, or covenant of the debtor himself, and that of a third party ; 
the latter shows that dependence is placed, not on the lien, but on what is taken to secure 
payment. As in Magruder v. Peter, 11 Gill & J. 217, the promissory note of the 
debtor, with an indorser, was held no payment so as to waive the lien. See Coster v. 
Bank of Georgia, 24 Ala. 37 ; Griggsby v. Hair, 25 id. 327 ; Slack v. McLagan, 15 111. 
242. In Nairn v Prose, 6 Ves. 759, taking a deposit of stock was held a waiver of the 
lien. In Lagow v. Badollet, 1 Blackf. 416, it was held that the vendor of real estate 
does not waive his lien by taking a note or bond from the vendee, unless some distinct 
security is also taken, either of the property or responsibility of a third person, as a 
mortgaire. Young r. Wood, 11 B. Mon. 23. In Sugden's Vendors. 57, it is generally 
stated that the lien is not waived by the purchaser's obligation. Pinchain r. Oollard, 13 
Texas, 333. See Frail v. Ellis, 16 Beav. 350, 17 Eng L. & Eq. 457, where it was held 
that a special contract must be explicit to deprive a vendor of his lien upon land sold. 
But the vendor's lien is waived by taking a new security, — as the vendee's note, with the 
security of a third person, White v. Dougherty, Mart. & Y. 309 ; Woods v. Bailey, 3 
Fla. 41 ; Boon v. Murphy, 6 Blackf 272 ; or the note of a third party alone, which is pre- 
sumed to be payment, Sears v. Smith, 2 Mich. 243 ; Vail v. Foster, 4 Comst. 312 ; Muir 
V. Cross, 10 B. Mon. 277 ; Trustees of Schools v. Wright, 1 1 111. 603. If the vendor re- 
ceive a worthless note by fraud or mistake, the lien remains on the land. Shelton v. 
Tiffin, 6 How. 163. If the vendee's note be given for the purchase-money and renewed, 
the lien remains ; but if that note i)e exchanged for that of a third party, the lien is 
extinguished. Muir v. Cross, 10 B. Mon. 277. The waiver of the vendor's lien is a 
questionfor the jury, but taking negotiable paper is not at all conclusive, nor is a certifi- 
cate of deposit. Mims v. Macon & W. R. R., 3 Ga. 333. A mere change in the form of 
indebtedness, or evidence of it, is not generally a waiver, unless so intended. Lewis v. 
Starke, 10 Smedes & M. 120. See Hoggatt v. Wade, 10 Smedes & M. 143. In Grant v. 
Mills, 2 Ves & B. 306, it was held that a bill of exchange drawn by the vendee, and 
accepted by him and his partner, did not waive the lien ; but we doubt whether this 
decision of the Master of the Rolls Is correct, the later and higher authorities being the 
other way. Gilman v. Brown, 1 Mason, 191, 4 Wheat. 255, per Mursfinll, C. J. ; Wil- 
liams V Roberts, 5 Ohio, 35 ; Eskridge v. M'Clure, 2 Yerg. 84 ; Foster v. Trustees 
of Athenaeum, 3 Ala. 302. In Williams v. Roberts, 5 Ohio, 35, it was held that "the 
vendor of land, who makes a conveyance and takes notes with personal security for the 
purchase-money, does not retain a lien on the land for that purchase-money." In 
Brown v. Gilman, 1 Mason, 191, 214, Stori/, J. says: "On a careful examination of 
all the authorities, I do not find a single case in which it has been held, if the vendor 
take a personal coUateral security, binding others as well as the vendee, as, for instance, 
a bond or note with a security or indorser, or a collateral security by way of plci'ge or 
mortgage, that under such circumstances a lien exists upon the land ifH'lf." Elliot v 


lien of the ship-owner on the cargo for his freight money. (/<) or 
the lien on the cargo for contribution in general average, which 
liens often depend upon possession ; (i) for such paper gives 
credit at least till it falls due, and to liens which depend on pos- 
session such credit is fatal, and is construed to be a waiver, and 
has been so held in many cases. (j) 

Edwards, 3 Bos. & P. 181, which may seem to be opposed to this rule, was decided 
upon a stipuhvtion against assignment or underletting, unless by express license. Cox 
V. Fenwick, 3 Bibb, 183. Held, that a vendor's lien on land may be waived where the 
vendor takes a distinct and independent security for the purchase-money, or when from 
other circumstances it is clearly inferable that the vendor does not rely upon the lien 
on the land. The taking of a bond has, however, been held not to be such a security, 
and is no waiver of a lien. By no fair presumption can such a waiver be presumed. 
Garson v. Green, 1 Johns. Ch. 308. " Taking a note for the purchase-money does not 
affect the vendor's lien " ; but when the vendor of lands takes the security (a note) of 
a third person for the purchase-money, he has no equitable lien on the land. Vail v. 
Foster, 4 Comst. 312. In the case of a mechanic's lien, for which a note was given 
and indorsed, and then pursued to judgment by the indorsee, it was held that the claimant 
could not recover by producing the note alone to be cancelled ; the judgment debt 
must be satisfied. This would seem to show that the indorsement and dishonor could 
not affect the lien of the vendor on a sale. Teaz v. Chrystie, 2 E. D. Smith, 621. 
See Miller v Moore, 1 E. D. Smith, 739 ; Gridley v. Rowland, id. 670. If, as in the of Edwards v. Bohannon, 2 Dana, 98, the vendor of land assigns the notes, atul 
the lien is found existing in the assignee's hands, it is plain that the assignment of the 
note has not destroyed the lien. In White v. Williams, 1 Paige, 502, it was held that 
where, upon a sale of lands, the negotiable note of the purchaser is given for the pur- 
chase-money, the vendor retains an equitable lien upon the land ; but an indorsee is 
not, from the mere transfer of the note, entitled to the benefit of such lien when the in- 
dorser has not been made liable upon the indorsement. 

{h) I Parsons, Mar. Law, 125, note 1, cases cited. In Horncastle v. Farran, 3 B. &. 
Aid. 497, an owner of a ship had a lien on goods till the delivery of good and ap- 
proved bills of exchange for the freight. After ot>jecting to a bill, he took it, and ne- 
gotiated it, and this was held an approval and relinquishment of his lien on the goods. 
Gibbs, C. J held, if payment were to be made by bills, this was inconsistent with the 
existence of a lien. In the case of The Cargo of the Ship Anna Kiml)all, U. S. D. C., 
Mass., 1861, 23 Law Reporter, 724, it was held, where the owner of a vessel took notes 
of the charterer for the balance of the charter-money, payable after the time when the 
ship was expected to arrive, that the lien on the goods for the freight was waived. 

(t) In Cutler v. Rae, 7 How. 729, it was held that an action in jiersonam by the owner 
of the vessel against the owner of the cargo, for a general average contribution, would 
not lie after the cargo had been delivered up, on the ground that the lien was lost I>y 
delivery up of the cargo. See comments on this case, 1 Parsons, Mar. Law, 511. 

( /) Sec cases quoted at the beginning of the Section. Birley v. (Jladstonc, 3 Maulo 
fc S. 205, 2 Meriv. 401 ; Mitchell v. Scaifc, 4 Cam|). 298; Raitt ». Miichell, 4 id. 146; 
Schooner Volunteer, 1 Sumner, 551 ; Certain Logs of Mahogany, 2 id. 589 ; Phillips y. 
Sodie, 15 East. 547 ; Cock v. Taylor, 13 id. 390 ; Horncastle v. Farran, 3 B. & Aid. 497 ; 
Horncastle v. Farran, 2 Stark. 590 . Crawsliay v. Homfray, 4 B. & Aid. 50 ; Christie v. 
Lewis, 2 Brod & B. 410. Sec Horncastle v. Fiirran, .s»/«u. 

VOL. li. li> 


By maritime liens we mean those liens or claims which arise 
from marine service or contracts, which attach to a particular 
thing, creating a tacit hypothecation, and which may be enforced 
in admiralty courts by proceedings in rem. They may or may 
not depend on possession. 

Most maritime liens are, we hold, more like the privilegia of 
the civil law than the mere common-law liens. It is quite cer- 
tain, at least in this country, that all maritime liens are Jiot 
dependent on possession, nor are they a mere extension of the 
right of possession. (/t) In nature as well as derivation they are 
more like the lien of a vendor of real estate, of which we have 
spoken above, and to which they are compared by Mr. Justice 
Story. (/) And in these cases, it is settled that giving credit does 
not destroy the lien, although there is a personal credit, and a 
personal indebtedness or security from tlie vendee to the vendor, 
in addition to the lien. Indeed, the modern maritime law gives 
the lien as auxiliary to personal security, and therefore personal 
liability does not desti'oy it. It would follow that tlie giving of 
negotiable paper does not extinguish a maritime lien, except in 
the cases before mentioned. (»i) 

(k) Harmer v. Bell, 7 Moore, P. C. 267, 22 En<,'. L & Eq. 62 ; Ex parte Shank, 1 
Atk. 234 ; Watkinson v. Bernadiston, 2 P. Wms. 367 ; Westerdell v. Dale, 7 T. R 
306 ; Justin v. Ballam, 1 Salk. 34 ; Brig Nestor, 1 Sumner, 73 ; Schooner "Volunteer, 
id. 551 ; Germain v. Steam-tug Indiana, 11 111. 535 ; The Gold-Hunter, Blatchf. & H. 
300; The Boston, id. 309; The Grafton, Olcott, 43, 1 Blatchf. C. C. 173; The Para- 
gon, Ware, 322 ; The Phebe, id. 263 ; Hcwett v. Buck, 17 Maine, 147; The Waldo, 
Daveis, 161 ; The Brig Casco, id. 184 ; Rich v. Lambert, 12 How. 347 ; The Calisto, 
Daveis, 29 ; Read v. Hull of a New Brig, 1 Story, 244 ; The Schooner Marion, 1 Story, 
68 ; Davis v. New Brig, Gilp. 473 ; Peyroux v. Howard, 7 Pet. 324 ; St. Jago de 
Cuba, 9 Wheat. 409; The General Smith, 4 id. 438; Buddington v. Stewart, 14 Conn. 
404; Davis v. Child, Daveis, 71. Parting possession when there is a lien, if con- 
sistent with the contract, does not waive it. Spaulding v. Adams, 32 Maine, 211. 
See also 1 Parsons, Mar. Law, 502. This is in the case of liens created by con- 
tract; and where possession is not at all of the essence of the contract, or of the lien 
as created by law, there is no reason that the loss of possession should be an evidence 
of waiver. 

(I) The Brig Nestor, 1 Sumner, 73, 86. 

(m) The Brig Nestor, 1 Sumner, 73, per Story, J. In The Active, Olcott, 286, it is 
held, that merely giving a note for supplies is no waiver of the lien, and the would 
not be different if the note were that of an agent. See Moore v. The Fasliion, 1 Newb. 
Adni. 49, and Moore v. Newbury, 6 McLean, 472. In both of these cases there was a 
bill for supplies presented In- a collecting clerk, who agreed to give time on receiving a 
note ; in one case a third party joined in the note. Held, that by the notes there was no 
waiver of lien. The case of llamsav v. Allcgre, 12 Wheat. 611, does not conflict with 


A decision in the Circuit Court of the United States for Maine 
rests somewhat on the peculiar care which admiralty takes of 

the doctrine in the text. A material man had received a negotiable promissory note at 
four months. It had not been paid, but was outstanding, and had not been surrendered ; 
it did not appear that it had not been negotiated. The District Court dismissed the libel, 
on the ground that the jurisdiction of the court, as an Instance Court of Admiralty, was 
waived by acceptance of a promissory note. Murshall, C. J. said, that " as it did not ap- 
pear by the record that the note bad been tendered to be given up, or actually surren- 
dered at the hearing in the court below, the decree would be affirmed." See tlie remarks 
of Slot-;/, J. on this case, in The Brig Nestor, I Sumner, 73. The language of Mr. 
Justice Story, in the case of the Nestor, would imply that taking the note was a 
waiver of the maritime lien ; but the decision did not require this dictum, as appears 
below. Nor, it is to be observed, did the decision of the lower courts or of the 
Supreme Court, in Ramsay v. AUegre, go upon the ground of payment by bill or 
note operating a discharge of the maritime lien. If we pursue Mr. Justice Story's 
analogy, wc find that equitable liens are not discharged by a promissory note, nor does 
it appear why maritime liens should be. The William Money, 2 Hagg. Adm. 136 
In this case also it appears that a seaman took a bill of exchange on the ship-owners 
for the amount of his wages, and the ship was discharged ; but it appeared that the sea- 
man preferred the bill to cash, and the election made it payment. See Leland ». The 
Medora, 2 Wood. & M. 92, as to what may be a waiver of a lien for supplies and stores 
furnished, and how far a promissory note may act as waiver of the lien. The learned 
judge stated that he had never known a lien to be enforced after the expiration of the 
credit in the negotiable paper, if such be given. No doubt the lien may be waived, 
and taking negotiable paper by way of personal security may be some evidence of 
waiver or relinquishment of lien. The waiver is a fact for the court to settle on all 
the evidence. Stevens v. The Sandwich, 1 Pet. Adm. 233, note ; Peyroux v. How- 
ard, 7 Pet. 324; Raitt v. Mitchell, 4 Camp. 146; Hutton v. Bragg, 2 Marsh. 339. 
But in these cases there appear to be required as evidence acts inconsistent with a 
lien. The note or bill of a master or owner has been held not to discharge a maritime 
lien. In the Eastern Star, Ware, 184, a sailor received a non-negotiable order as pay- 
ment of wages. Judge Ware said : " Even if he had made the draft payable to order, 
which he did not, I should have hesitated long before holding it to be a discharge of 
the wages, under the presumption of the local law of the State (Maine), that a nego- 
tiable instrument is intended to be a discharge of a pre-existing debt. But as the 
drafts were not negotiable, they would not be held payment, under the local law, be- 
tween merchant and merchant." In Spencer v. Bailey, 1 Hawaian, 124, it was held, 
that receiving bills of exchange for supplies in a foreign port was a presumption that 
they were taken in payment therefor ; but that presumption may be rebutted by proof 
that the bills were not taken as absolute payment, and if they arc dishonored, they are 
no bar to a suit upon the original account. North v. Brig Eagle, Bull. 78. The master 
drew a bill for supplies on one of the owners ; the receipt was " in full when paid." 
Held that the lien was not discharged. Bark Chusati, 2 Story, 4.').'>. In this case 
the libellants, being ship-chandlers, furnished supplies in New York, and there took a 
note of one of the owners for them. Held, that the ler loci of New York governed, and 
the not*" taken was only a conditional payment. From this it would follow, that, if a 
note were given for supplies in Massachusetts, the lex loci don trt ictus must then apply, 
and the note would be a discharge of the lien. But, as we have seen, in Mas- 
sachusetts the presumption is rebutted where, by taking a note, a lien or other 


seamen. (w^ For it was held that a negotiable note given to a 
seaman left his lien on the ship undisturbed, unless the effect of 
the note in discharging the lien was explained to him and agreed 
to, and some other security or advantage given to him by way 
of compensation for the loss of his lien.(o) 

In loans on bottomry, any contract or security for the absolute 
payment of the loan, in the case of the loss of the ship, invali- 

security would be lost. But the decision of Judge Story did not require him to 
regard the lex loci contractus, and the decision is extra-judicial. Had he confined 
himself to the presumption of payment by the general law, to which the Massa- 
chusetts and Maine law is admitted to be an exception, it would have been sufficient 
for the purposes of the case. A question then arises, which may be thus stated. A 
ship is repaired in New York. She belongs to B, who resides in Massachusetts. In 
payment B gives his negotiable promissory note, payable in Massachusetts, and re- 
ceives a receipt in full. If made payable in New York, it could not be held payment, 
even if so intended by the parties. If the lien were contracted in Massachusetts, ac- 
cording to Judge Story the lien would be discharged. Shaw, C. J. contra. The ques- 
tion then arises, whether the note being made payable in Massachusetts operates as a 
novation of the contract, and makes a note ojierate as a discharge. We think that 
when in discharge or in connection with a marine contract a note is given made pay- 
able on land at some particular place, that nevertheless the contract is maritime with 
regard to the rights of the parties and the evidence which must be considered in giving 
effect to the note. It is clear that the lien can only be enforced in the Admiralty 
Court, and the lien which is given by the maritime law must be regulated by that law 
with regard to its creation, duration, and waiver, and the presumptions of the latter 
and the intentions of the parties must be regulated by admiralty rules of evidence. 
Again, it seems that the lien gained in New York ought not to be waived, unless it is 
so intended by the New York party, and he cannot be supposed to intend a waiver of 
his lien, that being the contrary of the presumption of the New York law; but if it 
were urged that the JMassachusetts law must govern, and that ignorance of law is no 
excuse, the answer is plain, that the ignorance of the Massachusetts law is ignorance 
of foreign law, which is put upon the same ground as ignorance of fact, and will be 
relieved against in equity. Moreover, in Dcscadillas v. Harris, 8 Greenl. 298, the 
courts of Maine hold that a negotiable security given in a foreign country is not to be 
regarded here as an extinguishment of a simple contract debt, unless made so by the 
laws of that country. But it is almost settled, as will be perceived, that a maritime 
lien acquired in Massachusetts, and for which a note is there given, will not thereby 
be waived. In Page v. Hubbard, Sprague, 335, Mr. Justice Sprague, of the Dis- 
trict Court of the United States for Massachusetts, was referee, and decided that a 
maritime lien for materials furnished a vessel built in Massachusetts is not lost by the 
creditors taking the debtor's negotiable promissory note, which is produced at the hear- 
ing and offered to be cancelled. This, moreover, was a lien created by the Massachu 
setts statute of 185.5, ch. 231, which ought to be defeated by accepting a note, if any 
lien in Massachusetts were to be so defeated. The referee also rests upon the Massft' 
chusetts cases. See Sutton v. The Albatross, 2 Wallace, Jr. 527. 

(n) Brown v. Lull, 2 Sumner, 443. 

(o) The Betsy & Rhoda, Daveis, 113. See also The Eastern Star, Ware, 184. 


dates the bond, because it is of the essence of this contract, that 
the loss of the ship pays the deht.{p) 

A bottomry bond differs from other liens (maritime or other), 
as well as priinlegia, in this respect, that there is no personal 
liability connected with it, and that the only remedy is against 
the ship.(^) 

Additional security is allowed, however, if it only makes the 
payment of the bond, when the ship arrives safely, more certain, 
i)ut will give no claim to money, provided the ship does not 
arrive. (/•) 

It seems to be well settled that the taking of bills of exchange 
in connection with the bond, either as security for the bond or 
as secured by the bond, does not invalidate the bond, provided 
they are also subject to the same risk of payment by the loss of 
the ship. (5) 

(p) 1 Parsons, Mar. Law, 407, note 1 ; The Atlas, 2 Hagg. Adm. 48; Jennings r 
Ins. Co of Penn., 4 Binn. 244 ; Greeley v. Waterhouse, 19 Maine. 9 ; Kucher v. Conyng- 
ham, 2 Pet. Adm. 295, 303 ; The Brig Draco, 2 Sumner, 157 ; Bray v. Bates, 9 Met. 
237 ; The William & Euimeline, Blatchf. & H. Adm. 66 ; The Brig Atlantic, 1 Newb. 
Adm. 514; The Emancipation, 1 W. Rob. 124; Stainbank ?;. Fenning, 11 C. B. 51, 
6 Eng. L. & Eq. 412 ; The Nelson, 1 Hagg. Adm. 169, 1 Stuart, Lower Canada, 130. 
In the Atlantic, 1 Newb. Adm. 514, a bond contained the following stipulation : " It is 
understood and agreed that the said W. & Co. do not take upon themselves the marine 
risks usual in cases of bottomry and hypothecation"; and it was held that it wanted 
the essential characteristic of bottomry bond, and could not be enforced in rem in ad- 
miralty. The drawing of the bill could not help the matter, since it was merely col- 
lateral to the bond. 

iq) Stainbank v. Shepard, 13 C. B. 418, 20 Eng. L. & Eq. 547. Parke, B. said : 
" But the law forbids the creditor to have a direct remedy on the bond itself against 
the owner as well as the ship." Nostra Senora del Carmine, 29 Eng. L. & Eq. 572. 
See, however, in Bray v. Bates, 9 Met. 237, the opinion of Hubbard, J. In The Nel- 
son, 1 Hagg. Adm. 169, Lord Stowell said : " To the bond exhibited here some objec- 
'ions are taken respecting its form, but not affecting its validity. One objection is, 
that it binds the owners personally, as well as the ship and freight, ichich it cannot do. 
.... The form of these bonds is different in different countries ; so is their authority. 
In some countries they bind the owner or owners, in others not ; and where they do 
not, though the form of the bond affects to bind the owners, that part is insignihcant, 
but does not at all touch upon the effiriency of those parts which have an acknowledged 
operation." The Virgin, 8 Pet. 538, 554. See also 1 Parsotis, Mar. Law, 420, note 4. 

((•) Thorndike v Stone, II Pick. 183 ; Stainbank v. Shepard, 13 C. B. 418, 20 Eng. 
L. & Eq. 547 ; The Atlantic, 1 Newb. Adm. 514, supra. 

(s) The Emancipation, 1 W. Kob. 124. Dr. Lnsliini/ton stud : "Now, looking to the 
terms in which the bond is thus drawn up, it is clear in the first place upon the face of 
it, that it was given as a security for tlie bills of exchange which had bccMi drawn by 
the master upon his owners. This circumstance, however, would not aficct its validity 
under the principles laid down by the court in former cases." And in ihc case of the 


If the hill of exchange drawn on the owner be paid, the bot- 
tomry bond must be void, and only ordinary interest is paid ; 
but if such bills are dishonored, the bottomry bond comes into 
effect, and the risk of the loss of the ship, and the failure to pay 
the bills of exchange, is repaid by the marine interest. Bills of 
exchange might be drawn secured by a mortgage on the ship, 
and we do not see why a bottomry bond might not supply the 
place of a mortgage. (<) 

Tartar, 1 Hagg. Adm. 1, it was also held that a bottomry bond, indorsed as collateral 
security for bills of exchange, would not be vitiated in consequence of such an indorse- 
ment. Stainbank v. Shepard. 13 C. B. 418, 20 Eng. L. & Eq. .547 ; The Ariadne, 1 W. 
Rob. 41 1, 421 , per Dr. Lushington : " It is a common practice in transactions of bottomry 
for the lender to require the twofold security of a bill of exchange in addition to the 
bond; in such cases, the rule is to present the bill of exchange in the first instance, and 
if there is reason to believe that it will be paid, the bond is not put in suit. This rule 
is not inconsistent with the suggestion that the bond of bottomry is the original and 
primary security ; for when the expression is used, that the bond is the primary, and the 
bill of exchange a collateral security, it only means that the transaction is originally a 
transaction of bottomry, and the bill of exchange is given as an additional and more 
negotiable security." See also The Jane, 1 Dods. 461, per Sir fF. iSco^^ " But it is said 
that bills were given at the same time, and therefore that the lender looked to them, and 
not to the ship ; but this is the usual practice ; there is no inconsistency in taking such 
a collateral security, nor has it been ever held to exclude the bond or diminish its solid- 
ity." It is said that if a bill of exchange be taken of a consignee or agent for the amount, 
it is prima facie evidence that he looks to that rather than to the vessel. Ex parte Halkett, 
3 Ves. & B. 13.5 ; The Wm. Money, 2 Hagg. Adm. 136 ; Murray v. Lazarus, I Paine, C- 
C. 572; Ramsay v. Allegre, 12 Wheat -611. See The Augusta, 1 Dods. 283 ; The 
Tartar, 1 Hagg. Adm. I, cited supra ; Leland v. Ship Medora, 2 Woodb. & M. 92; 
The Lord Cochrane, 2 W. Rob 320. In The Schooner Zephyr, 3 Mason, 341, is an 
opinion by Story, J., in which the principle stated in the text is fully recognized. The 
Brig Atlantic, 1 Newb. Adm. 514 ; Greely v. Smith, 3 Woodb. & M. 236 ; The Ken- 
oersley Castle. 3 Hagg. Adm. 1 ; The St. Catherine, id. 250; The Hunter, Ware, 249. 
So if property is mortgaged to secure a bond, the mortgage is defeated by the defeat of 
the bond. Thorndike v. Stone, 1 1 Pick. 183 ; Bray v. Bates, 9 Met. 237. 

(t) The Schooner Zephyr, 3 Mason. 341. A bottomry bond was given, payable five 
days after the arrival of the ship in Boston. A bill of exchange for the amount loaned 
was drawn on London. The bottomry bond was to be void in case the bill was paid, 
the bottomry bond should be void at the option of the borrower. The borrower did 
not pay the bills of exchange, and the question was whether the holder of the bot- 
tomry bond could recover the exchange between London and Boston, in a suit on the 





Closely allied with equitable liens and the liens of the admi- 
ralty courts are the liens which are created by the various State 
statutes in favor of mechanics. These liens give the mechanic 
the same claim on the building in the construction of which his 
labor or materials are employed as the general maritime law 
gives the material-man on the foreign ship to which he has fur- 
nished supplies or repairs. (m) Moreover, the various States have 
passed statutes (v) in favor of material-men employed upon do- 
mestic ships, which can be enforced in the State courts, and have 
been sometimes enforced by the admiralty courts of the United 
States. (z<7) 

In their nature, as we have implied above, these statutory liens 
are like privile^ia in the civil law, and are nowise dependent on 
possession. Like equitable liens, they attach to real estate, and 
their means of enforcement are provided by the statutes creating 
them, which also provide that they shall be of no effect if not en- 
forced within a certain time. (a;) In this they bear some resem- 
blance to maritime liens, which by neglect to enforce them are 
lost to their holder. (//) After a vessel to which a maritime lien 
has attached has performed several voyages, even the sailors' lien 
for wages and the lien of the holders of bottomry bonds are lost 
by their neglect, and will not be enforced in a court of ad- 

(u) The General Smith, 4 Wheat. 438. 

(v) See 1 Parsons, Mar. Law, 493, note 1, for a collection of the statutes. 

(w) 1 Parsons, Mar. Law, .501, note 2 ; The General Smith, 4 Wheat. 438, note a. 

(t) Wiieeler v. Schroeder, 4 R. I. 383. The action to he commenced within four 
months. Rohinson v. Marncy, 5 Blackf. 329, 2 R. S., N. Y. 405, 4 1 ; Steamhoat 
Joseph E. Coffee, Oicott, Adm. 401. In the latter case, it is provided that the lien 
shall cease directly the ship or vessel leaves the State ; hut the lien was held not to 
be diverted by the boat's going from New York to New Jersey, during the progress of 
the repairs. 

iy) Leland v. The Ship Medora, 2 Woodb. & M. 92. Permitting the vessel to de- 
jjan was held to defeat the lien. The maritime law requires liens to be enforced as 
early as possible after they attach, for in this way only tiie rights of innocent third par- 
ties can be protected. Peyroux v. Howard, 7 Pet. 324. 345. See Packard v. Louisa, 2 
Woodlr & M. 48; The Nestor, 1 Sumner, 73, 80; The Chusan, 2 Story, 455 


miralty, unless it is made to appear that the sailors or holders 
are in no actual default. 

These statutory liens are not in general waived or defeated by 
the receipt of negotiable paper in payment thereof,(2) unless in 
cases where there is clear proof of an intention to abandon the 
lien. And when negotiable paper is not payment or discharge 
of a prior debt, but the negotiation of such paper would raise 
the presumption of payment, this is rebutted by the fact that by 
such presumption such a lien is lost. (a) 

(«) Greene v. Ely, 2 Greene, Iowa, 508. " The lien is purely statutory, and the man- 
ner of enforcing it clearly defined." The court hint at a different doctrine, but think 
that the lien is not waived. " Why should not a mechanic be as much entitled to his 
lien after taking a note, as a vender (of land) after receiving an obligation for the pur- 
chase-money 1 " In Mix V. Ely, 2 Greene, Iowa, 513, the note given fell due about six 
months after it was given. The second section of the act giving the lien provides that, 
" When any person shall wish to avail himself of the benefit of such lien, he shall com- 
mence his action, in any court having jurisdiction of the same, within one year from the 
time it should have been made by virtue of such contract by which such lien shall be 
claimed." The ])ayment of the note on the contract which created the lien should have 
been made on the first of May, 1848. It was only necessary, then, to commence suit 
within one year from that time. By taking a note, then, the time of lien provided by 
statute is actually extended. Quaere, whether renewing a note would still further extend 
the time of lien. It was held in Wheeler v. Schroeder, 4 R. I. 383, in the case of a writ- 
ten contract " payable in satisfactory paper at six months," that the four months within 
which the process was to be commenced under the statute begin to run from the matu- 
rity of tiie paper, and not from the completion of the job. In Goble v. Gale, 7 Blackf. 
218, the mechanic's lien was not defeated, though he gave a receipt in full. Accepting 
a bond and warrant of attorney was no defeat of lien. Thompson's Case, 2 Browne, 
297, and Hinchman ;;. Lybrand, 14 S. & R. 32, regard a lien by statute as much stronger 
than the vendor's lien on land, and imply that the mechanic's lien might not be waived 
by taking a bond, as a vendor's was in Kauffelt v. Bower, 7 S. & R. 64 ; Kinsley v. 
Buchanan, 5 Watts, 1 18. per Curiam: " Additional securities are in their nature cumu- 
lative ; nor where the parties have not expressly or impliedly so stipulated is there any 
reason why the one should be a relinquishment of the other." In Sutton v. The Alba- 
tross, 2 Wallace, Jr. 327, a receipt in full was given. In the Steamboat Charlotte v. 
Hammond, 9 Misso. 58, a note given to fall due during the time allowed for the exist- 
ence of the lien, was held no extinguishment of the lien. The case of Dutton v. N. E. 
Mut. Fire Ins. Co., 9 Foster, 153, is one in which taking a note of one partner discharged 
a lien which might attach to their buildings. The circumstances under which the note 
operated as a discharge appear in the case. In The Active, Olcott, Adm. 286. the 
view seems to be that, the lien being given to secure the debt, that only defetits the lien 
which would defeat the debt. 

(a) Sweet v James, 2 R. I. 270. A negotiable note is not payment of a pre-existing 
debt, but the actual negotiation raises such a presumption ; but this is only prima fade, 
and is rebutted by the fact that, if the note be considered payment, a lien is thereby 
lost. This was a case of mechanic's lien, and is an excellent case on the subject. 
From dirta in Curtis v. Hubbard, 9 Met. 322, and Mellcdge r. Bo-ton Iron Co., 5 


Moreover, as in the case of payment of a prior debt by nego- 
tiable paper, a receipt in full is not absolute evidence of an 
abandonment, but may be contradicted. (/j) 

In many of the States a judgment gives a lien on property, 
which is plainly in nature a privilegium, and is dependent on the 
statute creating it for its means of enforcement. 

A judgment lien may be defeated by taking a note or bill in 
payment and satisfaction ; but we should say that the waivei 
and surrender of the lien would not be readily presumed, and 
not unless such appeared to be the intention of the parties. (c) 



The right of stoppage in transitu is also unaffected by the 
seller receiving a bill of exchange, even if it be indorsed over, 
unless it be clearly regarded as payment. (^) For stoppage in 

Cush. 158, the rule witli regard to rebutting the presumption would seem to be nearly 
the same in Massachusetts. In Maine, however, — in Coburn v. Kerswell, 35 Maine, 
126, — the opposite doctrine would seem to be strongly implied, and we should judge 
the same rule of law would obtain in Vermont In the case of Hutchins v. Olcutt, 4 
Vt. 549, giving a note on demand was held to defeat a possessory lien, and from this 
we suppose the presumption of payment in the case of a statutory lien must be equally 
strong. See Hubbard v. Page, Spragne, .3.35, per Mr. Justice Sprague. 

(h) See cases supra; and Sutton v. The Albatross, 2 Wallace, Jr. 327. 

(c) But that it may be the case that a note is an extinguishment of the judirment 
there is no doubt. Like all other questions of payment by bill or note, it depends 
entirely upon the intention of the parties. Brewer r. The Branch Bank, 24 Ala. 439 ; 
Dogan ('. Ashbey, 1 Rich. 36. In the latter case, the owner of two judgments against 
A, and one against A and B, accepted the joint note of A and B for the full iimount 
of the three judgments, and gave receipts, as for so much money, in full of debt and 
interest; held that the judgments were satisfied. In this case the receipt in full was 
allowed to have some weight, and to stand as showing payment and satisfaction, so 
long as it was uncontradicted by other evidence. 

(</) Feise v. VVray, 3 East, 93. A trader here gives an order to his correspondent to 
send him goods, which are procured on the credit of the corres|)ondent, without the 
trader's name being known to the vendee. The correspondent was held to l)e so far a 
vendor, as between him and the trader here, that, on the bankruptcy of the latter, ho 
may stop the goods in trnnsitn by procuring a bill of lading from the bankrupt's brother ; 
and this, ttiough the trader here before his bankruptcy had accepted bills of exchange 
drawn on him by his coiTespondent for the amount of the goods ; such acceptances, 

Vol. II.— M 


transitu is merely an extension of the vendor's lien,(e) and the 
receipt of bills of exchange, or of part payment, (/) wonld not 
defeat such a lien, except upon the agreement of the parties, or 
upon waiver of the lien by actual delivery to the vendee. The 
insolvency of the consignee, which gives the right of stoppage in 
transitu, renders tlie bills like so much waste paper, and the 
vendor, because his possession is not completely divested, may 
enforce his lien. 

Thus, if a merchant in Liverpool consign goods to one in 
New York, and draw bills which are accepted, and sends tlie 
goods in a vessel pointed out by the consignee, this is an ex- 
ecuted sale and a constructive delivery, so far that the goods are 
at the risk of the consignee. (^) But it is not an actual deliv- 
ery ; and the consignor may send a bill of lading indorsed by 
him to his agent in New York, with orders to take the goods 
immediately on their arrival, and hold them until the bills of 
exchange are paid or secured. And it has been said that the 
bill need not be tendered back by the consignor upon such 
stoppage. (A) 

provable under his commission, amonnting at most to a part payment for the goods, 
which does not take away the vendor's right of stoppage in transitu. Owenson v. 
Morse, 7 T. R. 64. In Snee v. Prcscot, 1 Atk. 245, Lord Hardwich said, that if a con- 
Bignor should get back his goods in any way short of fulony, he should not blame him. 
In Hodgson v. Loy, 7 T. R. 440, it was held that part payment did not defeat the right 
of stoppage in transitu, but only diminished the vendor's lien pro tanto. Jenkyns v. 
Usborne, 7 Man. & G. 678 ; Bell v. Moss, .5 Whart. 189. See Newhall v. Vargas, 13 
Maine, 9-3, for a very full view of authorities. Donath v. Broomhead, 7 Penn. State, 
301. In Miles v. Gorton, 2 Cromp. «Sb M. .504, the goods in the warehouse of the ven- 
dor were sold under an invoice which expressed that they were to remain for rent. A 
bill of exchange was given for the price and negotiated, but before maturity the ven- 
dee became bankrupt. Held, that the vendor had not lost liis lien. The court said : 
" Here, in point of fact, the warehouse rent was not actually paid, but only charged, 
and such charge amounted to a notification by the seller to the purchaser that he was 
not to have the goods, not only until payment of the price, but of the rent ; and I 
think the effect is not to make, as has been argued, the warehouse of the vendor ihe 
warehouse of the vendee, but to make it a part of the contract between the parties, 
that the goods are not to be delivered until not only the price, but the rent, is paid." 
Ilsley V. Stubbs, 9 Mass. 65 ; Abbott on Ship., ch. 8 ; Mason v. Lickbarrow, 1 H. Bl. 
357 ; Fearon v. Bowers, id. 365, note a. 

{e) 1 Parsons, Mar. Law, 340, note 2. 

(/) See supra as to the receipt of bills, p. 177, note d. As to part payment, see 
Hodgson V. Loy, 7 T. R. 440 ; Feise v. Wray, 3 East, 93 ; Newhall v. Vargas, 13 
Maine, 93 ; Kymer v. Suwercropp, 1 Camp. 109. 

(g) Stanton v. Eager, 16 Pick. 467. 

(*) Edwards d. Brewer, 2 M. & W. 375. In Hays ». Mouille, 14 Penn. State, 48, 


And even if it be proved before commissioners of insolvency, 
the dividend received on it will only be considered as so much 
paid towards the price of the goods, and this although the bill is 
not yet mature. 



By the maritime law, part owners are generally liable in soiido 
for repairs and supplies to the vessel ; (i) and where they are so, 
the taking of a bill or note from one will discharge the others 
only when it can be shown that this was intended, or tliat credit 
was given to one or more of the part owners exclusively. (j) 
And even then, upon the general principles of the law of con- 
tract, the creditor does not lose his claim against the others, if 
he gave the credit to the rest exclusively, in ignorance that there 
were other owners to whom he might look for payment. (A:) 

it was held directly that " The purchaser's notes given for the price of the goods need 
not be tendered back before stopping the goods in transitu." 

(i) 1 Parsons, Mar. Law, 89, note 1, and cases. In Louisiana, it is held that part 
owners are not liable in soiido, unless they form a partner>hip. Carroll v. Waters, 9 
Mart. La. 500 ; Kimbal v. Blanc, 20 id. .386 ; David v. Eloi, 4 La. 106, 108 ; Burke 
i;. Clarke, 1 1 id. 206. 

(j) See 1 Parsons, Mar. Law, 91, note 1. The following are cases in which pay- 
ment has been made by the negotiai)Ie paper of one of the part owners, and the other 
part owners still held liable. Iliggins v. Packard, 2 Hall, 547 ; Muldon v. Wliitlock, 
1 Cowen, 290 ; Schemerhorn v. Loines, 7 Johns. 311 ; King v. Lowry, 20 Barb. 5.32 ; 
Patterson v. Chalmers, 7 B. Mon. 595; Cheever v. Smith, 15 Johns. 276; Wyatt c. 
Marquis of Hertford, 3 East, 147. See Reed v. White, 5 Esp. 122 ; Arnold v. Camp, 
12 Johns. 409; Robinson v. Read, 9 B & C. 449; Johnson v. Cleaves, 15 N. H. 
332 ; 1 Parsons, Mar. Law, p. 91, note 3. If one part owner by giving his note has been 
able, by means of receipts or other evidence of settlement furnished him by the creditor, 
to settle with his co-owners, the note will be held a payment or discharge of the owni rs. 
The waiver is to be settled on all the evidence. The ship's husband binds the princi[)als 
while acting within the scope of his authority. Creditors may waive the owner's liabil- 
ity and trust to the ship's husband alone, and may be cstopjied from denying this if be 
has dealt with the agent in such a way as to justify the other owners in believing that the 
agent's personal credit was relied on, and has permitted them to settle their accounts 
with the ship's husband on that basis, — in such a way as to be damnified if still held 
responsible. See Thompson v. Findcn, 4 Car. & P. 158; Muldon v. Whitlock, 1 
Cowen, 290 ; Wyatt v. Hertford, 3 East, 147 ; Cheever v. Smith, 15 Johns. 276 ; Reed 
k7. White, 5 Esp. 122. 

[k] Thomson v. Davenport, 9 B & C. 78 ; Schemerhorn v. Loines, 7 Johns. 311 


Charging one owner would only raise a presumption which 
might be defeated by showing that only one was known ; and 
for the same reason, if payment be made in such a case by 
the negotiable paper of one, which is dishonored, the others are 

It must be certain that it was not only intended to charge one, 
out to discharge the rest.(/) In Maine and Massachusetts, in the 
common-law courts, negotiable paper would be presumed to be 
absolute payment ; but we think it would be otherwise in admi- 
ralty courts, even within those districts. (?») 

Whether one part owner can bind the other owners by his 
bills, even for repairs, seems to be doubtful. («) 



A DEBTOR may pay a debt, or a purchaser pay for his goods, by 
the transfer of the bills of other parties ; and the like payment by 
the parties' own note or bill will, by the prevailing rule of law, 
be payment or not, according to the intent or bargain of the 
parties.(o) But another question may arise, and that is. What 
liability is left upon the transferrer if the paper is dishonored ? 
It would seem that bills of a third party would more readily be 
presumed payment than the bills of the party himself; for, as 
we have seen, the later New York cases tend to a rule that no 

(I) See cases in notey, supra, p. 179. 

[m) See Wallace v. Agry, 4 Mason, 3.36 ; The Bark Chnsan, 2 Story, 4.5.5 ; The 
Brig Nestor, 1 Sumner, 73 ; Leland v. The Mcdora, 2 Woodb. & M. 92 ; Macy v. 
De Wolf, 3 id. 193 ; The Eastern Star, Ware, 184 ; Page v. Hubbard, Sprague, 335. 
See these cases supra. In Baker v. Draper, U. S. C. C, Mass., Boston Courier, Dec. 
I, 1860, Mr. Justice Clifford held that the rule, as laid down by the State courts, mast 
prevail in the Admiralty ; that the presumption was one of fact, and not of law, and 
that it might be controlled by any circumstances which show that it was not the inten- 
tion of the parties to the contract that it should operate as payment. 

(n) See 1 Parsons, Mar. Law, 87, note 1. In Dickinson v. Valpy, 10 B. & C. 128, 
the Attorney-General (Scarlett) said, arguendo: " Ship-owners may bind eacii other for 
repairs, but not by bills of exchange." He cites Williams v. Thomas, 6 Esp. 18, 
which does not decide the point, nor does it contain a dictum to that effect. See also 
Brodie v. Howard, 17 C. B. 109. 

(o) See Sect. I. of this chanter, and notes 


intent of the parties can make the latter equivalent to payment: 
while in the former case this intent may be shown. (^9) 

The transferrer either indorsed the bill or gave with it his 
guaranty, or transferred it merely by delivery. Of the law of 
indorsement and guaranty we have already spoken, and say now 
only, that if the paper be forged or be otherwise wholly void in 
the hands of the transferrer, he will nevertheless be liable as 
indorser or guarantor, and may be considered as making new 
paper by his own signature ; or as giving by his transfer and in- 
dorsement a warranty of his own title as well as of the validity 
of the former signatures. (7) To consider each signature in in- 
dorsement as creating a new promise seems to explain much 
of the law of negotiable paper. 

If the paper be transferred only by delivery, the question is a 
little more difficult. In the first place, where paper is indorsed 
to a creditor, the debt cannot be sued without proof of present- 
ment and notice of dishonor of the bill or note.(r) 

(p) See Sect. I. of this chapter, p. 159, note t. 

{q) Dana v. Angel, 1 Hawaian, 180 ; Strange v. Ellison, 2 Bailey, 385. If the holder 
of a promissory note sell or barter it, with the name of a third person indorsed, there is 
an implietl warranty on his part that the indorsement is genuine, unless it appears that 
the transferee took it without reference to that security, or had agreed to run tiie risk 
of the indorsement being genuine. So if a note be not indorsed, there is still a war- 
ranty that the signatures are genuine. Camidge v. Allenby, 6 B. & C. 373. 

(r) Bridges v. Berry, 3 Taunt. 130. The defendant being unable to pay a bill when 
due which he had accepted, obtained time, and indorsed to the plaintiff, as security, a 
bill drawn by himself to his own order, which when due was dishonored by the drawee, 
bat the holder omitted to give the defendant notice. Held, that by this laches the de- 
fendant was discharged as indorser, also as acceptor of the other bill. Kearslake ». 
Morgan, 5 T. R. ."ilS. Gallagher v. Roberts, 2 Wash. C. C. 191, seems to conflict 
with this rule, requiring presentment and notice to the debtor who indorses the bill in 
payment of a preceding debt. But it was decided a century ago, that the drawer of a 
bill of exchange stood in the same relation to the payee as did the indorser of a prom- 
issory note. Heylyn v. Adamson, 2 Burr. 669, 677, per Lord MansJieJd. It would seem 
also to be clear that, if the note of a third party were indorsed by the debtor in pay- 
ment of a precedent debt, the debtor can only be held liable to the creditor as indorser 
of such note, in which case, of course, strict rules of demand and notice will be re- 
quired. Fulford V. Johnson, 1.5 Ala. 38.*) ; Farr v. Stevens, 26 Vt. 299. If, tlien, a 
bill or note be sold by the maker, he is entitled as the indorser thereof to a strict appli- 
cation of the law with regfird to demand and notice ; but, according to the case above 
cited, if given in payment of a prior debt, the rules arc relaxed. Wc should sup[)ose 
this case might be doubted, or at least limited in its application to the circumstances 
before the court, which show the bill to have been taken conditionally. In M'Luj;han 
V. Bovard, 4 Watts, 308, Mr. Justice (lUison makes a remark which would seem to 
unpport the case of Gallagher v. Roberts : " A note or bill taken in satisfaction of a 

VOL. II. 16 


But when it is not indorsed, the creditor, in suing on his origi- 
nal dobt, need only show that the bill still remains in his 

precedent debt imposes no further duty on the creditor than to use reasonable diligence 
in obtaining payment or acceptance by presenting it in season, and giving notice of its 
dishonor to the debtor from whom it was had, if he be a party to it. Smith v. AVilson, 
Andr. 187. But where, as here, the debtor is not a party to it, even want of notice is 
immaterial, unless he has sustained actual loss from it Chitty on Bills, 98." If the 
note be taken in discharge and satisfaction, the debtor, if indor.ser, seems to be entitled 
to the rights of indorser. If his name be not on the note, he is no party to it, and the 
creditor is paid, so far as the debtor is concerned, by the bill or note of the third per- 
son. It cannot be that Mr. Justice Gibson means that the note is taken in actual 
satisfaction of the precedent debt, for the authority cited merely decides that a note 
taken for a precedent debt is taken as payment, on condition that it is paid in the 
proper time. Smith v. Wilson, Andr. 187. See the remarks of Bayley, J., in Ca 
midge v. Allenby, 6 B & C 373 ; Soffe v. Gallagher, 3 E. D. Smith, 507. In Francia 
V. Del Banco. 2 Duer, 133, goods were sold for approved paper, and the defendants 
indorsed to the plaintiff's an accepted bill of exchange. Duer, J. said : '• But all the 
authorities agree that, where such a note or bill, by the understanding and agreement 
of the parties, is transferred and received in payment of the del)t, the prior liability of 
the debtor is extinguished, and it is only as an indorser that he can then be charged.'' 
When a drawer of a bill of exchange has no funds in the hands of a drawee, he is not 
entitled to notice, for the notice to the drawer is to enable him to withdraw his funds 
from the drawee's hands, and this is needless when he has no funds to withdraw. 
Cessante ratione cessat lex. And upon the dishonor of a bill before due, the creditor 
may resort to the original consideration. Tempest v. Ord, 1 Madd. 89. In Farr v. 
Stevens, 26 Vt. 299, it w'as held that, where the vendee had indorsed a note at the time 
of sale, it was a payment, and the vendee could only be treated as an indorser. So in 
Jennison v Parker, 7 Mich. 35.5, it is held that, when a draft was received indorsed by 
the debtor as collateral security for what the defendants were owing the plaintiff, to be 
applied when paid, and not before, it was his duty to present the same for payment 
when it became due, and take the proper steps to charge the debtor as indorser ; and 
failing to do this, he makes the paper his own. Dayton v. Trull, 23 Wend. 345, 
seems to settle the question ; but Branson, J. distinguishes, on the authority of Jones v. 
Savage, 6 Wend. 658, a bill from a note ; for a drawer is supposed to provide for # 
bill by placing funds in the drawee's hands. Lawrence i'. Langlcy, 14 N. H. 70, takes 
no such distinction. It was a case of a promissory note indorsed by the defendant, 
" as security for the payment of the balance of a debt." It was held that the notice of 
demand and non-payment must be made in the regular way to charge the debtor as 
indorser. Tobey v- Barber, 5 Johns. 68, and note to Sect. I. on Laches. In Kearslake 
V. Morgan, 5 T. R. 513, the plea was, that a note was indorsedybr and on account of their 
deht : on demurrer, objecting that it was not alleged that it was in satisfaction, or that 
there had been laches. Plea held good. This is approved by Chitty, Bills, 97 ; and due 
diligence must be shown on the part of the plaintiff. Dayton v. Trull. 23 Wend. 345. 
In Jones r. Savage, 6 Wend. 658 : No recover}- is allowed on goods, unless the drawer 
of a bill of exchange given for them has been legally fixed. See Whitney v. Abbot, 
5 N. H. 378, for what may be a waiver of want of proper presentment ana »rgu- 
lar notice. See Covely v. Fox, 11 Penn. State. 171. ScniUe contra, Kelsey v. Ros- 
borough, 2 Rich 241 ; also Price v. Price, 16 M. & W. 232 ; Hebden i Hartsink. 4 
Esp. 46. 


hands, (s) This is presumptive evidence of dishonor, and the 
defendant must then show that the note has been paid. As to 
paper transferred by delivery, the general rule we have else- 
where shown is, that the transferrer is not liable on such notes. (^) 
When the paper was transferred without indorsement, in pay- 
ment of any simultaneous debt or purchase, or for any new con- 
sideration, (t^) it constitutes generally payment of the debt, and 
the mere dishonor of the paper does not revive the original debt 
or consideration, or in any way give the transferee a remedy 
against the transferrer. The transaction amounts to a sale of 
such bill or note. 

This rule rests upon the ground that, when a note is sold and 
then transferred by delivery, the purchaser takes all the risk of 
the solvenpy of the parties who ought to pay it. And tliat a 
transfer for a new purchase, or other new consideration, is in its 
effect a sale, and there is no guaranty implied as to the solvency 
of the maker or any other party. The rule, therefore, applies 
only when the transfer can be considered as a sale. Hence it 

(s) Goodwin v. Coates, 1 Moody & R. 221. Where the buyer of goods hands over 
to the seller the promissory note of a third party, without indorsing it ; held, that in an 
action for the price of the goods, the plaintiff need not prove presentment of the note 
to the maker. See Robson v. Oliver, 10 Q. B. 704. Denman, C J. said : " If A gives 
B a promissory note made by another person (not his own. as in Price v. Price, 16 M. & 
W. 232), payable either on demand or at a future day, and the note is taken in account, 
B must present it in a reasonable time, just as if it had been indorsed to him." It was 
determined in this case that the acceptors being bankrupt at the time the notes were 
taken was an excuse for non-presentment. But the principle, that in the case of persons 
not parties to the paper there need be no presentment in case of insolvency of tlie 
maker, is recognized in the cases infra, which are, however, generally cases wliich 
.turned on other points, and in which the negotiable paper was a bank-note. Camidge 
V. AUenby, 6 B. & C. 373; Robson v. Oliver, 10 Q. B. 704 ; Turner v. Stones, 1 Dow. 
& L. 122; Rogers v. Langford, 1 Cromp. & M. 637. Buylej/, B. says: "The notes 
ought to have been either presented by the holder to the bank for payment, or else to 
have been returned without delay to the defendant, so as to have given him an oppor- 
tunity of getting payment for them, or of making the best of them." This is criticised 
with mucli acutcness by Mr. Justice Coli:ridy<', in Turner t. Stones, 1 Dow. & L 122. 
See supra, Bank-Notes. Hender^ion v. Appleton, cited in Rogers v. Langford, 1 Cromp. 
& M. 642, and from Chitty on Bills, Addenda, p. 658, 7th ed. Van Wart ". Smith, 
1 Wend. 219, fully supports tiie text. For other cases arising from the dealings be- 
tween the same parties, see Van Wart v. Woolley, 3 B. & C. 439, Ryan & M. 4. 

l'^ Refusal to indorse is strong evidence that the risk is on the tran.sferee. Whit 
beck V. Van Ness, 11 Johns. 409; Breed r. Cook, 1.5 id. 241 ; St. John v. Purdy, 1 
Sandf. 9. Sec also notes to § 1 in general. 

(u) Camidge v. Allenby, 6 B. & C. 373, 9 1). & R. 391 ; Ward v. Evans, 2 Ld 
Ravm. 928. 


has beea said to I/e extremely clear, that, if the holder of a bill 
send it to market without indorsing his name uppn it, neither 
morality nor the law of this country will compel him to refund 
the money for which he sold it, if he did not know at the time 
that it was not a good bill.(f) 

But if paper be transferred by delivery only as a security for 
a pre-existing debt, and it is dishonored while in the transferee's 
hands, it affects in no way the debt it was intended to secure. (i^) 
The original liability remains what it was, and upon dishonor of 
the paper it is not even necessary to give him notice thereof as 
an iudorser. The authorities are somewhat confused on this 
point, but the rule of law is, undoubtedly, that the debtor is not 
entitled to any technical notice, but may show in defence any 
injury he has sustained by the actual laches of the creditor. If 
a creditor is referred to a third person for payment, and such 
person gives him the option of receiving cash or a bill, when the 
latter is taken it operates as a discharge of the original debtor, 
though the bill received be dishonored at maturity. (a;) But 
when a bill of a third person is taken from the debtor himself, a 
dififerent question is presented. It was said long ago that '• tak- 
ing a note for goods sold is a payment, because it is a part of the 
original contract ; but paper is no payment when there is a pre- 
cedent debt. For when such a note is given in payment, it is 
always taken under this condition, to be payment if the money 
be paid thereon in convenient time."(//) But this now requires 
some modification with regard to paper transferred in payment 

(i^) Stedman r. Gooch, 1 Esp. 3. See Kearslake v. Morgan, 5 T. R. 513 ; Okie r. 
Spencer, 2 Whart. 253 ; Fenn c. Harrison, 3 T. R. 757 ; Evans v. Whyle, 5 Bing. 485, 
3 M. & P. 130; Ex parte Shuttleworth, 3 Ves. 368; Fydell v. Clark, 1 Esp. 447; 
Bank of England r. Newman, 1 Ld. Raym. 442, 12 Mod. 241 ; Emly v. Lye, 15 East, 
7. 12. In Ex parte Blackburne, 10 Ves. 204, the Chancellor seemed to think that, if 
goods are purchased and paid for with bills unindorsed, and they turn out bad, the 
vendee is still liable. Jones r. Ryde, 5 Taunt. 488, 1 Marsh. 157; Owenson v. Morse, 
7 T. R. 64 ; Camidge v. Allenby, 6 B. & C. 373, 9 D. & R. 391 ; Robson v. Oliver, 
10 Q. B. 704 ; Ward v. Evans, 2 Ld. Raym. 928 ; Rogers v. Langford, 1 Cromp. & M. 
637 ; Weakly v. Bell, 9 Watts. 273, contra. 

{w) Marsh v. Pedder, 4 Camp. 257, Holt, N. P. 72 ; Ex p.irte Dickson, cited 6 
T. R. 142 ; Taylor v. Briggs, Moody & M. 28 ; Robinson i: Read, 9 B & C. 449. 

(x) Strong V. Hart, 6 B. & C. 160, 9 Dow. & R. 189, 2 C. & P. 55 ; Smith v. Per- 
rand, 7 B. & C. 19, 9 Dow. & R. 803 ; Bailiie v. Moore, 8 Q. B. 489. 

(y) Ward v. Evans, 2 Ld Raym. 928. See Camidge v. Allenby, 6 B. & C. 373 ; 
Moore v. Warren, 1 Stra. 415 ; Holme v. Barry, id. 415. 


of an old debt. It would seem that a transfer, even without 
indorsement, would not place the solvency of the payor entirel} 
at the risk of the transferee. We see there is authority foi 
saying that the original debt revives, (sr) in cases where the 
revival can cause no injury to the transferrer, because he would 
have lost the money equally if he had kept the note himself. 
The creditor was entitled to cash ; taking notes instead is a favor 
to the debtor, and he is entitled, it is said, to the money, if the 
notes are not paid. 

But there can now, we think, be no rule in such cases which 
would control the bargain of the parties. (a) K it could fairly 
be inferred from any circumstances that their intention was to 
close and consummate the transaction without leaving any liabil- 
ity behind it, — that is, if it could be shown that the creditor 
discharged the debt in consideration of the paper, taking upon 
himself the risk of its payment, — then he would certainly be 
held to his bargain, always supposing an entire absence of fraud 
on the part of the transferrer. If an express contract to this 
effect were proved, we know no reason why it should not be 
regarded. And we see as little reason for saying that such a 
contract may not be proved by the indirect evidence of circum- 
stances. For there ai'e many circumstances from whicli a jury 
can infer whether it was a discharge or not. And accordingly it 
has been distinctly asserted by high authority, that the nature of 
the transaction, and all the circumstances regarding the bill, 
must be inquired into, in order to ascertain whether he is subject 
to any liability. (&) If the bill be delivered and received as an 

(2) In Evans v. Whvle, 5 Bing. 485, 3 Moore & P. 130, Park, J. said : " The dis- 
tinction is to be collected from ihe cases which have been cited If a party sells goods, 
and takes for them a bill of exchange which is not honored, he is remitted to iiis origi- 
nal consideration ; but if he discount bills for money to one who does not even indorse 
them, it is a purchase of the bills at his own risk." See Emly v. Lye, 15 E;ist, 7, 12. 
Where another security is not required, the party who discounts a bill of excliange 
dtands in the situation of a purchaser of tlie bill, and therefore, according to the case 
of Bank of England v. Newman, I Ld. liaym. 442, 1 Coinyns, 57, cannot recover, 
against the person with whom he discounts it, and whose name is not on the bill, the 
money advanced by way of discount. Ex parte Bhickbume, 10 V"es. 204, in which a 
bill uken for a prior debt turned out to be bad, and it was held that the original con- 
sideration might be resorted to. But if the tiill be discounted, and there is no antece- 
dent debt, it is evidence of a purch.-vse, and there is no dcin^^. 

(a) See notes in Sect. I. ICx parte Isbvcstcr, I Rose, 20. 

(b) In Jones r. Ryde. 1 Marsh. Mu, 5 Taunt. 4SS, it was decided, that one who dis- 

l(i * 


absolute payment and discharge, he will not be liable ; if other- 
wise, he may. The mere fact of receiving such a bill does not 
show that it was received in discharge, (c) But the rule probably 
is, that when payment and discharge cannot be shown, the risk 
of the payment of a note so given and received remains with 
the transferrer. 

counts a forged navy bill for an innocent person may recover from his transferrer the 
money given as so much had and received to his use. Chief Justice Gibbs lays down 
this principle, tliat the negotiator of the bill by declining to indorse it is not relieved 
from that responsibility which attaches to him for putting off an instrument of a certain 
description, which turns out not to be as he represents it. Fuller v. Smith, Ryan & M. 
49. In this case Abbott, C. J. said : " If you take a bill without an indorsement, you 
cannot sue a person from whom you receive it, but then you take it as a bill ; but here, 
in fact, the instrument on the faith of which the moitey was advanced, turns out not 
to be a bill of exchange, as it was represented, being altogether a forgery, and that I 
conceive to be the distinction." Young v. Adams, 6 Mass. 182. In Ellis v. Wild, id. 
321, the circumstances were very strong. The one party agreed to sell goods to the 
other, and that certain notes should be taken for them ; these turn out to be forged. 
It was held that he could not resort to the original debtor. It would be otherwise if 
the bargain were for cash. This case may be doubted as an authority ; even upon a 
bargain for certain notes, if one proves false, recovery may be had. Markle v. Hatfield, 
2 Johns. 455. M. sold goods to H., and received payment in bank-notes which wei-e 
paid to C, who discovered one of the notes to be forged. Neither M. nor H. knew 
the note was bad. It vvas held that the forged note was no payment, and could be 
treated as a nullity, and resort had to the original consideration. Eagle Bank v. Smith, 

5 Conn. 71. "A forged note or dishonored draft, if delivered in payment, is no satis- 
faction or extinguishment of an antecedent demand, and for most just and obvious 
reasons. They are of no value, and not what they were, either expressly or impliedly, 
affirmed to be by the person delivering them as payment, or believed to be by him who 
accepted them as such. On this point the law is too well established to require the 
aid of argument." Puckford v Maxwell, 6 T. R. 52 ; Owenson v. Morse, 7 id. 64 ; 
Stedman v. Gooch. 1 Esp. .3; Roget v. Merritt, 2 Caines, 117; Smith ». Smith, 2 
Johns. 235 ; Arnold v. Crane, 8 id. 79 ; Mudd v. Reeves, 2 Harris & J. 368 ; Hargrave 
V. Dusenberry, 2 Hawks, 326 ; Keene r. Thompson, 4 Gill & J. 463 ; Salem Bank v. 
Gloucester Bank, 1 7 Mass. 1, 33, 630, note ; U. S. Bank t. Bank of Georgia, 10 Wheat. 
333 ; Cabot Bank v. Morton, 4 Gray, 156 ; Merriam v. Wolcott, 3 Allen, 258. 

(c) Payment must be generally understood in the cases to mean conditional pay- 
ment, and not absolute payment and satisfaction. This is important to a correct 
understanding of some of the cases, and many of the dicta. In Stedman v. Gooch, 1 
Esp 3, Lord Kmyon says "that if, in ]iayment of a debt, the creditor is content to take 
a bill or note, payable at a future day, he cannot legally commence an action on his 
original debt until such bill or note becomes payable, or default is made in the pay- 
ment." Here we see " payment " used to mean the conditional payment by the note, 
and the absolute payment of the note by coin. In Mailhird v. Duke of Argyle, 6 Man. 

6 G. 40, on special demurrer it was held that, even in pleading, " payable " might be 
considered conditional payment by note. Tindal, C. J. said : " Payment does not ne- 
cessarily mean paymeUjI^ satisfaction and discharge, but may be used in its popular 
sense." See Wheelei* ». Schroeder, 4 R. I. 383, where "■payable in promisswry notes'" 
was construed to mean " payment in ease the notes were paid." 


We think whoever gives negotiable paper, transferable by de- 
livery, warrants that the signatures are genuine ; and Mr. Jus- 
tice Story, in his work on Promissory Notes, (6^) lays it down that 
there is a warranty of title. But why should this be so when an 
honest transferee need give no such warranty ? (e) For, as we 
have seen, property follows possession, and the mere possession 
of the transferrer is enough to give a perfect title to the honest 
taker of the paper negotiable by delivery only.(/) We hold 
that the doctrine of implied warranty in sales is applicable to 
the sale of bills and notes only to the extent that one who sells 
mdorsed notes warrants the indorsement genuine. 



Much of the law stated in the previous sections applies to the 
transfer of bank-bills, for they are promissory notes of the 
bank, either payable to bearer or indorsed by a payee in blank, 
and in either case transferable by delivery ; and they should be 
governed by the same rules, unless so far as they must be con- 
sidered constituting an exception to the general law governing 
negotiable paper of similar character. (^) We have considered 

{d} Promissory Notes, ^118. 

(e) Goodman v. Hiirvey, 4 A. & E. 870, 6 Nev. & M. 372. In an action by the 
indorsee; of a bill, who has f;iven value to a fraudulent indorser, the question for the 
jury is only whether he acted with good faith in taking the hill. Even gross negli- 
gence is not to be consi<lered hy the jury. " Gross ncirligcnce," said Lord Demiutii, 

" may be evidence of jikiUi Jides, but is not the same thing Where the bill 

passed to the plaintiff, without any jjroof of bad faith in him, there is no objection to 
his title." Willis v. Bank of England, 4 A. & E. 21 ; Uther v. Rich, 10 A. & E. 784, 
2 Per. & D. 579. Sec Backhouse r. Harrison. 3 Nev. & M. 188, .5 B. & Ad 1098 ; 
Crook V. Jadis. id 909, 3 N & M. 2.^)7 ; Foster v. Pearson, 1 Cromp. M. & R. 849, 
5 Tyrw. 2.0.5 ; Young i; Cole, 3 Bing. N. C. 724 ; Gompcriz v. Bartlett, 2 Ellis & B. 
849, 24 Eng. L. & Eq. 156; Gurncy v. Womersley, 28 id. 256; Dana i;. Angel, 1 
Hawaian, 180. 

//) Strange v. Ellison, 2 Bailey, 385; Cabot Bank v. Morton, 4 Gray, 156; Al- 
ifich V. .Tarkson, 5 R. I. 218. 

(«/) Scruggs w. Gass, 8 Yerg. 175. The court hold it difficult to distinguisli between 
private notes and the notes of banks. See Corbit v Bank of Smyrna, 2 Ilarring. Del 
235; Turner r. Stones, 1 Dow. & L. 131. 


in a chapter by itself the peculiar principles or rules of the law 
of bank notes or bills. 

In England, Bank of England notes are by statute (//) legal 
tender for all sums above <£ 5, except at the Bank of England 
or its branches ; and so country bank-notes are a legal tender 
unless objected to, and are considered as cash. They are, how- 
ever, everywhere considered by the law as money, more dis- 
tinctly and unreservedly than other negotiable paper, (i) 

{h) 3 & 4 Wm. IV. ch. 98, ^ 6. 

(i) Solomons v. Bank of Enj,dand, 13 East, 135, note; Southcot v. "Watson, 3 Atk. 
226, 232. Miller v. Race, I Burr. 452, per Lord Mansfield, is the most noted case oa 
the subject of bank-notes. It was decided in 1758, and was an action of trover for a 
bank-note which had been stolen, but which the defendant had taken fairly and honestly 
in the way of business. The paynoent had been stopped at the bank, and when the 
plaintiff presented the bill for payment, the defendant, a clerk, refused to pay the note, 
or return it to the plaintiff The case abounds in dicta, but the decision must have 
been the same had the note been an ordinary promissory note. Lord Mansfield said : 
"Now they (bank-notes) 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 cur- 
rency 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 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." 
The words of Lord Mansfield are quoted and approved in the case of U. S. Bank v. 
Bank of Georgia, 10 Wheat. 333 ; but this case was one which turned upon the 
point whether a bank was bound by receiving its own bills with forged signatures. 
Young V. Adams, 6 Mass. 182. See also cases in following notes. Phillips v. Blake, 
1 Met. 156. The bank-notes were objected to, but finally taken; held, a good tender 
and payment. In Young v. Adams, it is said: "And it is to be remembered that 
bank-bills are. after all, only private contracts, having no public sanction similar to 
that which gives operation to the lawful money of the country. It seems, however, 
necessary, to go thus far in conformity to the usages unfortunately prevailing respect- 
ing bank-bills in their loose and unrestricted currency, dangerous as it is to the welfare 
of individuals and of the community." Bank-notes pass as cash by devise, — Stuart 
?■. Bute, 11 Ves. 657, 662; Popham v. Aylesbury, Ambl 68, — and not by devise of 
choses in action. Fleming v. Brook, 1 Sch. & L. 318; Drury x. Smith, 1 P. VVms. 
404, held a bill good as a donatio mortis causa. So Miller v. Miller, 3 id. 356 ; Polglass 
V. Oliver, 2 Cromp. & J. 15. So possession is prima fiicie evidence of property. King 
V. Milsom, 2 Camp. 5 ; Greenstreet v. Carr, 1 id. 551. A tender of a country bank- 
note is a good tender, if the creditor only objects to the quantum and not to the quality 
of the tender. Lockyer v. Jones, Peake, N. P. 180, note. The last case was overruled 
in Mills V. Safford, and a Bristol hank-bill held not a good tender, though no objectiou 
was made on that account. This case will be found in Peake, N. P. 180, note. But it 
was overruled again in Tiley v. Courtier, 2 Cromp. & J. 16, note c, and I.ockyer r. 
Jones established as law. Phillips v. Blake 1 Met. 156 ; ll.uidy v. Dobhin, ,2 Johns. 
220; Wright y.Reed, 3 T. K. 55i ; Gu;iidi.iiis of Lichfield Union v. Greene, 1 H. & N. 


If they are forged, the rule before stated as to other notes 
in relation to warranty of the signatures applies to them. In 
other words, forged bank-bills are notliing ; payment by them is 
a nullity ; their transfer effects nothing, and the transferee might 
recover money paid for them, or perhaps the value of anything 
given or sold for them, on the ground of entire absence or fail- 
ure of consideration. (j) 

884, per Bramwdl, B. It (a bank-note) is not in all respects like a promissory note 
or bill of exchange, payable at a distant day. So a fortiori, Bank of England notes. 
Brown v. Saul, 4 Esp. 267 ; Grigby v. Oakcs, 2 B & P. 526 ; Wright v. Reed, 3 T R. 
554. In America, the bank-notes more resemble the English country bank-notes than 
Bank of England notes ; for the Bank of England notes are by statute made legal 
tender for ^ 5 or upwards, except at the Bank of England or any of its branches. In 
the United States the States are forbidden by the Constitution to make anything except 
gold and silver a legal tender in the payment of debts. See Ex parte Board, 4 Cowen, 
420 ; a sheriff was allowed to receive current bank-notes as money, and that against 
the creditor's express directions Keith v. Jones, 9 Johns. 120. " The note is a nego- 
tiable note under the statute ; and being declared to be payable in York State bills or 
specie is the same thing as being made payable in lawful current money of the State ; 
for the bills mentioned mean bank paper, which is here, in conformity with common 
usage and common understanding, regarded as cash." See also Judah v. Harris, 19 
Johns. 144; Leiber v Goodrich, 5 Cowen, 186; Dougherty z^. Western Bank, 13 Ga. 
287, 299; Bullard r. Bell, 1 Mason, 252; Phillips v Blake, 1 Met. 156; Polglass v. 
Oliver, 2 Tyrw. 89. In Pickard v. Bankes, 13 East, 20, Lord Ellenhorongh said, Pro- 
vincial bank-notes are certainly not money ; but if the defendant receives them as 
such, they are money as to him. Lightbody v. Ontario Bank, 1 1 Wend. 9 : " Although 
bank-notes supply the place of coin in affording a circulating medium, yet they are 
promissory notes, and in most respects the rules relating to promissory notes are appli- 
cable to them." Bills or notes payable in bank-bills are not negotiable. See defi- 
nition of bill or note, Collins v. Lincoln, U Vt. 268. Bank-notes, though not money, 
have a certain legal character in some respects like money. Corbit v. Bank of Smyr 
na, 2 Harring. Del. 2'35. 

(j) .Jones V. Ryde, 5 Taunt. 488 ; Wilkinson v. Johnson, 3 B. & C. 428 ; Young v. 
Adams, 6 Mass. 182 ; Phillips v Ford, 9 Pick. 39 ; Mudd v. Reeves, 2 Harris & J. 368. 
This was a case of a forged bank-note, and both parties were equally innocent. It was 
held to be the loss of the transferrer. The value of a gelding for which it was given 
was recovered. Keene v. Thompson, 4 Gill & J. 463 ; Hargrave v. Duscnberry, 2 
Hawks, 326. If one receive a counterfeit bank-note, he may treat it as a uulUlij. 
This was a case of a five-doll:ir bill altered to a fifty-dollar bill. Markle v. Hatfi.dd, 2 
Johns. 455; Salem Bank v. Gloucester Bank, 17 JMass. 1, 33 ; Simins v. Clark, 11 III. 
137. Ramsdale v. Horton, 3 Penn. State, 330; see also note k, infra; Anderson v. 
Hawkins, 3 Hawks, 568 ; Pindall v. Northwestern Bank, 7 Leigli, 617 ; Wilson v. Alex- 
ander, 3 Scam. 392 ; Eagle Bank v. Smith, 5 Conn. 71 ; Thomas v. Todd, 6 11111, 340. 
There are two authorities which trouble the courts in deciding questions with regard 
;o counterfeit notes and bills, but which were decided with regard to counterfeit coin, 
and which are no doubt nov/ had law. Sheppard's Touch. 140, says, in discoursing of 
a mortgage, if payment be made, part of it in counterfeit coin, and the party accept it 
Hn<' put it up, this is a good payment, and conseiiucntly a good j)erf()rtiuuice of the 


It is therefore held, that if one passes counterfeit bilL in pay- 
ment of a debt, he is bound to receive them back, if he has 
notice that they are counterfeited within a reasonable time ; and 
this reasonable time is a question for the jury, under the circum- 
stances of the case. (A:) 

condition. In Wade's Case, 5 Co. 114, we find this passage : " And it was said that it 
was adjudged between Vane and Studley, that wlicre the lessor demanded rent of his 
lessee act-oiding to the condition of re-entry, and the lessee paid the rent to the lessor, 
and he received it and put it in his purse, and afterwards, looking again over it at the 
same time, he found among the money that he had received some counterfeit pieces, 
and thereupon he refused to carry away the money, but re-entered for the condition 
liroken ; and it was adjudged that the entry was not lawful, for when the lessor had 
accepted the money it was at his peril, and after that allowance he shall not take 
exception to any part of it." Both decisions were made to prevent forfeitures, which 
probably misled the courts. In the civil law, as quoted by Pothier, 1. 346, "The 
debtor is not only without any right of obliging the creditor to receive anything differ- 
ent from what is due as a payment, but even if the creditor by mistake receive some 
other thing upon the supposition of that being the thing which is actually due, the pay- 
ment would not be valid, and the creditor may, on offering to return what he has so 
received, demand what is really due." This is also decided by Paulus, in 6 .50, jj. si 
quum aurum tibi promississem, tihi ignoranti quasi aurum as solverem non Uberabor. Dig. 
46, 3. 50. Pothier, Traite' des Obligations, No. 495. 

(k) Gloucester Bank v. Salem Bank, 1 7 Mass. 33 : " If it be said that the question 
whether there has been unreasonable delay and negligence is a question of fact for the 
jury, the answer is, that a judge, on »lie facts in this case, would be bound to instruct 
the jury that in point of law there had been negligence, so that a new trial would be 
altogether fruitless." This was a case in which one bank received its own bills forged, 
and kept them a long time without notice to the bank of which they were received. It was 
held that the bank was bound to know its own signature, and that laches had prevented 
a recovery. Thomas v. Todd, 6 Hill, 340 ; Ramsdale v. Horton, 3 Penn. State, 330; 
Markle v. Hatfield, 2 Johns. 455 ; Fogg v. Sawyer, 9 N. H. 365 ; Simms v. Clark, 1 1 111. 
137. It is said : " The law undoubtedly is, that a party who innocently pays away a coun- 
terfeit bill is not bound to take it back unless it is returned upon him in a reasonal)le time 
after it is discovered to be spurious ; and the reason of the rule is to enable him to 
trace out and fall back upon the person from whom he received it. But what shall be 
considered a reasonable time must necessarily depend on the situation of the parties, and 
the facts and circumstances of the particular case." In this case the notice of the spu- 
rious character of the bills was not shown to have been given for twenty days. The 
jury found the time reasonable, and the court would not disturb their verdict. The 
discovery of the spurious character throws upon the taker the duty of notifying his 
transferrer, and the reasonable time is to be reckoned from that. It was also held 
that an offer to return the note was dispensed with by the transferrer saying that he 
will not take back the note till compelled to do so by law. Raymond v. Baar, 13 S. 
& R. 318. One receiving a counterfeit bank-note kept it about six montlis after the 
spurious character of the note was discovered, when he gave notice to the defendant. 
This was held such negligence as prevented a recovery. Thomas v. Todd, C Hill, 
R40. A bill was discovered to be counterfeit about May 25, and kept without notice 
till July 4th following ; this was held to be an unreasonable time, and to defeat tne 


If the bills are genuine, but at the time of payment by the 
debtor the bank had stopped payment, this being unknown ar. 
the place where the bills were transferred, the loss falls on the 
payer, because even bank-bills not forged, and supposed to be 
f^ood, are not absolute payment.(^) Tliis seems to be at least 

(/) A holder of bank-notes at the moment a bank becomes insolvent is the loser, 
provided a person to whom he may pass them (however innocently) afterwards be not 
guilty of laches in attempting to collect them or in returning them to the transferee. 
Owenson v. Morse, 7 T. R. 64. Plate was paid for in notes of Messrs. Shaw, bankers, 
and left; to be engraved. This was after banking-hours, and the bank was never opened 
again. It was held that an action of trover would not lie for the plate, the notes being 
no payment. The point is very nice, and we think the question of stoppage in transitu 
entered into the decision. Corbit v. Bank of Smyrna, 2 Marring. Del. 23.5. For had the 
payment been made in a common promissory note on time, it would have been payment 
and satisfaction ; and bank-bills ought to be payment as much as promissory notes, 
provided the bank be not at the time actually insolvent ; but, as will be seen by exam- 
ining the section on liens and stoppage in transitu, the latter right revives, though pay- 
ment has been made by a note, provided when the note falls due the goods are still in 
the power of the vendor. In this case the rights of the vendor seem to have been re- 
garded as the same as if he had taken a common promissory note. The bank at the 
time could not be considered as actually insolvent. It would seem that country bank- 
notes are not regarded by the English courts as much like money as our bank-notes 
are regarded by our courts, Pickard v. Bankes, 1.3 P^ast, 20 ; and perhaps the more 
80, because the statute mentioned supra makes some bank-bills, namely, those of the 
Bank of England, legal tender. Erpressio unius est exclusio alterius. No bank-bills can 
be made tender by State statutes, by provision of the Constitution of the United States. 
and therefore conventional agreement tends to make all bank-bills as nearly as possible 
money. Timmins v. Gibbins, 18 Q. B. 722, 14 Eng. L. & Eq. 64. M. W. deposited 
certain bills on a country bank on the 26th of the month ; the notes were presented to 
the London agents of the bank the next day. The bank had stopped payment the 
26th. M. W could not maintain an action for money lent or money had and received. 
The notes had been immediately retransmitted, and notice of dishonor given to the 
plaintiff. Turner v. Stones, 1 Dow. & L. 122. A .£ .5 hank-bill was changed for the 
defendant on Saturday. On Monday the banking-house was opened two hours, but 
no payments were made, and the jury thought the bill would not have been paid if 
presented. The bank then was closed and became insolvent. The same day the 
plaintiff sent the note to the defendant, and asked for his money. Held, that the duty 
of a holder in such case is to give prompt notice of the stoppage of the bank, and to 
tender the note to his transferrer. In this case the plaintif!' had done all he was bound 
to do. From this and the previous case it seems that, when a hank closes and never 
opened for payment, the insolvency dates from the time of closing the bank at the 
close of usual banking-hours. The principle is, that the taker must have been at some 
time able to get the bill redeemed. Beeching v. Gower, Holt, N. P. 313. It ai)pcared 
a note of a country bank was given in payment, but before the time allowed by 
the law merchant for presentment had expired the bank failed ; yet it was held that 
the holder was bound to present the note for payment in due time, and by neglect- 
ing to do so made it his own. Camidge v. AUenby, 6 B. & C. 373 (1827). Thia 
is the leading English case on the subject, atid may be considered as the law in the 


the general rule ; but in some of the States of this country 

English courts. Goods were sold on the morning of the 1 0th of December ; at threq 
o'clock of the same afternoon bills were given in payment. These were notes of D. & 
Co., at Hiuklersfield, who had stopped payment at 1 1 o'clock, A. M. of the same day; 
but this was known to none of the parties. The notes were not presented ; but on the 
l"tii (one week after) the defendant was required to take back the notes. It was held, 
that, under the circumstances, the plaintiff could not recover. Holroyd, J. seems to 
regard the notes as payment ; " but if promissory notes, the plaintiff was barred by his 
laches." Littledale, J. put his opinion on the ground of laches, and if bank-bills are 
payment, that the taker has the risk. See Timmins v. Gibbins, 18 Q. B. T22, 14 Eng 
L. & Eq. 64; Rogers v. Langford, 1 Cromp. & M. 637 (1833). The notes were not 
presented ; and although the plaintiff gave notice to the defendant, he did not offer to 
return the notes for a week. See also Bowes v. Howe, 5 Taunt. 30. In the case of 
Turner v. Stones, 1 Dow. & L. 122, Mr. Justice Coleridge delivered the opinion of the 
court, and all the previous cases are most ably reviewed. From the English cases, supra, 
it seems that presentment is not necessary to bind the transferrer, but that there must be 
a prompt return. In America, the bills must be returned in a reasonable time after their 
spurious or worthless character is discovered, and what is reasonable is a question for the 
jury. In England, from some of the cases it appears that the bills must be presented 
or circulated immediately. We do not think this the rule with American bank-bills. 
In Phillips V. Blake, 1 Met. 156, no opinion is given, but much doubt is cast upon the 
power of recovery, in case a bill is not actually presented for payment at the bank 
counter. But the usual rule requiring presentment, even though the payor is insolvent, 
— Bowes V. Howe, .5 Taunt. 30 ; Sands v. Clarke, 8 C. B. 751, — in the case of bank- 
notes is done away with. See cases supra et infra. Roget v Merritt, 2 Caines, 1 1 7. 
This case is much like Owenson v. Morse, 7 T. R. 64. Lightbody v. Ontario Bank, 
11 Wend. 9. The bank had stopped payment on the day before the bill was passed. 
The transferee, after the refusal of the defendant to accept, deposited the bill with a 
receiver, and got thirty-three per cent of its amount. It was held to be the loss of the 
holder at the time of insolvency. The case overrules a dictum of Spencer, C. J., in 
Whitbeck u. Van Ness, 11 Johns. 414. He says, commenting on Markle v. Hatfield, 2 
Johns. 4.')5 : '• We held that the payee did not assume upon himself the risk of forgery, 
the forged note being received upon the faith of its being genuine ; but it is not to he 
doubted, that, had the bill been good, and had the bank failed, and the parties been equally 
ignorant of the fact, the decision would have been different " In this case, a distinction 
is drawn between bank-bills paid for a contemporaneous and a prior debt, in which dis- 
tinction we have no confidence. Timmins v. Gibbins, 18 Q. B. 722, 14 Eng. L. & Eq. 
64, per Lord Campbell, C. J. : " There must always be some interval during which the 
payor was del>tor." But as the case went somewhat on that ground, it weakens its 
authority on the question of payment of a contemporaneous debt It appears that, if 
the loss were to fall on the transferee, both parties being in appearance equally inno- 
cent, great frauds would be perpetrated ; for the transferrer must be presumed in 
nocent until proved guilty, and that can seldom be shown. As in Jefferson v. Holland, 
cited in Corbit v. Bank of Smyrna, 2 Harring. Del. 235, 260 ; Fogg v. Sawyer, 9 N. H. 
365. See Frontier Bank v. Morse, 22 Maine, 88. This case was carried to the Courl 
of Errors, — Ontario Bank v. Lightbody, 13 Wend. 101, — and affirmed. Chancelloi 
Walwoith said: " The same principle (that with regard to the notes of third persons for 
a pre-existing debt) is applicable to the notes of an incorporated bank, except that as 
to the latter there is always an implied understanding between the parties, that, if the 
bill at the time it is received is in fact what the party receiving it supposes it to be. he 


a different system of law prevails. These we refer to in our 
notes, (w) 

is to run the risk of any future failure of the bank. This implied agreement between 
the parties arises from the fact that bills of this description, so long as the bank which 
issued them continues to redeem them in specie at its counter, are by common consent 
treated as money, and are constantly passed from hand to hand as such. The receiving 
them as money, however, is not a legal, but only a conventional, regulation, adopted 
by the common consent of the community This principle of considering bank- 
bills as money, which the receiver is to take at his own risk, cannot therefore be carried 
any further than the conventional regulation extends ; that is, to consider and treat 
them as money so long as the bank by which they are issued continues to redeem them 
in specie, and no longer." Mr. Gallatin, in his essay on the Currency and Banking 
of the United States, p. 29, says : "A payment made in bank-notes is a discharge of 
the debt, the creditor having no recourse against the person from whom he has received 
the notes, unless the bank has previously failed." Grafton Bank v. Hunt, 4 N. H. 488 ; 
Fogg V. Sawyer, 9 N. H. 365. As to entire or partial worthlessness, see, to the same 
effect, Lightbody v. Ontario Bank, 11 Wend. 9. Sec also Ex parte Blackburne, 10 
Ves. 204; Lovett v. Cornwell, 6 Wend. 369; Gilman v. Peck, 11 Vt. 516; Frontier 
Bank v. Morse, 22 Maine, 88. See perhaps contra, Lowrey v Murrell, 2 Port. Ala. 
280 We doubt whether the cases are similar of a bill on a broken bank and a coun- 
terfeit bill. A counterfeit bill is as no bill ; it is utterly worthless, and of no value ; 
whereas, a bill on a bank is a genuine and true bill, of uncertain value, and perhaps 
worthless by reason of insolvency. In Wainwright v. Webster, 11 Vt. 576, the same 
was decided, and that the character of bank-notes was conventional. Frontier Bank v. 
Morse, 22 xMaine, 88, is to the same effect, and holds that the rule that, where parties 
are equally innocent or guilty, potior est conditio defvndentis, is not applicable to cases of 
money paid by mistake. And if the payor of the bills, when seasonably notified, re- 
plies that he will have nothing to do with the bills, it is not necessary that they should 
be returned by the earliest mail, or tendered to him. In this case the cashier of the 
bank requested the defendant to give him bills of a large denomination, and those in 
question were furnished him. In Houghton v. Adams, 18 Barb 545, bills on a Mary- 
land bank, which had become insolvent a few hours before, were sold at one per cent 
discount. It was held that the holder at the time of failure must be the loser. Harley 
V. Thornton, 2 Hill. S. Car. 509, note. The holder of a bank-note at the time the bank 
stops payment must bear the loss, provided he has been in ))ossession so long that a 
reasonable time for presenting the note and demanding payment has elapsed. It is 
always necessary that the note should have been presented within a reasonable time, 
when the party intends to charge the person from whom he took it. Bank-notes 
depreciated in value may he taken at full value. White v. Guthrie, 1 J. J. Marsh. 503 ; 
Honore v. Colmesnil, id. 503. 

(m) Alabama. Lowrey v. Murrell, 2 Port. Ala. 280. The dictum in Whilbeck v. 
Van Ness, 11 Johns. 409, is quoted, and the decision was upon the ground that in pass- 
ing bank-notes there was no warranty of the solvency of the maker. The distinction 
between prior and contemporaneous debts is discarded. It is to be observed, that there 
was no diligence in attempting to colle^J, and no offir to return. 

Pennsylvania. Bayard v. Sliunk, 1 Watts & S. 92, is the strongest case on the sub- 
ject, and the opinion of the court was delivered by Chief Justice Gibson: " By the con- 
ventional rules of business, a transfer of bank-notes, though they are of the same mould 
and obligation (as notes of third persons) betwixt the original parties, is regulated by 
peculiar principles and stands on a different footing." The grounds of the decision are 

Vol. IL— N 17 


The same rule applies a fortiori to protect one who receives 
a bill of a broken bank on representation that it is worth its 
nominal value. (w) But if a taker expressly agrees to receive 
it as genuine, on his own knowledge and at his own risk, the 

" commercial convenience and the inconvenience of reclamations, more than counter- 
balancing the danger of a crafty man's putting off a counterfeit bill, which he cannot 
be shown to have known to be on a broken bank." The distinction is very strongly 
drawn between forged bills and those on broken banks, and we think correctly ; but the 
reason given in the case of a bill on a broken bank, that it is seldom or never worth- 
less, though impaired in value, seems to be met b}' Mr. Chief Justice Parker, in the 
case of Fogg v. Sawyer, 9 N. H. 365, supra, who remarks, that any forged or counter- 
feit coin has some value. 

Tennessee. Scruggs v. Gass, 8 Yerg. 17.5. The transfer of an individual's note for 
a pre-existent debt is mentioned, and the court say it is difficult to distinguish, in law, 
bank-notes from those of individuals. And it is said : " This court does not say but 
that Scruggs might have avoided the effect of the payment in bank-notes by having 
presented them to the bank for payment, and on refusal notified Gass of the fact." 
This decision seems to turn upon presentment and notice in the case of bank-bills, 
which we have discussed in another place. The case of Young v. Adams, 6 Mass. 
182, was one of counterfeit bills. 

Delaware. Corbit v. Bank of Smyrna, 2 Harring. Del. 2.35, adopts the same rule as 
the Pennsylvania case. Layton, J. dissented. It holds, also, that the effect of a pay- 
ment in hitnlc-noiQS does not arise from their conventional, but from their legal char- 
acter. Also, if at the time of a contract a bank-note be paid without indorsement, 
guaranty, or agreement, it is received as 7«oney, and the risk of the solvency of the bank 
is on the part of the receiver. The distinction is also taken as to prior or contempo- 
raneous debts, and bank-notes are held no payment of the former by any implied agree- 
ment, as is the case in a sale or exchange, or a contemporaneous transaction. And even 
If the transferrer were liable, from agreeing that the notes should be at his risk, yet he 
must have proper legal notice to bind him. In this case, Mr. Justice Layton, dissent- 
ing, denies the distinction between a prior and contemporaneous debt. The case in 
Delaware is by far the ablest case on the question, and abounds in sound reasons for 
the same conclusion arrived at in the Pennsylvania case. 

Massachusetts. Young v. Adams, 6 Mass. 1 85. See Snow v. Perry, 9 Pick. 539, a 
case in which the bank stopped payment on the day after the bills were received, and 
in that respect resembling Turner v. Stones, 1 Dow. & L. 122. Edmunds v. Digges, 
1 Grat. 359, decides that there is no warranty of solvency at the time of the trans- 
fer of the bank-bills, provided both parties are equally innocent and ignorant. In this 
case the bills given were in exchange for other bills, and they were given to the trans- 
feree at his solicitation, and when the insolvent condition of the bank was discovered, 
the bills were immediately tendered in return. The point was thus fairly and fully 
presented to the court, there being perfect innocence and no laches on the one side or 
the other. 

(n) Commonwealth v. Stone, 4 Met. 43; Oilman v. Peck, 11 Vt. 516 ; Alexander v. 
Dennis, 9 Port. Ala. 174 ; Corbit v. Bank of Smyrna, 2 Harring. Del. 235 ; Jefferson d. 
Holland, cited 2 Harring. Del. 260. He who receives the bill of a broken bankj on rep- 
resentation made to him that it is worth its nominal value, does not take it at his own 
risk. The question whether passing a bill on a broken bank and receiving good money 
in exchange without any words is a representation that the bill is worth what it pur- 


law does not prevent his taking this risk upon himself, or make 
a better bargain for him than he has made for himself. 

One exception to the general rule seems to be well established 
It is, that if a bank receives bills supposed to be its own in pay- 
ment of a deV)t due to it, or held for collection from an innocent 
party, and they turn out to be forged, the bank is nevertheless 
held. For a bank is obviously bound to know whether bills pur- 
porting to be its own are genuine or forged, by a reason stronger 
than applies to anybody else ; (o) and the fact of the reception 

ports to be, depends on the attendant circumstances. Commonwealth v. Stone, 4 Met. 
43. Alexander v Dennis, 9 Port. 174, was a case of fraud, and no notice or return of 
the bills was held necessary to bind the payor. We have taken cases from those 
States where payment in bills of a bank already insolvent is at the risk of the payee, 
or where a bill or note is presumed payment until it is shown to be otherwise. 
Aldrich v. Jackson, 5 R. I. 218. 

(o) In U. S. Bank v. Bank of Georgia, 10 Wheat. 33-3, it was held that, though in 
general payment in forged paper is not good, yet that it was not applicable to a pay- 
ment made bona fide to a bank in its own notes. The Bank of Georgia having origi- 
nally issued the bank-notes in question, they were, in the course of circulation, fraudu- 
lently altered, and having found their way into the Bank of the United States, the 
latter presented them to the former, who received them as genuine, and placed them to 
the general account of the Bank of the United States as cash, by way of general de- 
posit. The forgery was not discovered till nineteen days afterwards, upon which notice 
was duly given, and a tender made of the notes to the Bank of the United States, and 
by them refused. Both parties were equally innocent of fraud, and it is not disputed 
that the Bank of the United States were lK>nn fide holders for value. In Levy v. 
Bank of U. S., 4 Dall. 234, 1 Binn. 27, a forged check had been accepted by the bank, 
and carried to the credit of the plaintiff (a depositor) as cash, and upon a subsequent 
discovery of the fraud the bank refused to pay the amount. The court then said : " It 
is ouroi)inion, that, when the check was credited to the plaintiff as cash, it was the same 
thing as if it had been paid ; it is for the interest of the bank that it should be so taken. 
In the latter case the bank would have appeared as plaintiffs ; and every mistake that 
could have been corrected in an action by them may he corrected in this action, and none 
other." In Bolton v. Ricliard, 6 T. R. 1.39, carrying a check to the credit of a party 
was held equivalent to the transfer of so much money in the hands of the banker to his 
account In Price v. Neal, 3 Burr. I3.T.5, the drawer's name was forged, but the bills 
were paid by the acceptor, who attempted to recover his money. The court said : " Here 
was no fraud, no wrong. It was incumbent upon the plaintiff to be satisfied that the 
bill drawn upon him was the drawer's hand before he accepted or paid it. But it was not 
incumbent upon the defendant to inquire into it." If, therefore, a drawee is bound to 
know the hand of the drawer, it follows that a bank is bound to know whether the sig- 
natures on its own bills are genuine or not. This case was followed by the stronger 
case of Smith v. Mercer, 6 Taunt. 76, from which decision Mr. Justice Chnmbre dissented. 
In Gloucester Bank v. Salem Bank, 17 Mass. 33, the latter had paid money to the 
former in its own bills, which were discovered to be forgeries. Notice of the doubtful 
character of the notes was given in fifteen days, and averments of forgery fifty days, 
tfter the bills were taken. The notes were in a bundle which had not been examined 


might be regarded, in favor of an innocent party, as an adoption 
of the bills by the bank. Whether a bank would be so bound 
if it received these forged bills on deposit, is not settled by au- 
thority, (p) The case is different. The bank here also should 
know its own bills, and should give immediate notice if it in- 
tended to deny them. It is, however, possible that the bank 
would not be holden, unless its reception of the bills had in some 
way exposed an innocent depositor to loss in case they were now 
returned, which loss would have been avoided had the bank 
refused at once to receive them as genuine. But the negli- 
gence of the bank, if there be any in the view of the law, must 
be the immediate and certain cause of injury to the depositor. 
No remote result can be contemplated. And in the case of de- 
posit, we are inclined to think that a bank would not be held to 
such immediate knowledge and strict diligence as to be re- 
quired to know and give notice of the character of bills imme- 
diately on deposit. 

Another question occurs in this connection, which is, how far 
a bank is bound to know whether the bills of other banks are 
genuine, (g) We see no sufficient reason for saying that the 

by the cashier till a long time had elapsed. The bank was held bound to know its own 
notes. The court say : " The true rule is, that the party receiving such notes must 
examine them as soon as he has opportunity, and return them immediately. If he 
does not he is negligent, and negligence will defeat his right of action. This principle 
will apply in all cases where forged notes have been received, but certainly with more 
strength where the party receiving them is the one purporting to be bound to pay. For 
he knows better than any other whether they are his notes or not ; and if he pays them 
or receives them in payment, and continues silent after he has had sufficient oppor- 
tunity to examine them, he should be considered as having adopted them as'his own." 
This case rests principally on laches. This question has all the authorities on ona 
side, and we must consider the question settled. The case of Price v. Xeal, 3 Burr. 
1354, rests upon Wilkinson ». Lutwidge, Stra. 648, and Jenys v. Fawlcr, 2 id. 946 
See Smith v. Chester, 1 T. R. 654 ; Barber v. Gingell, 3 Esp. 60 ; Bass v. Clive, 4 
M. & S. 13. 

(p) U. S. Bank r. Bank of Georgia, 10 Wheat. 333. The bills in this case were 
received on deposit, but the distinction between bills received in payment or on deposit 
was not argued. See, also, Corbit v. Bank of Smyrna, 2 Harring. Del. 235, which 
would seem fully to sustain the proposition that the case of deposit was not different 
from that of payment. 

(q) In Corbit v. Bank of Smyrna, 2 Harring. Del. 235, which has been much quoted 
above, the facts were as follows. The bank received notes of a bank on deposit, which 
had previously failed. They were held to be bound thereby ; but this, it must be 
remmnberi'd, is not a case of forged notes, and it was in a jurisdiction where jjenuine 
bills are at tlie risk of the taker. 


bank stands, in respect to the bills of other banks, in any mate- 
rially different position from that of an individual, in regard to 
bank or other notes. (r) 

It must be true on principle, and the proposition rests upon 
authority, that no loser by forged or insolvent bills can recover 
without due diligence and due notice to the person who will 
be affected by his claim. (5) And we should say that the l)urden 
of proof of this diligence and notice would always lie on the 
claimant, and the question be one for a jury.(^) 

If the bills paid are of a bank then actually insolvent, but tlie 
insolvency is wholly unknown to either party, the rule we should 
think most reasonable, on grounds already intimated, and to a 
considerable extent sustained by authority, is, that the party 
receiving them is presumed to take them as a conditional pay- 
ment only ; that is, he is bound to all reasonable diligence to 
collect the bills ; but if they are worthless in his hands, in part 
or for the whole, he may then, if he has used such diligence, or 
gives such notice as will enable the transferrer to guard against 
loss, fall back on the party paying them for indemnity. 

It must be obvious, however, in this as in the former cases, 
that this presumption would be overthrown by any evidence of 
a special understanding or agreement that tlie receiver took the 
bills at his own risk, and as absolute payment. And so if any 
negligence can be attributed to either party, and the loss is in 
any material degree owing to such negligence, that party should 
be held to suffer that loss. The case of a partial insolvency we 
have considered in the chapter on Bank Notes and Bills. 

Bank-bills sometimes remain in circulation for a long time ; 
or are locked up by a holder for many years, and then brought 
out and made use of by him or his representatives. The taker 
of such bills loses nothing by the mere fact of age, because no 
statutes of limitation run against bank-l)ills.(?/) But tlie bank 
may possibly have ceased to exist when the l)ills were trans- 
ferred, and all its accounts be closed, and no remedy be open to 

(r) Frontier Bank v. Morse, 22 Maine, 88. 

(») See supra, pp. 191 - 194, notes / and m. 

{t) See notes supra. 

(«) Dougheity v. Western Bank of Georgia, 1.3 Ga. 287, 299. " We determine that 
a bank-note is not barred by the lapse of the statutory term commcnciiij,' at its date, and 
that generally the statute of limitations has no applieation to bank-notes." 


the holder of its bills. In this case we should say they stood 
upon the footing of bills of an insolvent bank, and the same 
rules of law would apply to them. Bank-notes have indeed 
been known to be paid out and received winch have been 
hoarded for a long time, during which the charter of the bank 
itself has been several times renewed. 

A difficult question has arisen in practice, but has not, so far 
as we know, passed under adjudication ; and possibly it may 
seem rather a question of notice than of payment. The maker 
of a note which has been indorsed pays the promisee on maturity 
in bank-bills which prove to be forged or worthless. This is not 
discovered till some time after the maturity of the note, and too 
late to give notice, as upon dishonor, to the indorsers. Would 
the payee be allowed, upon discovering the fraud, to hold the 
indorsers by notice given them in reasonable time ? On the on€ 
side, it might be urged that bank-notes were not money ; (v) thai 
the bill or note, if made payable in bank-notes, would not have, 
been a negotiable bill or note, or governed by the laws of nego 
tiable paper, and that the holder was entitled to cash ; and if hd 
did not take it, he must bear the loss, because it was his choico 
to receive conditional payment. On the other hand, it may b(i 
said that bank-notes are for all tliese purposes money ; that in 
the payment of notes they are to be regarded as coin ; that coin 
is as likely to be counterfeit as bank-notes, and therefore payment 
by one is as good as by the other. 

From this reasoning we might seem to derive the element of 
reasonable time being allowed the payee to notify the indorsee 
after he has discovered tlie wortliless character of the bank-bill 5 
taken in payment. This question we have not seen decided ; 
but we think it doubtful, if a note be paid in coin which 
afterwards turns out to be counterfeit, whether any notice 
could then hold the indorsers. As to them the note is functum 
officio. It has actually been paid as far as they are concerned, 
and taking the counterfeit money is a matter between the par- 
ties ; and as to all but the payor and payee the note is dead. If 
p^oods are sold, and payment made in bad bills, in the absence of 
fraud the property in the goods will be held to have passed, and 
the remedy of the taker of the bad bills is against the vendee in 

(v) See supra. 


an action of assumpsit. Trover or replevin for the goods is not 
in such a case maintamable. 




This subject has been considered generally in a part of a 
previous chapter. The precise question for present consideration 
is this. If a partnership is dissolved, and the duty of settling the 
aflfairs of the old firm falls upon one or more of the partners, 
who may or may not, as a new firm, carry on tlie business, and 
the creditor of the old firm is induced to continue his relations 
with the new firm, and in this or some other way to take from 
the continuing partner or partners negotiable paper for debts 
due from the old firm, and thereafter tlie insolvency of sucli 
continuing partner or partners takes place, are the original part- 
ners still liable for the indebtedness of the old firm ? 

After some vacillation, it seems to be well settled in Eng- 
land that the responsibility of one partner may be taken instead 
of the firm's liability, (z^) provided that he give a negotiable 

{w) In Thompson v. Percival, 3 Nev. & M. 167, 5 B. & Ad. 923, which was decided in 
1834, Lord Chief" Justice Denman delivering the opinion of the court, the facts were as 
follows. A and B dissolved partnership, agreeinj^ that B should carry on the business, 
and should receive and paj' all the debts, for which purpose sufficient partnership funds 
were left at his disposal. C, a credijtor, applied to B, and was informed that A knew 
nothitig of his debt, that he, C, must look to B alone. After this C drew a bill on B, 
which was accepted, but dishonored, B having become bankrupt. Held, that the jury 
were to determine whether C had agreed to receive B as his sole debtor, and take his 
acceptance in satisfaction of the debt due to both, — that such an agreement would be 
a good defence to A by way of accord and satisfaction. In this case, the case of David 
V. EUice, 5 B. & C. 196, 7 D. & R. 690, decided in 1826, was disapproved. In that 
case. A, B, and C were partners ; A retired, and notice was given to D, a creditor. B and 
C, continuing business, assumed the funds and debts of the partnership ; the balance due 
T) was transferred to his credit by the new firm, on whom he drew bills, which were jiaid. 
He fully assented to the transfer. On the insolvency of the new firm, it was held by 
Chief Justice Abbott, that A, the retiring partner, was still liable for the balance not i)aid. 
See also Heath v. Percival, 1 P. Wms. 682. Among the authorities cited in Tliompson 
V. Percival are Evans v. Drummond, 4 Esp. 89 ; Reed v. White, .5 id. 122. In Thome 
V. Smith, 2 Eng. L. & Eq. 301, C. B. 18.t1. it was held that an agreement between 
the payee and one of several makers of a joint and several promissory note, that 

200 Notes and bills. [ch. vil 

promissory note. It is clear that the agreement of the partners 
with regard to the settlement of the firm and partnership debts 
will not affect third parties, who are not privy to such an ar- 
rangement. And even if the creditor agree to accept one part- 
ner as his debtor, there being no new consideration, the promise 
would seem to be a nudum pactum. 

The cases go very far in holding that there must pass to 
the creditor some new consideration to support a parol agree- 

the payee shall take another promissory note in satisfaction of the first, with payment 
of the note taken by the payee on such understanding, amounts to payment by the other 
makers of the note. Hart v. Alexander, 2 M. & W. 484 ; Harris v. Farwell, 15 Beav. 
31,15 Eng. L. & Eq. 70. In Waydell v. Luer, 3 Denio, 410, a partner, after the dis- 
solution of the firm, adjusted a note against the partnership by giving some money, 
and the note of a third party, and his own note for the balance. The creditor received 
the same, and gave up the note of the firm. The original note was held to be extin- 
guished. So in Sneed v. Wiester, 2 A. K. Marsh. 277 ; Shcehy v. Mandeville, 6 
Cranch, 253 ; Wiseman v. Lyman, 7 Mass. 286. In Spear v. Atkinson, 1 Ired. 262, 
however, where a creditor of the firm had taken the firm's note for goods, and after the 
dissolution of the firm taken a bill of exchange drawn by one of the late partners in his 
own name, which was protested for want of funds in the drawer, and had delivered up 
the promissory note, such creditor's original claim was held not to be merged by the prom- 
issory note or bill of exchange, but that lie was entitled to recover the price of the goods. 
In Pope V. Nance, 1 Stew. 354, it was held that, where a creditor received from one 
partner, after a dissolution of the firm, the paper of third persons in payment of the 
partnership demand, and in exchange for the paper of the firm, he thereby released the 
other partners. Nichols v. Cheairs, 4 Sneed, 229; Minis v. McDowell, 4 Ga. 182; 
Stone V. Chamberlin, 20 id. 259. In the last case (1856), S and J., partners in trade, 
gave a firm note for a debt due hy the firm. After dissolution, a creditor, knowing 
this, took the individual note of J. in renewal, giving time of payment without the 
knowledge of S. Held, that S. was exonerated from all liability. Herring r. Sanger, 3 
Johns. Cas. 71 ; Arnold v. Camp, 12 Johns. 409. Where a partnership note was given 
up and a partner's note taken for the amount, it was held to constitute pa3'ment. But 
when one sells goods to an ostensible partner, without knowing that there are dormant 
partners, and sues on the individual note, even a judgment and execution returned 
nulla bona will not be a bar to an action for goods sold against all the partners. Watson 
V. Owens, 1 Rich. Ill ; Harris v. Lindsay, 4 Wash. C C. 271. In Parker i'. Cousins, 
2 Grat. 372, it was decided that taking a new security from one of two joint debtors 
will release the other, if in any case, only when there is an agreement by the creditor, 
express or implied, that he shall be released. The case was one in which a partner 
after dissolution renewed a note in the partnership name ; the other partner was not 
bound on the new note ; but neither was he discharged on the old, for theVe was an in- 
tention manifested to retain the partnership liability. The decision of the court was 
somewhat Mter. In Estate of Davis & Desauque, 5 Whart. 530, where the separate note 
of one partner was taken by a party holding the note of the firm, it was held to be a ques- 
tion of intention whether this amounted to an extinguishment of the joint debt. The 
onus lies upon those who allege an extinguishment. It is necessary for them to show a 
special contract to that effect, or that the joint note was given up ; anil even where tha' 
is the case, the presumption may be rebutted by countervailing proof. In this case the 


meiit.(.^j But when new negotiable paper passes from the con- 
tinuing member to the creditor, there is a new consideration, and 
this is in general sufficient to support an agreement to release 
and exonerate the other partner or partners. Whether there be 
such an agreement is a question for the jury ; and the new 
negotiable paper may be merely collateral security, the original 
liability being expressly retained. 

Tlie law may be stated to be the same on this point in all parts 
of the United States, although it may not have been expressly 
decided in the courts of all the States. The authority of both 
the English and American decisions thus far will be found to 

surrender of the joint note is spoken of as a decisive circumstance, as is also its reten- 
tion. Slason V. VVickersham, 4 Watts & S. 100, is to the same effect. Anderson v. 
Henshaw, 2 Day, 272 ; Yates v. Donaldson, 5 Md. 389 ; Thompson v. Briggs, 8 Foster, 
40. " A promissory note, given by the surviving partners for an account against the 
firm, is not a payment of it, unless it he agreed to be received as such." In Dutton i: 
N. E. Mut. F. Ins. Co., 9 Foster, 153, which is a very good case, it was held that, 
where E. and D were partners, indebted to H. and E. for labor performed and materials 
furnished, which might be a lien upon their buildings, and H. and E. discharged the 
debt against E. and D , and took the note of D. in satisfaction, the lien, if any, was 
[hereby lost, and the only remedy remaining was on the note of D. lu England, by 
statute 6 Geo. IV. ch. 16, § 62, a bill against a partner is satisfied before the joint 
debt, in case of a separate adjudication in bankruptcy. 

{x) In Lodge v. Dicas, 3 B. & Aid. 611, decided in 1820, upon a dissolution of 
partnership it was agreed between the partners that one should assume tiie debts to 
A. Of this A was informed, and expressly agreed to exonerate the other partner from 
all responsibility ; but it was held by Abbott, C. J., and Biiyley and Ilolroijd, JJ., that 
both partners still remained liable. The case of Smith v. Rogers, 17 Johns. 340, 
seems not unlike this. K. and B. were partners, indebted to the plaintiffs for goods 
sold. The plaintiffs were informed of their dissolution, and the assumption of the debt 
by B., with which they expressed themselves satisfied. B. afterwards paid part of the 
debt, and gave his promissory note for the balance, for which there was a receipt, 
" When paid, to be placed to the credit of U. & B.'s account with them." Wheii B. 
became insolvent, it was held that the plaintiffs could recover on the original consider- 
ation. In Gough ih Davies, 4 Price, 200, A deposited money with B and C, bankers, 
taking their accountable receipts. B retired, and A continued to leave his money with 
the new firm, consisting of C and D, a new member, from whom he received interest 
regularly, giving them no notice, and continuing to receive interest and transact busi- 
ness for four years, until they became insolvent. Held, B, the retiring partner, was 
Btill liable. " Nor are those circumstances sufficiently strong to be left to a jury." 
Gairow, B. dubitante. It would appear that the accountalile receipts of the old firm 
were retained by the plaintiff. It was held in Kirwaii i;. Kirwan, 4 Tyrw. 491, that 
mere knowledge by a creditor of dissolution will not release the old partners from lia- 
bility, though he continue his account, unless there be an express acceptance of the 
Bubstituted credit of the new partnerstiip. But long credit, or distinctly a<'cej)fing tho 
Dew firm's credit, may operate a discharge. Oakeley r. I'ushellcr, 10 Bligh, 548. 


accord with the Enghsh case at the beginning of the note. In 
Massachusetts, Maine, and Vermont, however, the same rule 
with regard to prima facie payment by note prevails ; and the 
note of one partner merely, received for the partnership debt, 
will operate a payment, unless the reverse can be shown to Imve 
been the intention of the parties. (?/) 

The New York cases have been very contradictory, and the 
courts of that State have been disposed in some cases to consider 
their doctrine, " that the debtor's own promissory note cannot be 
taken in payment of a precedent debt, even by express agree- 
ment," applicable to the discharge of a firm debt by a part- 
ner ; (z) and that the note of one partner cannot be taken in 

(y) French v. Price, 24 Pick. 13. The negotiable note of one of several persons, 
whether partners or tenants in common, equally liable for goods purchased, constitutes 
a payment, and therefore the others are discharged from their liability. 

(z) In Arnold v. Camp, 12 Johns. 409, (see note w,) it was held that the note of a 
partner may be taken as payment when a partnership note is given up, provided such 
be the agreement of the parties. In Muldon v. Whitlock, 1 Cowen, 290, the law of 
Arnold v. Camp was followed and cited with approval, and the partners were held 
not discharged, because there was no a^'reement. In Rosseau v. Cull, 14 Vt. 83, it ia 
said to be law in New York that one of two joint del)tors giving his note will only be a 
discharge by the agreement of the parties. In Cole v. Sackett, 1 Hill, 516, however, 
this case was disapproved, and where E. and C, being in partnership, gave their note 
for a precedent debt of the firm, under an agreement that it should be received in full 
satisfaction and discharge; and afterwards having dissolved, E. agreeing, for a consider- 
ation received from C, to assume and pay the debt for which the note was given ; in 
pursuance of which arrangement E. took up the note and gave his own in lieu thereof! 
Held no bar to recovery on the original consideration. The case of Cole v. Sackett 
was reconsidered and approved in Waydell v. Luer, 5 Hill, 448, where the decision 
was, that giving a negotiable promissory note by one of several partners or joint debtors, 
for a demand antecedently due from all, will not extinguish their hability, though the 
creditor ex|)ressly accept the note in satisfaction. In this case, also, Thompson v. Per- 
cival, 5 B & Ad. 92.5, is mentioned, and regarded as not in accordance with the New 
York doctrine, which follows. David v. EUice, .5 B. & C. 196. The case of Waydell 
V. Luer, in 1846, was carried to the Court of Errors, 3 Denio, 410, quoted snpTo, and 
overruled, but not upon the ground that the note of one partner could, by the agree 
ment of the parties, be taken in payment and satisfaction of the partnership debt 
But Lott, Senator, and Gardiner, President, took the ground of Thompson v. Percival 
and Arnold v. Camp. Porter and Van Schoonlioven, Senators, held the doctrine of the 
Supreme Court, and Talcott, Johnson, und //anrf seemed to incline to the opinion of the 
Supreme Court on the point we are discussing. Senators Backus, Denniston, Emmons, 
Jones, Sandford, J. B. Smith, and Wheeler gave no opinions, but voted for reversal. 
Senators Deijo, Hard, and S. Smith voted for affirmance. In Eiwood v. Deifendorf, 5 
Barb. 398, " This principle, distinctly advanced in Cole i'. Sackett and in Waydell v. 
Luer, cannot be considered as overruled by the decision in the latter case by the CoiTt 
of Errors." 


satisfaction of a pre-existing debt, even by express agreement. 
This, though not settled in the Court of Appeals, appears to be 
the rule of the Supreme Court. 

When, as is sometimes the case, a sealed note is given by one 
partner for the firm debts, the principles of merger would seem 
to apply, and the debt is therefore extinguished. 



The renewal of bills and notes presents the question of pay- 
ment in a different light. Whatever may be the law with re- 
gard to payment and satisfaction of a pre-existing debt by bill or 
note, the general custom and understanding of the mercantile 
world would seem to demand that a new note, given in renewal 
of an old one which is taken up, as it is termed, should pay and 
cancel the old note for which it is given. 

The banks consider this to be the effect of renewal, even 
though the old notes are left with the bank, as is frequently the 
case. (a) The old note would be cancelled if it were paid in 
money, though the same money were immediately loaned to the 
debtor who had just paid it in. (6) There seems to be no need 
of going through the ceremony of paying down coin, which is to 

(a) This is mentioned in Bank of the Commonwealth v. Letcher, 3 J. J. Marsh. 195. 
The fact of leaving old notes with the banks when they are renewed certainly should 
have no weight in favor of the presumption that the new notes are taken as collateral 
security, as would be the case where the old note is left in the hands of an individual, 
for banks almost universally keep the old notes. But in Ex parte Barclay, 7 Ves. Jr. 
597, where bills were given in lieu of others, and the old bills allowed to remain, it 
was held that " in lieu " might be qualified and explained by the fact of their being 
so allowed to remain. This, however, was not a case of a bank, or where notes are 
renewed as in America. But delivering to the debtor the old note is held to be no 
evidence of payment. Olcott v. Kathbone, 5 Wend. 490. In Louisiana exactly the 
opposite rule prevails, and the surrender of the note is evidence of a novation of the 
debt. Morgan v. Creditors, 1 La. 527. So in California, the surrender of a note is 
prima fucie evidence of its payment. Smith v. Ilarjjer, 5 Calif. 329. 

(6) tr. S. Bank v. Bank of Georgia, 10 Wheat. 333. This case is quoted to show 
how the law may dispense with what is really in effect done by a much shorter pro- 
cess, and how the parties' intentions are regarded in ascertaining the effect of theii 
acts. See, also, Slaymaker v. Gundacker, 10 S. & li. '5. 


be tak:en awaj again. Yet renewal amounts to this in the un- 
derstanding of the parties, and we should think the courts ought 
to regard this universal understanding in arriving at the inten- 
tions of the parties. 

Banks renew notes again and again. New sureties are fur- 
nished on new notes, and the debtor's own note often taken for 
one with sureties. The parties, without question, suppose them- 
selves discharged. 

Some of the courts seem to admit that renewing a note can- 
cels the old debt, which is merged in the new note.(c) But it 
cannot be regarded as by any means settled ; and many of the 
courts are disposed to make no distinction between the case of a 
note given for a note, and a note or other simple contract substi- 
tuted for a prior simple contract deht.{d) 

(c) Sliiymaker v. Gundacker, 10 S. & R. 75, per Tilghman, C. J. In the States 
of Maine, Massachusetts, and Vermont, where a note is presumed to be payment 
of a prior debt, of course die new note is presumed to discharge the old. Cornwall 
V. Gould, 4 Pick. 444; Huse v. Alexander, 2 Met. 157. In Hart v. Boiler, 15 S. 
& R. 162, the same judge delivered an opinion. A note falling due was protested 
for non-payment. It was renewed, the second one being for the same sum, and by the 
same parties. This was not paid, neither was it protested or notice given the indorser, 
who was defendant. The question was, whether the second note was a discharge. Per 
Tilghman, C. J : " It is a general rule, that, if one indebted to another by note gives 
another note to the same person for the same sum, without any new consideration, the 
second note shall not be deemed a satisfaction of the first, unless so intended and ac- 
cepted by the creditor. But if so accepted, it is a satisfaction. The quo animo it was 
accepted is matter of fact, which the court cannot take to itself, and exclude the jury 
from the decision of it. The intent may often be deduced from circumstances, though 
nothing positive was expressed." 

(d) Bank of Commonwealth v. Letcher, 3 J. J. Marsh. 195. In Olcutt v. Rathbone, 
5 Wend 490, the cashier of a bank accepted, in payment of a note falling due, a check 
of a third person for a part of the amount and a new note for the balance ; it was held, 
that on the check being dishonored an action might be maintained on the original note 
against the maker to recover the amount of the check, and that the delivery of the old 
note was no evidence of payment. In M'Guire v. Gadsby, 3 Call, 234, citing as au- 
thority Roades v. Barnes, 1 Burr. 9, Cumber v. Wane, 1 Stra. 426, it was held that 
promissory notes could not be extinguished by subsequent notes given by the same 
parties. This seems to be the strict rule of law. In Gordon v. Price, 10 Ired. 385, it 
is said that the acceptance of a bill or note on another bill or note is not a discharge 
of the first note or bill, without a specific agreement that it shall be, or unless the inten- 
tion appears; but due diligence must be used in endeavoring to collect the second bill. 
In Weakly v. Bell, 9 Watts, 273, 280, the renewal of notes was held payment only 
when so intended; but this is the question, whether the intention in most renewals 
should not establish a presumption of fact, that when a note is exchanged for a new 
one, the old one is discharged. But in Crocket v. Trotter, 1 Stew. & P. 446, it was 
said that the agreement must be express, to render the new note a discharge of the 


When a good note is exchanged for one void or worthless 
from any cause, as usury, the former contract is not thereby 
avoided. ((') The debtor has not given that to tlie creditor which 
the creditor supposed, and therefore the creditor is not bound 
thereby. Nor would an exchange or renewal of notes l)e held 
a payment and discharge, if such discharge would injure the 

Even in those jurisdictions where a note is paid by one given 
for it in most cases, this is not the case where by such a pre- 
sumption a mortgage debt would be lost ; there is no ground 
then for thinking that the parties so intended, and the courts 
hold that such notes are not intended as payment and satisfac- 
tion, and that the original debt continues so far as to sustain the 
mortgage. (/) 

We would carefully distinguish between a note given in ex- 
change for a note, and the payment of a note by a check, draft, 
or order, which is dishonored. (»■) In taking a check, there sel- 

old. It seems that surrender of the note is evidence of a novation in Louisiana. Mor- 
gan V. Creditors, 1 La. 527. But receiving new notes operates no novation. Hob- 
son r. Davidson, 8 Miirt. La. 431. But if the holder take a new note, with the same 
maker, but other security, this will be a discharge of the old note. Coco v. Laconr, 4 
La. .507. Poth. Oblig., No. 5.59 : " If since the debt was contracted a new agreement 
has taken place between debtor and creditor, by which a longer time of payment has been 
qiven, or a new place of payment appointed, or the debtor allowed the liberty of paying 
to another person than the creditor, or even by which the debtor should have bound 
himself to i)ay a larger sum or a less one, to which the creditor was willing to confine 
his demand ; in all these cases, and the like, according to the principle that the nova- 
tion is not to be presumed, it must be decided that there has been no novation, and 
that the parties intended only to modify, diminish, or augment the debt, rather than to 
extinguish it, in order to substitute a new one for it, if they did not explain them- 
selves." Merlin, Rep. de jur. novation, § 5. 

(e) Chastain v. Johnson, 2 Bailey, 574. The plaintiff sold a parcel of cotton to tho 
defendant on a credit, and took a note for the amount, which was surrendered, and re- 
ceived a new note for the amount of the debt, with the addition of usurious interest. 
Held that no action would lie upon the new note, hut the price of the cotton was re 
coverable, for which he had given a perfectly valid note. 

(/) Watkins v. Hill, 8 Pick. 522; Pomroy v. Rice, 16 Pick. 22. In the former 
case it was held that the mortjagc remained a good security for the second note. In 
the opinion, l)y Parker, C. J., there is a as to the effect of the exchange as to an 
innocent third party claiming as purchaser from the mortgagor. In the latter case, a 
feme sole, lield the mortgage and note. The latter was delivered up by her husband, 
who took a new note for principal and interest. This was held no payment of tho 
mortgage debt as against even a grantee of the mortgagor, thus answering in the 
affirmative the r/uare in the former case. 

{(/) Morgan v. Bit/.enbcrger, 3 Gill, 350. Here the note given for the original con- 
sideration was surrendered for an order of the debtor on K , by whom it was dishonored 

vor,. It. 18 


dom or never appears an intention of receiving it, unless duly 
honored, as payment or satisfaction. Of course a check or- 
draft may be by agreement taken for a note, and so operate a 
novation. (/i) But if the drawer knows at the time that the 
draft will be dishonored, and has no funds in the drawee's hands, 
it might be doubted if an agreement to take it in payment would 
be binding on the creditor. Sucli an agreement seems tainted 
with fraud. This topic lias been considered in the chapter on 
Checks. When, however, a second unobjectionable bill is given 
in good faith, in lieu of the first, the presumption that the first is 
paid thereby is reasonable, and we see no ground for permitting 
the creditor to resort to the former, (i) 



A BILL, check, or note has been held to be earnest or part 
payment under the 17th section of the Statute of Frauds. (y) 

If a party who gives a bill knows at the time that it is of no 
value, the holder may, wiien he discovers the fraud, sue the 
party on liis original liability ; or if the bill be given for goods, 
the sale being tainted with fraud on the part of the vendee, the 
vendor may consider it void, and retake his goods without breach 
of the peace, or maintain replevin or trover for them ; or he may 
affirm the sale, and sue for his purchase-money. (A:) 

This was held no bar or payment, hut was held to account for the absence of the note 
at the trial, at which the action was on the original consideration. Smith v. Harper, !i 
Calif. 329. 

(A) Helme v. Middleton. 14 La. Ann. 484. 

(i) Dillon V. Rimmer, I Bing. 100, per Dallas, C. J. 

ij) Chit. Cont. 397; Chit. Bills, 7th ed., 97, 8th ed., 80, note h, 84; 10 Peters, Abr. 
128, note x. Giving a note when it amounts to payment, or even when it is payment, 
till dishonored, takes a case out of the Statute of Frauds. But it would seem that in 
New York, where a note of the debtor cannot be payment, it does not take a contract 
out of the statute ; but it may be different with the note of a third party. Combs r. 
Bateman, 10 Barb. 573. In Massachusetts, the debtor's own promissory note would 
probably amount to such payment as the statute requires, and the law would be the 
same in Maine and Vermont. 

(k) Thurston v. Blanchard, 22 Pick. 18. In this case the vendee got the goods by 
fraudulent representations, and gave his note for the sum. There had been no tender 

CH. VII.] FRAUDS. 207 

A note given to defraud the maker's creditors is not void as to 
him,(K-) although if the payee be a party to the fraud, he cannot 
maintain an action thereof. 

AVe apprehend that the rule of law, or the principle which must 
govern such cases, is substantially that which was laid doM-n by 
Lord Tenterden. It must rest the decision of the question of fraud 
upon the mind, the intent, of the purchaser. For if he supposed 
himself to have reasonable ground for expecting that the check 
would be paid, the transaction cannot be deemed fraudulent as to 
him, and therefore the property would pass. But if he knew that 
there was no such reasonable ground for this expectation, the trans- 
action would be fraudulent, and the vendors entitled to recover 
their property in any proper action. (^) So where a vendor is de- 
ceived by the vendee by fraudulent representations as to the solv- 
ency of the maker of the note,{m) the note is no satisfaction. Or 
if a creditor, acceding to a compromise of an insolvent debtor, takes 
notes with the other creditors, and then secretly a farther note to 
induce him to accept the promise, the farther note is void between 
the parties.(mm) All these cases rest upon the principle that fraud 
defeats all contracts, and renders them voidable in favor of the 
innocent party, who has his election whether he will confirm them 
or not.(ri) 

In conclusion it may be remarked, that we think the tendency 
of the courts in Maine, Massachusetts, and Vermont is to make the 
presumption of payment less and less strong, and so to conform to 
the great weight of authority on the other side of the question ; 
and we might expect that the difference in this respect will disap- 
pear altogether. And perhaps it may be hoped that the obvious 
desirableness of this result will lead the courts of these States to 
consider it with favor. 

of the note, but he was allowed to recover, provided the note could be delivered up, 
Shaw, C.J. intimates that replevin also may be maintained. Buffington v. Gerrish, 15 
Mass. 156; Kimball v. Cunningham, 4 id. 502; Stevens t». Austin, 1 Met. 557. B re- 
ceived A's promissory note for goods, which the latter got by fraud and sold to C, who 
also had knowledge of the fraud. B was allowed to maintain trover against C for the 

{kk) Carpenter v. McClure, 39 Vt. 9. 

{1} See unpra, p. 85. 

(m) Alexander v. Dennis, 9 Port. Ala. 1 74. 

(mm) Weaver v. Waterman, 18 La. Ann. 241. 

(n) Ford v. Atwater, 1 Root, 58; Hanks v. M'Kee, 2 I.itt. 227; Kindmll v. Cun- 
ningham, 4 Mass. 502; Seaver v. Dingley, 4 Greenl. 306. 

208 NOTES AND BILLS. Ton. vin. 





Payment of a note or bill should be made directly to the 
holder and legal proprietor of it.(a) And the benefits and rights 
of payment accrue only to one who was compellable to pay. 
Hence a question has arisen whether a later indorser, who was 
not duly notified, may waive that defence, and by paying the 
note acquire a right against an earlier indorser. It cannot be 
doubted that, if the earlier indorser be duly notified, so that his 
obligation is fixed, a later indorser who pays the money to a 
holder, and takes the note up, although having a good defence, 
which he does not choose to make, is nevertheless entitled to sue 

(a) If the money finds its way to the holder's hands, and is treated hj him as a 
liquidation of the debt, it amounts to payment. In Field v. Carr, 5 Bing. 13, 2 Moore, 
& P. 46, the circumstances were as follows : A drew a bill on the defendant, which he 
accepted. Then A indorsed the bill to the plaintiffs, who were his bankers, and it was 
entered to the account of A, and being presented at maturity was dishonored The 
plaintiff-bankers then debited A with the amount, but did not return the bill to him. 
A few days afterwards the defendants paid the amount to A, who still continued his 
banking account with the plaintiffs, and at various times paid in money to them ; the 
balance was at no time in his favor, but he had paid in more than sufficient to cover 
the amountof the bill and the items of account which preceded it. A failed, and his 
bankers, the plaintiffs, proved their whole balance under the commission, and then 
brought this action against the acceptor. It was said by Best, C. J., that the "pay- 
ment (to A alone) would not have discharged the defendant, the plaintiffs having been 
at that time the holders, and entitled to the amount of the bills ; but the ground on which 
the defendant is discharged is, that the plaintiffs not only entered the bills to the credit 
of A, but treated them as having been paid." In Pratt v. Foote, 5 Seld. 463, one offered 
'the bank in payment of a note a customer's check on the bank ; the bank refused it, 
but said that if funds came in before the note was due, they would apply the funds 
This was not the case till afterwards, but the bank marked the note as jniid, and ihi» 
was held a payment. 


the earlier indorser in the right of the holder from wliom he 
takes the note, or is remitted to his own rights as indorsee, and 
may sue the earlier indorser, as he might have done had he 
continued holder. (6) It has been decided, however, and for 
reasons of weight, that if an indorser has another note given him 
to sbcure and indemnify him for his indorsement, and, not being 
notified as indorser, waives tliis defence, and pays the note volun- 
tarily, he does not thereby acquire a right to enforce the note 
which was given him for his indemnity. (c) 

Payment may be made to one authorized personally by the 
owner, or authorized by his office and character, to receive the 
money. (tZ) This of course includes one who is legally authorized 
by the holder or owner to receive payment as a factor (e) or at- 
torney, (/) and one of several partners to whom, as a firm, the 

(b) See Ellsworth v. Brewer, 11 Pick. 316 ; Emerson v. Cutts, 12 Mass. 78 ; Toth. 
PI. 142, 143, 164. 

(c) Bachellor v. Priest, 12 Pick. 399. 

{d) A presentment by any person in possession of a bill bo?ia fide is sufficient to 
charge the parties to the bill. Per Wilde, J., in Bachellor v. Priest, 12 Pick. 406. 
Bayley on Bills (Phil, and Sewall's ed), 141. In the case cited it appeared that the last 
was a special indorsement, — "Pay to J. Flewelling, Esq., Treasurer," — but the pre- 
sentment was made by one Dunscombe, to whom it was delivered by the bank of the 
Hudson & Delaware Canal Co. Of course one entitled to make presentment and de- 
mand must be entitled to recoive payment of the money. Payment made to a person 
found in a merchant's counting-room, and appearing to be intrusted with the business 
of such merchant, is a good payment to the latter, though such a person was never 
emj)loyed by the merchant for any such purpose. Barrett v. Deere, Moody & M. 200 ; 
Corficld V. Parsons, 1 Cromp. & M. 730, 7.33. The production alone of the bill of ex- 
c!iange, indorsed in blank, is in general sufficient authority to warrant a payment to 
the bearer ; for the possession is presumptive evidence of ownership, or at least of 
agency, without being the habitual agent. Owen v. Barrow, 4 Bos. & P. 101 ; Anony- 
mous, 12 Mod .564 ; Paley, Principal and Agent, 181 ; Ward v. Evans, 2 Ld. Haym, 
928 ; Little v. Obrien, 9 Mass. 423 : Sterling r. Marietta, &c. Trading Co., 1 1 S & R. 
179 ; Mauran v. Lamb, 7 Cowen, 174 ; Gorgerat v. M'Carty, 2 Dallas, 144 ; Hunter 
r>. Kibhc, 5 McLean, 279; Bachellor v. Priest, 12 Pick. 399; Sherwood v. Poys, 14 id. 
172 ; Banks v. Eastin, 1.5 Mart. La, 291 ; Adams v. Oakes, 6 Car. & P. 70. If a note 
belong to a bank, the cashier thereof is, by virtue of his office, entitled to make de- 
mand of payment, or to authorize a sub-agent. Hartford Bank v. Barry, 17 Mass. 94. 
A payment to the bank to whom the note is indorsed for collection discharges the 
maker. Smith v. Essex Co. Bank, 22 Barb 627 ; Montgomery Co. Bank v. Albany 
City Bank, 3 Scld. 459; Colvin v. llolbrook, 2 Comst. 126; Commercial Bank of 
Pennsylvania v. Union Bank of N. Y., 1 Kern. 203. 

(e) Favenc v. Bennett, 11 East, 36. I'ayment should not in general be made to a 
Tiere sub-agent. Yates v. Freckleton, 2 Dong. 622. 

(/) Coore V Callaway. 1 Esp. 115, 116; Coles v. Bell, 1 Camp. 473, note; 
Vol. II.— LS * 


debt is dae (g-) upon the negotiable paper. But although it used 
to be said that, if a bill were payable to A alone, A must ap- 
pear and demand payment,(/i) we think this rule must now be 
relaxed. We admit that payment must be made to A, or his 
authorized agent. If a bill be payable to A, to the use of B, the 
payment should be made to A only, or his agent or indorsed. (i) 
And it has been held, that, when a bill or note has been indorsed 
to an agent merely to receive payment, and this is known to the 
payor, such agency is revoked by the death of the principal ; and 
if that be known to the payor, and he makes payment to the 
indorsee, it will be no discharge of his liability. (y) 

Payment may be made to the representatives of a dead own- 
er,(A:) the assignees of a bankrupt, (/) the guardian of an infant (7n) 

Spybey v. Hide, id. 181. The payment can only be made, as it seems, to one who haa 
authority to demand it, and who can also give a discharge. The agent or cleric of the 
plaintiff's attorney has been held not authorized to make a demand. See cases supra; 
also, Yates v. Freckleton, 2 Dong. 622. Nor would a payment to the wife of the owner 
of a bill, unless she were the authorized agent of her husband, be sufficient to discharge 
the debtor. Solomons v. Dawes, 1 Esp. 83. Sawyer v. Cutting, 23 Vt. 486, shows 
that the wife is not presumed to be the husband's agent. Benjamin v. Benjamin, 1.5 
Conn. 347; Lane v. Ironmonger, 13 M. & W. 368; Freestone v. Butcher, 9 Car. 
& P. 643. 

{(j) Ttaffv. East India Co., 15 Ves. 198, 213. 

(h) Marias, 4th ed., 34 ; Sigourncy v. Lloyd, 8 B. & C. 622, 3 Man. & R. 58. 5 Bing. 
525, 3 Moore & P. 229, 3 Younge & J. 220. See chapter on Transfer, as to restrict- 
ive and qualified indorsements; also, Edie v. East India Co, 2 Burr. 1216, 1227, 
1 W. Bl. 295 ; Treuttel r. Barandon, 8 Taunt. 100, 1 J. B. Moore, 543 ; Snee v. Pres- 
cot, 1 Atk. 245 ; Poth. PI. 89 

(i) Cramlington v. Evans, 2 Vent 307, Carth 5; Marchington » "Vernon, 1 B. & P. 
101, note c; Smith v. Kendall, 6 T. R. 123, 1 Esp 231. See chapter on Transfer, for 
a discussion of restrictive indorsements. 

(j) Poth. Pi. 168; 1 Pardess. 437,438 ; Mar. 72, 73. See Tate v. Hilbert, 2 Ves. 
Jr. HI ; Williamson v. Thomson, 16 Ves. 443. Marius objects to this doctrine, PI. 
219, Lex Mercatoria. 

{k) Poth. PI. 166. And it has been held, that one who pays over to one who has 
obtained probate of a forged will, will be protected. Allen v. Dundas, 3 T. R. 125. A 
probate, so long as it remains unimpeached, cannot be questioned in the temporal 
courts. Rex v. Vincent, Str. 481. Contra, Rex v. Goodrich, Old Bailey, 1784; Rex 
V. Fauntleroy, 2 Bing. 413, 1 Car. & P. 421. 

(/) If a banker or agent become bankrupt, his assignees may receive payment of 
a note or bill without thereby being liable to an action of trover by the real owner 
of the paper. They will merely be liable to pay over to the true proprietor. Jones 
V. Fort, 9 B. & C. 764, 4 Man & R. 547 ; Tennant v. Strachan, Moody & M. 377, 
4 Car. &P. 31. 

(m) Payment of a bill beneficial to a minor, made to the infant himself, is said to he 
valid, though it should be made to the guardian. Poth. PI. 166. 


or insane person,(n) or to the husband whose wife is the payee or 
holder. (o) But a wrongful holder and detainer of the bill has 
no right to be paid, and the promisor has no right to pay him.(yj) 

If the payment be indirect, as to a banker who has the bill, 
and because of such payment credits the payee to that amount in 
account with the bank, the bill will be considered paid. (7) 

Payment, as we have seen, to one whose right to receive 
depends on a forgery, does not discharge the payor. (/•) So any 

(n) Payment to one who is non compos mentis and under guardianship is not valid, 
the payor havin;^ knowledge of the guardianship. Leonard v. Leonard, 14 Pick. 230. 
The ward in this case had in his possession a promissory note payable to himself. The 
letter of guardianship w;xs held to be conclusive evidence that the ward was not of 
sound mind, and therefore not entitled to receive payment. White v. Palmer, 4 Mass. 
147. Li this case, too, the ward had possession of the note, but the court held that 
there was no reason for the defendant to believe that the ward was the agent of the 

(0) If a payment be made to a married woman, after knowledge of her marriage, 
without concurrency of her husband, the person who makes such payment would not be 
discharged. Barlow v. Bishop, I East, 4.32, 3 Esp. 226, note. An effectual indorsement 
of the note of a, feme cocert is to be made in the husband's name. Barlow v. Bishop, 3 
Esp. 266 ; or such a note may be declared upon as payable to the husband, per Rich- 
ardson, J., in Arnold v. Revoult, 1 Brod. & B. 443, 4 J. B. Moore, 66, 72. 

(p) Netterville v. Stevens, 2 How. Miss. 642. 

[q] Field V. Carr, 5 Bing. 13, 2 Moore & P. 46. If a bill be sent to a drawee who 
is directed to pass it to the holder's credit, and does so, the bill is paid, and is functus 
officio. Savage v. Merle, 5 Pick. 85. 

(r) Smith v. Sheppard, Sel. Cas. 243, Ms. of Mr. Sergeant Bond, Chitty, 9th ed., 
261. The plaintiffs, assignees of Bagnall and Hand, sued the defendants at London Sit- 
tings, after Hilary T., 16 Geo. III. The defendant was indebted to the bankrupts, B. 
and H., in £30, for goods sold Oct. 1774. Comberstall, the bankrupts' servant, 
brought a bill of parcels in the same handwriting that all their former bills had been, 
and fraudulently said his master was in want of cash, and desired he would accept a 
bill of exchange, which C. immediately drew, signed with his own name, payable to 
Bagnall and Hand or order, and gave a receipt for the bill of parcels. The defendant 
accepted the bill, and C. afterwards carried it away. The bill was brought to the de- 
fendant by Spencer, who had it in payment for goods. The names of Bagnall and 
Hand were indorsed on the bill, and the defendant paid it ; but that indorsement was a 
forgery. It wa'* the bankrupts' practice to deliver in their bills at Christmas, but on 
the Christmas following this transaction no bill was handed in to the defendants. No 
evidence appeared in whose handwriting the indorsement was, but it did not appear 
to be like the bankrupts' or like Comberstall's. Lord Mansfield said : " Each party is 
innocent; the question is on whom the loss must fall. It should be on him wlio is 
most at fault. It is admitted that Comberstall used to receive money, but not draw 
bills. Here is a bill that does not trust Comberstall at all, for it is to pay to the order 
of the bankrupts ; in this case, if he had been used to draw bills, that would not vary 
the case, because it is pretended that the indorsement is by Comberstall ; then he that 
takes a forged bill must abide the consequence, for the man whoso name is forged 
kciws nothing of it. In this case the name of Bagnall & Hand is forged ; it could 


one may pay a bill for honor of a drawer or other party (after 
protest, not before), and thereby acquire a claim against the 
party for whom he pays, and all who are liable to him ; but not 
unless that party's signature is genuine, for the risk of this is on 
him who pays for honor. 

A payment to a thief or finder of a note transferable by deliv- 
ery will not, as we have seen, discliarge the payor, unless made 
in good faith, without knowledge or direct means of knowledge, 
and in the usual course of business. (.s) Payment to a wrong 

not be paid without their hand, and the defendant has been neg:li(jent in inquiries 
whether it was their hand or not. The "round which defendant relies on is, that the 
bill was not delivered at Christmas, as nsual ; but that is no weight, because it had been 
delivered before in October." Verdict for the plaintiffs. Esdaile c.La Nauze, 1 Younge 
& C. Exch. 394 ; Johnson v. Windle, 3 Bing. N. C. 22.5, 3 Scott. 608. In Smith v. 
Chester, 1 T. R. 654, the indorsee who sued the acceptor of a bill was nonsuited, be- 
cause he could not prove the handwriting of the indorser, although it was upon the bill 
when accepted. Per Buller, Ashhurst, and Grose, JJ. in this case of Cheap v. Har- 
ley, cited in Allen v. Dundas, 3 T. R. 127 ; Buller, J., Mead v. Young, 4 id. 28. Id 
this case the note was payable to H. Davis or order, and indorsed by one H. Davis, 
not the real payee. It was held by the majority of the court, Ashhurst, Buller, and Grose, 
in opposition to the opinion of Lord Kenyan, that the indorsee took no title. Lord 
Kenyan thought the case could not be distinguished from Miller r. Race, 1 Burr. 452, 
which was a case of a note payable to bearer (Chit. Jr. 467). Gibson v. Minet, 1 H. Bl. 
569, 607 (Chit. Jr. 479). In a case in Massachusetts, it appeared that a note was made 
by one Brown, payable to T. Jackson, Jr., and his name indorsed thereupon, but shown 
to be a forgery. Under the forged name of the payee was the name of Fearing, the 
defendant. The note was presented to the bank for discount by Brown, the maker of 
the note. State Bank v. Fearing, 16 Pick. 533, per Shaw, C. J. The indorser was 
held by his signature to admit the validity of the previous signatures. It seems i)lain, 
however, that no action could have been maintained against Brown, the maker, unless 
his presenting the bill at the bank would have operated in that way as far as he was 
concerned. Bayley on Bills, 313. Critchlow v. Parry. 2 Camp 182; Lickbarrow ». 
Mason, 2 T. R. 63. In Morgan ;;. Bank of the State of N. Y., 1 Duer, 434, 1 Kern. 
404, the defendants, on being sued for money deposited, produced a check payable to 
Corlies & Co., and an indorsement in the name of the payee, wliich was shown to be a 
forgery. The bank was still held liable to the depositor. Cog^rill v. American Exch. 
Bank, 1 Conist. 113; Weisser v. Denison, 6 Seld.. 68. The very doctrine contended 
for in State Bank v. Fearing, 16 Pick. 533, has, we think, been held in England in the 
cases of East India Co. v. Tritton, 3 B. & C. 280. 5 D. & R. 214 ; Smith v. Mercer, 6 
Taunt. 76, 1 Marsh. 453. But the ground of these decisions is stated to he this, that 
each indorsement is a warranty of the validity of the prior indorsements ; and 'his also 
seems to be the doctrine of the French writers, and has been adopted by the Code de 
Commerce, 140 ; Pardess. 376. See also Lovell v. Martin, 4 Taunt. 799. Even a 
bona Jide holder who claims under a forgery has no right to be paid. Mead i'. Young, 
4 T. R. 28; Long v. Bailie, 2 Camp. 214, note ; Forster v. Clements, 2 Camp. 17; 
Johnson v. Windle, 3 Bing. N. C. 225. 3 Scott, 608 ; Hall v. Fuller, 5 B. ■& C. 7.50. 

(s) Miller v. Race, 1 Burr. 452, per Lord .l/tjHs^tW. The note was payable to bearer, 
and had been obtained by robbing the m.iil ; but an innocent holder was allowed to 


party of a note or bill long dishonored, or of a check long after 
it was drawn, or of a check wliicli had been torn into pieces, and 
these pieces afterwards pasted together, does not discharge tlie 
payor. (/) 

An acceptor or maker should pay a bill or note at any time 
when demanded on the day when it falls due, and if not paid, 
protest may be made or notice given at oiice.{u) But as the 

recover on it, and therefore, although the banker had notice that a bill or note was lost 
or stolen, yet, if the holder be a l)ona Jide one, he may recover upon the note, and the 
banker may pay such a one, and be protected. Pearson v. Hutchison, 2 Camp. 211, 
6 Esp. 126. 

(I) Scholey c. Ramsbottom, 2 Camp. 485, per Lord EUeiiborough. See chapter on 
Checks, for a full collection of authorities. 

(m) This demand should be made within the business hours. A banker at whose house 
a bill is made payable, or on whom a check is drawn (see chapter on Checks), must 
pay the check or bill on its presentation, or he renders himself liable to an action at the 
suit of the drawer. Marzetti v. Williams, 1 B. & Ad. 415, 1 Tyrw. 77, note b. But to 
render a banker so liable, the bill or check mast be presented during banking hours. 
Whitaker v. Bank of England, 1 Cromp. M. & R. 744, 6 C. &- P. 700, 1 Gale, 54. The 
notice may be given at once. Ex parte. Moline, 1 Rose, 303 ; Burridge v. Manners, 
3 Camp. 193; Leftley v. Mills, 4 T. R. 170; Haynes v. Birks, 3 B. & P. 599. In 
Leftley v. Mills, 4 T. R. 170, this rule, which is now well established, was laid down 
with great clearness by Bidler, J. In this case a clerk called with the bill upon which 
the question arose at the house of the defendant, the acceptor, on the day it became 
due ; but not finding him at home, left word where the bill might be found, that the 
defendant might send for it and take it np. This not being done at six o'clock in the 
evening, it was noted for non-payment. Between seven and eight o'clock the same 
clerk called on the defendant again with the bill, who then offered to pay the amount 
of it, but refused to pay an additional half-crown demanded for the notary. Lord 
Kenyan was of the opinion that the notice was sufficient, and directed a verdict for the 
defendant. But it seems that the protest on the bill was not authorized by any statute, 
and therefore that there was no reason why the acceptor should .be charged with costs 
of protest. See Greeley v. Thurston, 4 Greenl. 479, per Wcslon, 3 , criticising Lord 
Kenyon's decision, and adopting the rule of Mr. Justice Bullcr, that a demand at a 
reasonable hour upon the day of payment is sufficient to charge maker, acceptor, or 
indorser of negotiable paper, who may be sued upon that last day of grace or payment. 
If, then, after demand upon the last day of grace,, the right of action becomes vested 
in the holder, he may of course be justified, if he commences an action, in demanding 
all costs which have already accrued in addition to the sum already due. Nor do we 
think that, if an indorser were fixed by notice and suit commenced after demand on 
the last day of grace, that tender of the mere sum due by the maker or acceptor would 
release the indorser so liable. It has been decided also, in Shed v. Brett, 1 Pick. 401, 
and City Bank v. Cutter, 3 id. 414, that after demand and notice the indorser may be 
forthwith sued, without waiting for the expiration of the day on which the note falls 
due. "It would be a very extraordinary doctrine," says Wi-slon, 6., in the case cited 
tupra, " to hold that he (the indorser) might be sued before any action could be sus- 
tained against the principal and ultimate debtor. If, therefore, an action lies against 
the indorser, it must equally lie against the maker or acceptor." 


payor has the whole day, if he afterwards in the course of that 
day makes the payment, this is good as respects himself, and 
invalidates the notice to other parties. («') 

It can be paid before it is due only at the peril of the party 
paying ; so that if a check be post-dated, and paid to a thief or 
finder on a day before that on wliich it is dated, the bank loses 

{v) Hartley v. Case, 1 C. & P. 555, 4 B. & C. 339, 6 D. & R. 505. This probably 
rests upon the same grounds with the old rule, that a debtor has till the last hour 
of the day of payment. Hudson ?;. Barton, 1 Kol. 189, per Lord Colce ; Anonymous, 
F. Moore, 122; Rockingham v. Oxenden, Salk. 578. The plea of tender by an 
acceptor a/ler the day of which the bill falls due is insufficient. Hume v. Peploe, 
8 East, 168. With regard to drawer and indorser of a bill, or indorsers of a note, 
a different rule may be thought to prevail. The drawer or an indorser is only 
conditionally liable, and is only bound to pay when notice and request have been 
made. Therefore it has been said, that a plea of tender after the bill became due 
might be good on the part of a drawer or indorser, because they have a reasonable 
time in which to pay. Byles on Bills, 176, note w. See Walker v. Barnes, 5 Taunt. 
240, 1 Marsh. 36 ; Soward v. Palmer, 8 Taunt. 277, 2 J. B. Moore, 274. But we 
think this doctrine may be considered as doubtful. In Siggers v. Lewis, 1 C. M. & 
R. 370, 4 Tyrw. 847, 2 Dowl. 681, a plea was held bad which alleged as defence that 
the indorser had not had a reasonable time to pay before the action was commenced. 
It appears, however, that late cases have held that an action may be commenced against 
an indorser on the last day of grace, and the writ may be served before due notice of 
dishonor could reach the indorser by course of mail. (See Vol. I. p. 411, note m.) 
Shed I'. Brett, 1 Pick. 401. In this case we think the doctrine that the indorser has a 
reasonable time to pay the bill is entirely exploded by Parket\ C. J., who says : " If the 
putting the letter into the post-oflBce is notice in it.self, which we have shown, then it was 
given l)efore the commencement of the suit. And it would be mischievous to decide 
otherwise, for every plaintiff's right of action would commence at different times, ac- 
cording to the distance of the party sued ; and the time of suing must be conjectured, 
as it cannot be known when the notice will be actually received. Besides, if the object 
of waiting be to give the party opportunity to take up the note, there must be a sort of 
double usance ; for the holder must wait till his letter is received, and for a reasonable 
time afterwards for the party receiving it to come and pay the money. Who would 
take a bill or note remitted from New Orleans if this doctrine be correct? and if the 
parlies liable be beyond sea, such instruments would be mere waste paper. Jf the bill 
should not be accepted, or the indorsed note not paid, the unfortunate holder, with prop- 
erty belonging to the drawer or indorser before his eyes, must remain an idle spectator 
of the scramble of other creditors for it, or suffer it to be withdrawn by the debtor him- 
self without the power of arresting it." In Stanton v. Blossom, 14 Mass. 1 16, the suit 
was commenced upon the morning the bill was dishonored, and notice put in the post- 
oflBce afterwards. A doctrine which would lead us to the same conclusion by analogi- 
cal reasoning, is found in the bankrupt cases, where, though the drawer or indorser 
could not have possibly received notice, yet the claim, upon showing notice given, may 
be proved under the commission. Bayley on Bills, 4th ed., 264 ; Milford v. Mayor, 1 
Doug. 54 ; Bull N. P. 269 ; Chilton v. Whiffin, 3 Wils. 13 ; Macarty r. Barrow, 2 Stra. 
949; Forman v. Jacob, 1 Starkie, 46; Watson v. Loring, 3 Mass. 557; Chitty on 
Bills, 3d ed., 169, 184 ; Puckford v. Maxwell, 6 T. R. 52 ; Starey v. Barm, 7 East. 435 


the money, (it;) And if negotiable paper be paid before it is due, 
and afterwards be indorsed for value, as indorsees cannot know 
or guard against such payment, it constitutes no defence against 
their claim, (x) 



One who pays a bill or note at maturity has a right to the pos- 
session of it, at least if it be negotiable. (v/) Nor should an 

{w) Chitty, 148. 

(x) Burbridge v. Manners, 3 Camp. 193; Morley v. Culveiwell, 7 M. & W. 174. 
See note in former case. The rule laid down by Chitty is, that an indorsement cannot 
in general be made after payment so as to affect any of the parties except the person 
making such indorsement. Mr. Chitty says nothing about such a payment being in due 
course of time, and not by anticipation. The distinction seems to be one that is en. 
tirely necessary and justified by the laws of negotiable paper. It is plain that, when a 
promisor does pay a note before maturity, he should be careful to have it destroyed ; 
otherwise, if it gets into circulation it must deceive an innocent person, who, if the bill 
were past its maturity, would be put upon his guard against imposition. In Baker v. 
Wheaton, 5 Mass. 512, Parsoris, C. J. says : " If the promisor has bonajide paid the 
note to the promisee while it was his property and unassigncd, if the promisee should 
afterwards fraudulently indorse it to an innocent purchaser for a valuable consideration, 
yet the promisor might defend himself by proving a payment prior to the transfer, be- 
cause by the payment the note was ipso facto discharged, and there was no subsisting 
contract to assign. If the law were not so, the maker of a negotiable note might 
often be injured. He cannot demand a delivery of the note as a previous condition 
of payment; but he must pay the money due, and if a delivery is refused, his remedy 
i.s by proving payment, which will avail him against a subsequent indorsee." The 
terms of the rule, as laid down l)y the Chief Justice, would certainly include notes 
paid before maturity, as well as those paid at maturity, and therefore affected with 
equities as to all subsequent parties taking after such payment. The case under 
consideration was one of an indorsement after maturity, and the payment by the 
maker was spoken of as compulsory, and this was a reason why protection should be 
extended to him. This certainly could not apply to one taking up a note not yet due. 
who certainly enables another to deceive, if he does not provide that the note shall not 
be reissued. In Blake v. Sewell, 3 Mass. 556, Hemmenway v. Stone, 7 id. 58, Webster 
V. Lee, 5 id. 334, and Boylston v. Greene, 8 Mass. 465, the language is equally general, 
but the cases, like the first, did not call for the distinction. Beck v. Kobley, 1 H. Bl. 
89, note ; Hull v. Pitfleld, 1 Wils. 46. It seems to have been decided, and with good rea- 
son, that a premature release does not protect the releasee as against a subsequent bona 
fide holder, any more than a premature payment. Dod v. Edwards, 2 C. & V. 602. 

(y) This seems to have been doubted in Haker v. Wheaton, 5 Mass. 509, cited in the 
preceding note. But see Byles on Bills, 17" and 180. Hansard ?;. Hobinson, 7 B. 
& C 90, 9 Dowl. & U. 860 ; Towell i;. Roach, 6 Esp. 76 ; Alexander r. Strong, 9 M. 


agent to receive payment deliver up a note or bill without pay- 
ment, (z) Where there was a usage of trade, however, to de- 
liver up a note on receipt of a check, an agent was considered 
justified in doing so, although the check itself was never paid. (a) 
But if other parties had a right to the production of a note of 
which payment is demanded, it would seem that they would be 
discharged (b) by the payee putting the note out of his hands. 

If a stranger pays a bill, as one left at a banker's, for example 
and takes possession of the bill, this is not necessarily a payment 
by the acceptor,(c) but may be a purchase of the bill, which 
gives a right to demand its payment of those liable. In general, 
a bill is not discharged until paid by or in behalf of the acceptor, 
or a note until paid by the maker, (c?) 

& W. 733. It has been held, in Wain v. Bailey, 10 A. & E. 616, 2 Per. & Dav. 507, 
that, if the bill be not negotiable, the promisor cannot refuse to pay before the bill is 
given up to him. 

{z] This used to be the strict rule. Marius, 21 ; Wards. Evans, 12 Mod. 521 ; 
Vernon v. Boverie, 2 Show. 296. 

(a) Russell v. Hankey, 6 T. R. 12. In this case a London banker received bills 
from a correspondent, to whom they had been indorsed, to present them for payment. 
The bills were given to the acceptor, who gave in payment a check upon a banker 
in London for the amount. Tlie drawee of the check dislionored it, having no funds 
of or account with the drawer. The defendants contended that they had only done 
what was usual in the ordinary course of trade and business with bankers, of which 
opinion was Lord Ktnijon, and also the whole court, who refused a rule to set aside 
the nonsuit. Byles on Bills, p. 16, says, that it is now doubtful if a London banker 
would be protected in taking checks for bills as payments, and it is believed by him not 
to be the custom. 

(6) Powell V. Roach, 6 Esp. 76 ; Ridley v. Blackett, Peake's Ad. Cas. 62. So if 
the holder of a check receive bank-notes instead of cash, and the banker fail, the drawer 
is discharged. Vernon v. Boverie, 2 Show. 296. 

(c) Deacon v. Stodhart, 2 Man. & G. 317. See also Jones v. Broadhurst, 9 C. B. 
173. In Burr v. Smith, 21 Barb. 262, a note became due, and a stranger called for 
it on the holder and took it away, declining to have it cancelled. Nothing was said 
about buying the note. Rut this was held a payment and a bar to a suit bv a person 
who received it from the stranger. The plaintitF in the case was not, however, a bona 
Jide holder. 

(d) In Eastman v. Plumer, 32 N. H. 238, the principal signer of a promissory 
note, when called on for payment brought the money, paid it over to the holder, who 
received it as and for payment, and gave up the note to the principal. The monev 
belonged to a third party, who sent the principal debtor to purchase the note ; and this 
third person bringing an action against a surety on the note, the latter was held not 
liable, tlie note as to him being paid. In Kemp v. Balls, 10 E.xch. 607, 28 Eng. L. & 
Eq. 498, the defendant pleaded that he accepted a bill for the accommodation of the 
drawer; that there was no value or consideration for such acceptance, and that the 
drawer indorsed this bill and other bills to the plaintiff as security for 'he <«pcyiueni 


It is an ancient rule of law, that a part payment of a debt, 
the whole of which is due, cannot extinguish the debt, even 
where the parties agree that it shall. (e) The reason is, that the 
creditor's promise is without consideration. The rule itself is 
now much relaxed, and perhaps brought into some doubt. At 
all events, a very slight consideration suffices. If the payment 
is in any way more advantageous to the creditor than the con- 
tract requires it to be ; as if it be made before it is due ; or by a 
stranger ; (/) or by a new bill or note for part, with a surety, («•) 

to the plaintiff of £ 30 ; and that, after action, the plaintifTs claim on the bill was satis- 
fied and discharged by the payment to them by an acceptor of one of the other 
bills of the money so advanced. On demurrer, the plea was held bad, partly on 
the ground that the payment relied on was made by a stranger, and was not 
alleged to have been made for and on account of the debt, and to have been rati- 
fied by the defendant. See also Goodwin v. Cremer, 18 Q. B. 757, 16 Eng. L. & 
Eq. 90; Thame v. Boast, 12 Q. B. 808. 

(e) Fitch V. Sutton, 5 East, 230, unless the demand be unliquidated ; Wilkinson v. 
Byers, 1 A. & E. 106, 3 Nev. & M. 853; Watters v. Smith, 2 B. & Ad. 8t?9 ; Beau- 
mont V. Greathead, 2 C- B 494. When a person is bound to pay a certain sum, there 
is no consideration, in the view of the law, for a promise that it shall be satisfaction if 
part is paid. Nor is it a consideration for a postponement of a portion of the debt. 
Pzice V. Cannon, 3 Misso. 453; Wheeler v. Wheeler, 11 Vt. 60. Of course a release 
under seal is a sufficient consideration. Part payment, if agreed to be in full, is made 
Batisfaction by statute in some States. See Rev. Stat, of Maine. But see, with regard 
to the extinguishment of one simple contract by another. Com. Dig. Accord. B. ; Good 
V. Cheesman, 2 B. & Ad. 328, 4 C & P. 513; Cartwright v. Cooke, 3 B. & Ad. 701 ; 
Garrard v. Woolner, 8 Bing. 258. The substitution of one simple contract for another 
is the substitution of one cause of action for another. 

if) Welby V. Drake, 1 C. & P. 557. In this case the defendant was the drawer of 
a bill for £ 18 3s. lit/., in satisfaction of which the plaintiff had taken £9 from the 
plaintifl"s father, in satisfaction of the whole debt. The suit being brought by the 
plaintiff, Abbott, C. J. said : " If the father paid the smaller sum in satisfaction of this 
debt, it is a bar to the plaintiff's now recovering against the son, because by suing the 
•on he commits a fraud on the father, whom he induced to advance the money, upon 
ihe faith of such advance being a discharge of his son from further liability." 

(y) Hardman v. Bellhouse, 9 M & W. 596, where a bill or note on which some other 
person than an original debtor is liable is expressly given and accepted in full satisfac- 
tion and discharge, the liability of the original debtor upon the original debt will not 
revive on the dishonor of the substituted instrument. Sard v. Rhodes, 1 M. & W. 
153, Tyrw. & G. 298, 4 Dowl. 743, 1 Gale, 376. Contra, if taken on account or in 
renewal. Stedman v. Gooch, 1 Esp. 3 ; Kearslake v. Morgan, 5 T. R. 513. As a mat- 
ter of pleading, if a note is given in satisfaction of a former one, and in satisfaction 
of that a third, this cannot be pleaded in satisfaction of the first. David v. Preece, 5 
Q. B. 440. A bill of exchange or promissory note of the debtor, or of anotncr party, 
58 not payment of a precedent debt utdess it be so agreed or understood by the parties. 
See in general, Tobey v. Barber, 5 Johns, 68 ; McGinn r. Holmes, 2 Watts, 121 ; John- 
son i; Weed, 9 Johns. 310; Iliggin.s v. Packard, 2 Hall, 547 ; Coxc v. Hankinson, 
VOL. II. 19 


or pcxliaps a new bill or note that is negotiable, the former not 
bfaing so. (A) So the bill of one person for the joint debt or note 
of both.(i) So the payment of the whole principal of a prom- 
issory note has been held to sustain an agreement that no 
interest should be demanded. (y) And, at present, we doubt 
whether any bona fide agreement by way of compromise, not in 
itself oppressive, would now be declared invalid by our courts. 

If a drawer of a bill pay a part of it to a holder, the holder 
may still, as we should say, recover the whole amount from the 
acceptor ; {k) but he recovers that part which has been paid to 
him only as trustee of the drawer. 

Coxe, 85 ; Bill v. Porter, 9 Conn. 23 ; Sheehy v. Mandeville, 6 Cranch, 253 ; Chas- 
tain V. Johnson, 2 Bailey, 574 ; Porter v. Talcott, 1 Cowen, 359 ; Ayre v. Van Lieu, 
2 South 765 ; Sneed v. Wiester, 2 A. K. Marsh. 277 ; Davidson v Brid<ieport, 8 Conn. 
472 ; Gardner i\ Gorham, 1 Doug. Mich. 507 ; Weed v. Snow, 3 McLean, 265 ; Hay.? 
V. Stone, 7 Hill, 128; Kelsey v. Rosborougli, 2 Rich. 241 ; Steamboat Charlotte t\ 
Hammond, 9 Misso. 58 ; Elwood v. Deifendorf, 5 Barb. 398. In some States (c. g. 
Maine, Vermont, and Massachusetts) the rule is, that such bill or note is prima farAt 
payment, unless the contrary appears. Head v. Upton, 10 Pick. 522 ; Jones v. Ken- 
nedy, 11 id. 125 ; Wood v. Bodwell, 12 id. 268 ; Hutchins v. Olcutt, 4 Vt. 549, 555 ; 
Huse V. Alexander, 2 Met. 157 ; French v. Price, 24 Pick. 13. See also Trotter v. 
Crockett, 2 Porter, 401. It is a question of fact for a jury to determine the intention 
with which the security was given and accepted. Hart v. Boiler, 15 S. & R. 162 ; Bul- 
len ». McGillicuddy, 2 Dana, 90 ; Gardner*. Gorham, 1 Doug. Mich. 507. See chapter 
on Payment by Bill or Note, for a very full discussion and collection of the cases, and 
of the distinctions taken between cases in the various States of the Union. 

(A) Sibree v. Tripp, 15 M. & W. 23, even if the debt be for a larger amount than tho 
amount of the note. 

(i) Thompson v. Percival, 5 B. & Ad. 925, 3 Nev. & M. 167. Taking a bill from 
one of two partners may be an advantage, and so be a consideration for abandoning a 
part of the sum due. The sole liability of one partner may be much more advanta- 
geous, it is said, than that of two or more. See chapter on Payment by Bill or Note. 

{j) Beaumont v. Greathead, 15 Law J., C. P., 130, 3 Dowi. & L. 631, 2 C. B. 494. 

(k) In Johnson ?>. Kennion, 2 Wils. 262, it was held that the holder could recover from 
the acceptor the whole amount of the bill. This decision was approved in Walwyn v. 
St. Quintin, 1 B. & P. 652. However, only the difference between what was originally 
due and what was paid by the drawer was allowed to be recovered by the holder of the 
acceptor in Bacon v. Searles, 1 H. Bl. 88. Pierson v. Dualop, 2 Cowp. 571. In this 
case, the mere arrest of the drawer was held no discharge of the acceptor. See Brown 
«. Rivers, 2 Doug. 472, which has, however, very little bearing upon the question before 
us, and only goes to show that an " action upon a note cannot be split." R''id v. 
Furnival, 1 Cromp. & M 538, 5 C. & P. 499. In Hemming v. Brook, 1 Car. & M. 57, 
Lord Abinf/er ruled that the holder could only recover of the acceptor the amount of 
the bill, minus what had been paid by the drawer. But in Jones v. Broadhurst. 9 C. 
B. 173, it was held that the holder could recover the whole amount of the bill from tho 
acceptor, and if he has been already paid in part by the drawer, he holils an equal sum 
to such payment in trust for such drawer. So if the drawer has paid the whole. Id 


Credit given by the party to a bill or note who is liable for its 
payment to the holder at his request, or if accepted by him, is 
equivalent to payment. But where a bill accepted for the ac- 
commodation of the drawer was sent to a bank for collection, 
and at its maturity the bank credited the holder with the 
amount, this is no payment which discharges the acceptor, for 
the bank acquires the holder's rights to the bill against the 
acceptor. (/) 

If a banker takes from a customer a note with a surety, to 
secure a running balance, and gives credit on the faith of it, and 
afterwards general deposits or payments are made which equal 
or exceed the amount of the note, it still remains a security for 
the balance which may at any time exist. (m) 

It may be regarded as established, that if a note be secured by 
a mortgage, and the mortgagor at its maturity give a new note, 
which is regarded by him and the mortgagee as a renewal of the 
old note, and even repeats this many times, each note that is 
given up is itself paid by the new one, and is a good considera- 
tion for the new one, but the original debt is not paid so as to 
discharge or affect the mortgage ; nor will that be discharged 
unless by payment in money of the first note with interest, or 

See also Kemp v. Balls, 10 Exch. 607,29 Eng. L. & Eq. 498 ; Goodwin v. Cremer, 18 
Q. B. 757, 16 Eng. L. & Eq. 90. But in Lazarus ?;. Cowie, 3 Q B. 459, a payment of 
the bill by a drawer was held a complete satisfaction. It has been said, and would 
seem to be favored by the reason of the thing, that, the drawer being security for 
the acceptor, the payment by the former would be, pro tanto, a discharge, and that, 
if payment in full were made, only nominal damages could be recovered against 
the acceptor. See Pothier, 106 ; Hemming v. Brook, 1 Car. & M. 57. Payment 
by a party who is a security upon negotiable paper may be considered in two ways, 
which perhaps accord with the original and reasonable intent of the parties. With 
regard to subsequent parties to a bill or note, a security's having paid the bill oper- 
ates as satisfaction. So far as they are concerned the bill is extinct, funclum officio. 
If this were the case with regard to prior parties, such a security, having paid the bill, 
would have no right of action against such prior parties on the bill, but only for money 
paid to the use of such prior party. This, however, is at variance with the everyday 
practice, which allows any indorser who has " taken up " or paid the paper (so far as 
subsequent parties are concerned), to erase all the names subsequent to and including 
his own, and proceed like an ordinary indorsee against prior parties. CalloAV t;. 
Lawrence, .3 M. & S. 95. See Roberts v. Eden, 1 B. & P. .398 ; s. C criticised by 
Putteson, J. in Bartrum v. Caddy, 9 A. & E. 27*, 1 Per. & D. 207. See Pacific Bank 
V. Mfrcf.ell, 9 Met. 297. 

(/) Pacific Hank i-. Mitchell, 9 Met. 297. 

(m) Pease c. Hirst, 10 B. & C. 122. 


some other payment which the parties agree upon as satisfying 
the mortgage. (/i) 

As negotiable paper may be demanded and should be surren- 
dered upon payment, the possession of it by one bound to pay it 
is in general presumptive proof that he has paid.(o) But the 

(n) See chapter on Payment by Note or Bill, for a full collection of authorities upon 
this sulyect. 

(o) Hill V. Gayle, 1 Ala. 275; Dugan v. United States, 3 Wheat. 172; Baring v. 
Clark, 19 Pick. 220 ; Northampton Bank v. Pepoon, 11 Mass. 288 ; Green v. Jackson, 
1.5 Maine, 136 ; Greenl. on Evid., § 33 ; Story on Notes, ^§ 247, 452. In Uugan i;. 
U. S., 3 Wheat. 172, this was so held, although there was a special indorsement by 
the indorser to a third person. In Baring v. Clark, 19 Pick. 220, the acceptor had pos- 
session of the bill, but it had been in circulation after acceptance. See Pfiel r. Van- 
bate n berg, 2 Camp. 439; Egg v. Barnett, 3 Esp. 196; Aubert v. Walsh, 4 Taunt. 
293; 3 Stark Ev., 4th Am. ed., 1090, 1091 ; Gibbon v. Featherstonhaugh, 1 Stark. 
225 ; Bell v. Norwood, 7 La. 95 ; Brembridge v. Osborne, 1 Stark. 374 ; I'icquet v. 
Curtis, 1 Sumner, 478; Hughes v. Hind, 1 Wright, 650; Wilson v. Goodin, id. 219. 
In Dugan o. U. S., 3 Wheat. 172, Mr. Justice Liringslon, delivering the opinion of the 
court, said : " After an examination of the cases on this subject, (which cannot all of 
them be reconciled,) the court is of opinion that, if any person who indorses a bill of 
exchange to another, whether for value or for the purpose of collection, shall come in 
possession thereof again, he shall be regarded, unless the contrary appear in evidence, 
as the bonajide holder and proprietor of such bill, and shall be entitled to recover, not- 
withstanding there may be on it one or more indorsements in full, subsequent to the 
one to him, without producing any receipt or indorsement back from either of such 
indorsees, whose names he may strike from the bill or not, as he may think proper." 
3 Kent's Com. 79; Mauran v. Lamb, 7 Cowen, 174; Dean v. Hewit, 5 Wend. 257. 
In Mendez v. Carreroon, 1 Ld. Raym. 742, per Ld Ch. J. Holt, the plaintiff was indor- 
see, who had himself been sued. It was held, that he must prove that he had paid the 
party who sued him. There seemed to be a qucere whether the plaintiff must not 
produce a receipt upon the protest. The case of Welch v. Lindo, 7 Cranch, 159, to 
the same effect, may be considered as overruled. This case, decided by Marshall, 
C. J., held that such an indorsee must have a reassignment or a receipt from the 
last or subsequent indorsees. These cases have led Mr. Justice Stori/, in his work on 
Promissory Notes, to say that " the production of a note, it is said, in the hands of a 
party either maker or indorser, is not evidence that it has been paid by him, but proof 
aliunde should be given ; and hence the importance of a receipt upon the back of a 
note." See also Chitty on Bills, ch. 9, pp. 456. 457, 8th ed. ; id., p. 429, 9th cd.. Chitty 
and Hulme. But he hints at the adoption of the doctrine in our text by the United 
States and American courts generally. U. S. v. Barker, 1 Paine C. C. 156 ; Norris v. 
Badger, 6 Cowen, 449; Brinkley v. Going, 1 Breese. 288; Campbell v. Humphries, 
2 Scam. 478, 479, and notes: Bank of U. S. v. U. S., 2 How. 711. All these cases 
follow the case of Dugan v. U. S., quoted supra. See also Mottram v. Mills, 1 Sandf. 
37 ; Hunter v. Kibbe, 5 McLean, 279 ; Dollfus v. Frosch, 1 Denio, 367. In an ac- 
tion by drawer against acceptor of bill, if the plaintiff pniduce the bill with a gen- 
eral receipt upon the back, this was held to be prima farie evidence that the bill had 
been paid by the defendant, and not by the plaintiff. Schulcy v. Walsby, Peake, Ca*. 
24 ; Jones v. Fort, 9 B & C. 764. The presumption of payment arising from iha 


course of business may weaken or destroy this presumption. As, 
if a depositor at a bank is in the habit of sending to a hank 
checks drawn upon it, the mere possession of the check by the 
bank is not even prima facie evidence that the check was paid 
by them, ( 7?) 

So the possession of a bill by an acceptor is not evidence of 
payment by him, unless it can be shown that, after he received it 
for acceptance, it^passed from his hands into circulation. Then, 
if he received it again, the presumption is that he acquired it by 
payment. (^) And if a bill or check be sent to the drawee to be 
passed to the credit of the sender, and is so credited, the bill is 
discharged, and can no longer be negotiated. (r) 

If there be a general receipt of payment on the back of a 
note or bill, as the maker or acceptor is primarily the person to 
pay, the presumption will be that the payment was made by 
him ; {s) and since the holder has the custody of the negotiable 
paper, receipts on the back of such negotiable paper are pre- 
sumptive evidence of payment ; but it is for a jury to decide if 
this was done to take the bill out of the Statute of Limita. 
tions.(^) These presumptions are of course open to rebutter. 

possession of the note by the party liable to pay, may be rebutted certainly. Fellows 
V. Kress, 5 Blackf. 536. 

(p) See chapter on Checks, where the authorities are collected. 

(q) Pfiel V. Van baten berg, 2 Camp. 439. See also cases in note o. 

[r) Savage v. Merle, .5 Pick. 83. In this somewhat peculiar case the circumstances 
were as follows. The defendant, John A. Merle, drew a bill of exchange on W. & 
N. Wyer, of New Orleans, in favor of the plaintiff. The plaintiff sent the bill 
directed to " Wyer & Merle," directing them to pass it to the credit of the plaintiff. 
At the time the bill was drawn no such firm as " Wyer & Merle " existed ; but Wyer, 
the survivor of the firm of W. & N. Wyer, and John A. Merle, the defendant, had 
made arrangements to go into partnership, and had issued circulars intimating such in- 
tention. The bill was passed to the credit of the plaintitf in the books of W. & N. 
Wyer. The receipt of the letter was acknowledged by W. & N. Wyer, who say the 
bill has been accepted and will meet with due honor. The contemplated partnership 
never went into operation. There was no presentment of the bill to the drawee for ac- 
ceptanctc or payment other than sending of the bill itself to him, and no protest or 
notice was sent to the drawer. Held, that the defendant was not liable as drawer, nor 
as the plaintiff's agent, and so liable for negligence. 

(s) Scholcy V. Walsby, Peake's Cas. 24. 

(t) Gibson V. Peebles, 2 McCord, 418. But where the receipts were such as might 
take the bill or note out of the Statute of Limitations, such receipts in the handwriting 
of the holder would be of very slight weight, as they could hardly be then considered 
as admissions against interest. Perhaps all the writing in the case is to be presumed to 
have been made at the time at which it bears date. If such receipts were in the hand- 




If a debtor who owes on sundry accounts makes a general 
payment, the question may arise as to which account it shall be 
credited ; he may owe on book account and on note, and does 
this payment settle the note ? or he may owe notes some of 
which are secured and others not, and which of these notes are 
paid ? The law of appropriation presents in this way questions 
of some difficulty. (w) 

The general rules are, first, that the party paying can appro- 
priate his payments as he chooses, (i?) but he should indicate 
to the payee his application of the payment at or before the time 
of payment, (i^;) He is not, however, allowed so to appropriate 

writing of the defendant, who sets up the Statute of Limitations, of course they would 
be good evidence of such payment. But if the writing is in the hand of the plaintiff, 
it may, at least, be said to he a species of evidence which the holder has it in hi? power 
at any time to create. Perhaps the actual payment should be shown, or at least that 
such writing was on the note before the statute had run its course. This question has 
been thought worthy of special statutes in some of the States, as, for example, in Mas- 

(u) The whole law on the subject of the application, or, as it is sometimes called, the 
imputation of payments, was learnedly discussed and fully expounded iu Clayton's 
case, in Devaynes v. Noble, 1 Meriv. 572. 

(p) That in the case of voluntary payments, and not those made by process of law 
(Blackstone Bank v. Hill, 10 Pick. 129), the debtor may apply the payments as he 
pleases, is held in the following cases. Tayloe v. Sandiford, 7 Wheat. 13 ; Reed v. 
Boardman, 20 Pick. 441 ; Martin v. Draher, 5 Watts, 544; M'Donald r. Pickett, 2 
Bailey, 617; Mitchell v. Dall, 4 Gill & J. 361 ; Selfridge v. Northampton Bank, 8 
Watts & S. 320; Runyon D.Latham, 5 Ired. 551; Rowland v. Rench, 7 Blackf. 
236; Rackley v. Pearce, 1 Ga. 241 ; Randall v. Parramore, 1 Fla. 409 ; United StaUrs 
». Bradbury. Daveis, 146. 

(w) Reynolds v. M'Farlane, 1 Overt. 488 ; Moss v. Adams, 4 Ired. Eq. 42. The 
parties need not declare how the money is to be appropriated ; it will suffice if such 
direction or appropriation can be implied from any circumstances. Robert i'. Garnie, 
3 Gaines, 14; Brett v. Marsh, 1 Vern. 468 ; Shaw v. Picton, 4 B. & C. 715, 7 Dowl. 
& R. 201 ; Chitty v. Naish, 2 Dowl. 511 ; Mitchell v. Dall, 2 Harris & G. 159, 4 G. 
& J. 361 ; Marryatts v. White, 2 Stark. 101 ; Fetors v. Anderson, 5 Taunt. 597 ; 
Taylor v. Rymer, 3 B. & Ad. 333 ; Scott v. Fisher, 4 T. B. Mon. 387. If such in- 
tention on the part of the debtor appear, the creditor is bound thereby. Reed ». 
Boardman, 20 Pick. 441; Hall v. Marston, 17 Mass. 575; Gilchrist v. Ward, 4 
Mass. 692; Bonaffe v. Woodberry, 12 Pick. 463; Hussey v. Manuf. & Mechanics 
Bank, 10 Pick. 415; Boslcy v. Porter, 4 J. J. Marsh. 621 ; Hall j;. Constant, 2 
Hall, 185; M'Donald v. Pickett, 2 Bailey, 617; Martin t;. Draher, 5 Watts, 544; 


payment as to affect the relative rights of his sureties, (a;) but iu 
some eases he seems to be permitted to exercise his option, to 
the injury of a surety of one of the debts. (y) 

The question of the time within which the creditor may make 
his appropriation has been much discussed, and the authorities 

Boutwell V. Mason, 12 Vt. 608; Pindall ?;. Bank of Marietta, 10 Leigh, 481 ; Mil- 
ler V. Trevilian, 2 Rob. Va. 1, 27 ; Mills v. Fowkes, 7 Scott, 444 ; Black v. Schooler, 
2 McCord, 293. Though the creditor at the time, and constantly afterwards, refuse 
to make the application directed or requested, if he receive the money he is bound 
by the application made by the debtor. Reed v. Boardman, 20 Pick. 441. The fact 
that a debtor denied owing one of the debts is evidence of intention to have tlie pay- 
ment applied to another; so the correspondence of the sum paid with one of the debts 
affords a presumption that it was intended to cancel that debt. Tayloe v. Sandiford, 
7 Wheat. 13, 20; Mitchell v. Dall, 2 Harris & G. 159, 160, 173, 4 Gill & J. 361 ; 
Robert r. Garnie, 3 Gaines, 14 ; West Branch Bank v. Moorehead, 5 Watts & S. 542 ; 
Scott V. Fisher, 4 T. B. Mon. 387 ; Stone v. Seymour, 15 Wend. 19. In this case the 
following rules are laid down, which may be said to be universally received, both among 
the civilians and in courts of common law. 1st. If both debts are due at the time of 
a partial payment, the debtor is at liberty to apply the payment to which he pleases, 
if his intention is manifested at the time of payment; subject to this restriction, how- 
ever, that the creditor is not obliged to receive a partial payment of any particular 
debt of which the whole is due at the time the oflPer of payment is jnade. 2d. When 
the debtor neglects to manifest his intention as to the application of the payment at the 
time it is made, the creditor may at the time he receives the money apply it to which 
debt he pleases, unless the debtor objects ; the creditor manifesting his intention at the 
time, either in the acquittance which he gives or in some other way. 3d. If a partial 
payment is made on account of debts, one part of which debts consists of the principal, 
and another of the interest or compensation due for the use of capital, of such debts 
so much of the payment as is necessary to satisfy the interest or arrears then due shall 
be first applied for that purpose, and the residue only shall go to reduce the amount of 
the principal debt. These rules prevailed in the Roman or civil law, and are now the 
settled law of France, Spain, Holland, Scotland, England, and the United States. 1 
Doraat, B. 4, tit. 1, § 4, Art. 1, 3, 5, 6 ; Nap. Code, Art. 1253, 1254, 1255 ; 5 Partidas, 
tit. 14, Law 10 ; Van Der Linden's Inst, of Holland, B 1, ch. 18, § 1, Henry's Transl. 
267 ; Bell's Law of Scot., Art. 562, p. 135 ; 2 Bell, Com. 535 ; Wood's Civ. Law, 293 ; 
1 Evans, Poth. 328, No. 528 ; Anonymous, Cro. Eliz. 68 ; Bois v Cranfield, Style, 239 ; 
Hayncs v. Harrison, 1 Ch. Gas. 105 ; Crisp v Bluck, Finch, 89 ; Field v. Holland, 6 
Cranch, 27 ; Taylor v. Talbot, 2 J. J. Marsh. 49 ; Baker v. Stackpoole, 9 Cowen, 420 ; 
Civ. Code of Louis., Art. 2159, 2160, 2161 ; Hart v. Dewey, 2 Paige, 207. See also 
Williams v. Houghtaling, 3 Cowen, 88; Tracy v. WikoflP, I Dall. 124. In Hall v. 
Marston, 17 Mass. 575, it was held that when a creditor receives from his debtor a bill 
of exchange, with directions to pay a part of it to another creditor, he has no right to 
appropriate the whole sum collected to the payment of his own debt. It may bo a 
question whether the debtor could complain ; but there is no doubt that the creditor to 
whom a portion was to be paid could maintain an action for money had and received. 

yx) Postmaster-General v. Norvell, Gilpin, 106; Merrimack Co. Bank v. Brown, 
12 N. H. 320; Myers v. United States, 1 McLean, 493. 

{y) See, on the rights of a surety, Kirby v. Marlborough, 2 Maule & S. 18; 
Postmaster-General v. Furoer, 4 Mason, 333. 


are far from uniform. Perhaps the general rule may be stated 
thus : As between the debtor and creditor, it may be made at 
any time before a suit is brought, or an actual controversy 
begun. But in regard to third parties, whom a delay might 
affect, it must be made within reasonable time. (2) The cred- 
itor cannot change an application which he has once made. (a) 
Secondly, if he can exercise this choice, but does not, the payee 
may make this appropriation, (6) provided it be such an appli- 
cation as the debtor coiild not reasonably and justly object to. 

(z) Mayor of Alexandria v. Patten, 4 Cranch, 317 ; Pattison v. Hull, 9 Cowen, 747 ; 
Bosanquet v. Wray, 6 Taunt. 597 ; Frazer v. Bunn, 8 C. & P. 704 ; United States 
V. Kirkpatrick, 9 Wheat. 720, 737. See also Philpott v. Jones, 2 A. & E. 41 ; Williams 
V. Griffith, .5 M. & W. 300 ; Brady j; Hill, 1 Misso. 315 ; Hilton v. Burley, 2 N. H. 193 ; 
Heilbron ». Bisscll, 1 Bailey, Eq. 4.30 ; Starrett ». Barber, 20 Maine, 457. Whether 
the application can be made by the creditor after suit brought is discussed in Wilkin- 
son V. Sterne, 9 Mod. 427 ; Bosanquet!'. Wray, 6 Taunt. 597 ; Mills v. Fowkes, 5 Bing. 
N. C. 455 ; Williams v. Griffith, 5 M. & W. 300 ; Mayor of Alexandria i'. Patten, 4 
Cranch, 317; Brady v. Hill, 1 Misso. 315; Heilbron v. Bissell, 1 Bailey, Eq 430 
In Mayor of Alexandria v. Patten, 4 Cranch, 317, Marshall, C. J. stated the whole 
law on the subject of application of payment so clearly and in so few words that wo 
quote them at length. " It is a clear principle of law, that a person owing money on 
two several accounts, as upon bond and simple contract, may elect to apply his pay- 
ments to which account he pleases ; but if he fails to make the application, the election 
passes from him to the creditor. No principle is recollected which obliges the cred- 
itor to make this election immediately. After having made it, he is bound by it ; but 
until he makes it, he is free to credit either the bond or simple contract. Unques- 
tionably circumstances may occur, and perhaps did occur in this case, which would 
be equivalent to the declaration of his election on the part of the debtor, and therefore 
the court was correct in instructing the jury that, if they should be satisfied that the pay- 
ments were understood to be made on account of the goods sold at vendue, they ought 
to apply them to the discharge of that account ; hut in declaring that the election, which 
they supposed to devolve on the plaintiff if the application of the money was not under- 
stood at the time by the parties, was lost if not immediately exercised, that court erred." 

(a) Hill V. Southerland, 1 Wash. Va. 128; White v. Trumbull, 3 Green, N.J. 314; 
Hilton V. Burley, 2 N. H. 123. 

[b) Smith V. Screven, 1 McCord, 368 ; Blinn v. Chester, 5 Day, 166. The rule which 
the Continental law adopts from the Roman law is. that the intention of the party mak- 
ing the payment should govern. The words of the Digest are : " Quotiens quis debi- 
tor ex pluril)us causis unum debitum solvit: est in arbitrio solventis dicere, quod potius 
debitum voluerit solutum ; et quod dixerit id erit solutum." Dig. 46, 3, 1 ; Cod. 8, 43, ] . 
" Quotiens vero non dicimus id quod solutum sit, in arbitrio est acci|)ientis, cui potius 
debiio acceptum ferat." Id. This indicates the power of election in the payee, but 
that such election should be indicated to the payor appears from the same and following 
passages: " Dum in re agenda (in re present!, hoc est statim atque solutum est) hoc 
fiat; ut vel creditori liberum sit, non accipere, vcl debitori non dare, si alio nomine ex 
solutum quis eorum velit. Creterum postea non pcrmittitur." But if there be no appro- 
priation by tlie debtor, the creditor at cominon law, where there are several distinct debts, 
has a right of appropriation any time before action. Simson v. In^jham, 2 B & C. 65 


The limitation imposed by this last requirement is hardly capable 
of exact definition ; but the reason for it is obvious. The debtoi 
has an undoubted right to apply his payments. But if he ab- 
stains from exercising this right, and is only silent, it cannot be 
supposed that he intends, by his silence, to subject himself to an 
injury. Nor can the creditor reasonably allege that the debtor 
was under any obligation to make an express application of the 
payment, and, by not doing it, gave the creditor a right to inflict 
upon him injury. The only fair inference, and, as we appre- 

3 Dowl. & R. 249 ; Philpott v. Jones, 2 A. & E. 41. The following cases hold that, 
in case of distinct debts, the creditor may exercise his option. Clayton's Case, 1 
Meriv. 572, 604 ; Bodenham v. Purchas, 2 B. & Aid. 39 ; Kirby v. Marlborough, 2 M. 
& S. 18; Peters v. Anderson, 5 Taunt. 596; Mayor of Alexandria v. Patten, 4 
Cranch, 317 ; Rackley v. Pearce, 1 Ga. 241 ; Brewer v. Knapp, 1 Pick. 332 ; Wash- 
ington Bank v. Prescott, 20 Pick. 339 ; Blackstone Bank v. Hill, 10 Pick. 129 ; Mann 
V. Marsh, 2 Caines, 99 ; Mitchell v. Dall, 4 Gill & J. 361, 2 Harris & G. 159 ; Arnold 
V. Johnson, 1 Scam. 196 ; Brady v. Hill, 1 Misso. 315 ; Blinn v. Chester, 5 Day, 166 ; 
Logan V. Mason, 6 Watts & S. 9 ; Rosseau v. Cull, 14 Vt. 83; Selleck v. Sugar- 
Hollow Turnpike Co., 13 Conn. 4.53 ; Allen v. Kimball, 23 Pick. 473 ; Jones v. United 
States, 7 How. 681 ; Cremer v. Higginson, 1 Mason, 338; Van Rensselaer v. Roberts, 
5 Denio, 470 ; Sawyer?). Tappan, 14 N. H. 352 ; United States v. Wardwell, 5 Ma- 
son, 82. For the mode in which application made by the creditor may be proved 
and fixed, see Starrett v. Barber, 20 Maine, 457 ; Allen v. Kimball, 23 Pick. 473 ; 
Lindsey c. Stevens, 5 Dana, 104. Campbell v. Hodgson, Gow, N. P. 74 ; Hall v. 
Wood, 14 East, 243, note; Neale v. Reid, 1 B. & C. 657, 3 Dowl. & R. 158. In 
this case A sold goods to B, to whom and at whose risk they were shipped to 
Linbon. They were to be paid for by bills on R. & Co. C, the supercargo, waa 
A's agent, and was to retain possession of the goods until the amount of the bills 
on R. & Co. was remitted, and then the bill of lading was to be given up to B. 
R. & Co., by B.'s order, effected insurance. The ship was captured, and R. & Co. re- 
ceived the proceeds, and gave credit for a part thereof to B, and paid a portion to his 
assignees in bankruptcy. The bills drawn by B in favor of A were paid in part, and in 
part rejected. A brought an action for money had and received for his use. It was 
held that they were not obliged to apply the proceeds of the policy to the payment of 
the bills for the goods. In Woodroffe n. Ilayne, 1 C. & P. 600, accommodation accept- 
ances were given by A to B, and passed by B to C to secure some acceptances of his, 
which were paid by B out of the produce of other acceptances of C. A's acceptance 
was not given up, though C was desired not to present it, and A was informed that it 
would not be presented. The original transaction was held to be continued. The fact 
A did not call for the bill, was held to constitute a presumption that he allowed it to re- 
main in the hands of C as security for accei)tances given subsequently to those for which 
it was first given. See Atwood v. Crowdie, 1 Stark. 483. The doctrine of the exercise 
of the creditor's option applies where one of the debts is due on a specialty. Manning u. 
Westernc, 2 Vern. 606 ; Peters v. Anderson, 5 Taunt. 596. So where there arc a judg- 
ment and a simple contract debt. Brazier ». Bryant, 2 Dowl. 477 ; Cliitty v., id. 
511. f)r where there is a prior debt which is merely eciuitablc. Bosanquct v. Wray, 6 
Taunt. 597, 2 Marsh. 319. It is said that a general payment niust be apjilied, if not ap- 
propriated by the creditor, to a prior legal and not to a subsequent equitable demand. 
Vol. II.— P 


hend, the only legal inference, from the silence of the debtor, is 
that he is willing the creditor should make any application of 
the money which is advantageous to him, and at the same time 
not injurious to the creditor. (c) When the payee has once made 
an election, he cannot change it.{d) This privilege of the payee 
only applies to voluntary payments,(e) and where several notes are 

Goddard v. Hodges, 1 Cromp. & M. 33, 3 Tyrw. 209. Although one of two debts was 
secured only by an unstamped bill, it was held that the holder might apply a payment to 
that in preference to a bill duly stamped. Biggs v. Dwight, 1 Man. & R. 308. B was the 
holder and A the acceptor of two bills, both overdue, the one unstamped for £25, the 
latter stamped for £ 50. The acceptor paid £22 10s. to B, the holder, " on account.'' 
B said he wished to have the full amount of the £ 25 bill. A replied, that he had no 
more then, but would pay some more soon. B then indorsed the £25 bill. Received 
£22 10s., in part of two bills. It was allowed B to appropriate this payment to 
the unstamped bill. So, although one of two debts has been barred by the Statute of 
Limitations, the creditor is at liberty to appropriate a general payment to the discharge 
of a debt so barred. Mills ;;. Fowkes, 5 Bing. N. C. 455, 7 Scott, 444. In this case 
Tindul, C. J. said, the rule of the civil law, that a general payment is to be applied to a 
more burdensome debt, is unknown to our law. It is said, and with good reason, that 
application of payment cannot be made after a controversy has arisen, or after an action 
has been brought. In U. S. v. Kirkpatrick, 9 Wheat. 737, Story, J., delivering the 
opinion of the court, said : " The general doctrine is, that the debtor has a right, if he 
pleases, to make the appropriation of payments ; if he omits it, the creditor may make 
it. If both omit it, the law will apply the payments according to its own notions of 
justice. It is certainly too late for cither party to claim a right to make an appropria- 
tion after the controversy has arisen and a fortiori at the time of the trial. In cases 
like the present, of long and running accounts, where debits and credits are perpetually 
occurring, and no balances are otherwise adjusted than for the mere purpose of making 
rests, we are of opinion that payments ought to be applied to extinguish the debts ac- 
cording to the priority of time, so that the credits are to be deemed payments pro tarito 
of the debts antecedently due. Robinson v Doolittle, 12 Vt. 246 ; Faircliiid r. Holly, 
10 Conn 176. 

(c) Ayer v. Hawkins, 19 Vt. 26; Cowperthwaite v. Sheffield, 1 Sandf 41G; Parch- 
man v. McKinney, 12 Smedes & M. 631 ; Bancroft v. Dumas, 21 Vt. 456 ; Caldwell v. 
Wentworth, 14 N. H. 431. 

(<^)Hillr. Southerland, 1 Wash.Va.l28; White r. Trumbull, 3 Green, N.J. 314 ; Mil- 
ton D. Burley, 2 N. H. 103. When an account was delivered by an a^ent in which he 
charges himself with a balance, and then continues to receive moneys for his principal, 
subsequent payments made by the agent are not necessarily applied to cancelling the 
previous balance, when subsequent receipts are equal to subsequent payments. Ly- 
saght V. Walker, 5 Bligh, N. S. 1 ; Taylor v. Kymer, 3 B. & Ad. 320. When the con- 
signor of goods appropriates the proceeds, he may alter the appropriation any time 
before the goods or a notice of the former appropriation have reached the creditor. 
Hankey v. Hunter, Peake, Ad. Cas. 107, per Lord Kenyon. When the creditor has 
rendered an account of the application of a payment to various debts, he cannot elect 
to vary such election, so as to affect the rights of third persons. Bank of North Amer- 
ica V. Meredith, 2 Wash. C. C 47. 

(e) Blackstone Bank v. Hill, 10 Pick. 129. 


joined in a suit, and execution satisfied in part, the surety of one 
of the notes has a right to demand a proportional appropriation. 
If a debtor makes a payment without appropriation, the creditor 
cannot apply it to debts not then due and payable, if there be 
otlier debts then due and payable. (/) 

Tliirdly, if neither party appropriates the payment at the time, 
the law will do it.(^) And in making this appropriation the law 
will regard the probable intention of the parties and the justice 
and merits of the case. (A) Among the most general rules of 

(/) Bacon v. Brown, I Bibb, 334 ; McDowell v. Blackstone Canal Co., 5 Mason, 
11 ; Seymour v. Sexton, 10 Watts, 255. 

(g) See preceding note on this subject. But in Philpott r. Jones, 2 A. & E. 41, 
Taurdon, J. said, that the appropriation might be made by the creditor any time before 
the case came to be considered by the jur_v. The application of a payment by law 
would seem to be of little benefit to the debtor. In Peters v. Anderson, 5 Taunt. 596, 
it seems that the action is sufficient, and sufficiently early notice of the appropriation 
made by the creditor. 

(h) Postmaster-General v. Norvell, Gilpin, 106 ; Harker v. Conrad, 12 S. & R. 301 ; 
United States v. Kirkpatrick, 9 Wheat. 720; Crcmere. Higginson, 1 Mason, 323 ; Gwinn 
V. Whitaker, 1 Harris & J. 754 ; Briggs v. Williams, 2 Vt. 283 ; Robinson v. Doolittle, 12 
Vt. 246 ; Randall v. Parramore, 1 Fla. 409 ; Bayley v. Wynkoop, 5 Oilman. 449. The 
probable intention of the debtor, the creditor having made no appropriation, seems to 
control. Hilton v. Burley, 2 N. H. 193 ; Dorsey v Gassaway, 2 Harris & J. 402 ; Ded- 
ham Bank v. Chickering, 4 Pick. 314; United States v. Bradbur\% Daveis, 146. And 
it will be presumed that he meant to extinguish those debts which were most burden- 
some, — those which bear interest rather than those which do not, — debts secured by a 
penalty, including such debts as may be used to declare the debtor bankrupt. But if 
all debts are alike in other respects, the payment will be appropriated according to their 
priority in time, and it was the rule, that, if all were alike in every respect, the payment 
would be applied ratably to their reduction. Dig. 46, 3 ; Favenc v. Bennett, 1 1 East, 36. 
But the intention of the debtor must be compatible with an honest intention to discharge 
all the dctits at some time. Otherwise, if upon a series of debts payment were made, it 
would certainly be for the del)tor's interest to have payment made to the last in point of 
time, and so have the benefit of the Statute of Limitations as to those which were earlier. 
So the debtor, if dishonest, would prefer to cancel a debt which was secured ; but 
the law makes appropriation of jiayment first to such debts as are not secured. But 
still the law will appropriate a payment so as to relieve a surety for another, when left 
to operate of itself. But see Mills o. Fowkes, 5 Bing. N. C. 455 - 457, 7 Scott, 444, 
where Tindal, C. J. denies that the application of a general payment to the more burden- 
some debt is known to the common law ; and also Stone v. Seymour, 15 Wend. 29, in 
which the principle of applying the money to the debt most burdensome to the debtor, 
as was the Roman and civil law rule, — I Domat, 6, 4, tit. 1, M. art. 2, 3, — is criti- 
cised, as overlooking the fact, that, where there are conflicting interests, the golden 
rule applied as well to the debtor as to the creditor. Field v. Holland, 6 Cranch, 27. 
See Bell's Law Diet, Art. Indfjinite Puijinml. Hcyward v. Lomax, 1 Vern. 24, al- 
lows the application to be made by law to the most burdensome debt, — as, in that 
case, to paying off a mortgage drawing interest, rather than an account not secured. 


applicatiou are these, that interest is to be paid first, (i) and then 
the principal ; and that application of payment is to be made 
to those debts which are prior in date.(y) The appropriation 
by either party should be indicated in some way to the other ; 
as, if he makes an entry in liis books, he should show it to 
the other party. (^') And if one of the debts be secured, and 
others not, the law (in the absence of appropriation by the 
parties) will apply the payment first to the unsecured debts,(/) 
unless the others are secured by a surety, and then, in gen- 
eral, the appropriation will be made to benefit and relieve 

and on which no interest was payable. This seems to look to the ultimate intention 
of tlie debtor not to pay all the debts. Wilkinson v. Sterne, 9 Mod. 427, per Lord 
Hardwicke. To the same effect is Bacon v. Brown, 1 Bibb, 334 ; Anonymous, Comb. 
463, per Lord Hdt. In Manning v. Westerne, 2 Vern. 607, the application was ruled 
to be proper which was most beneficial to the creditor, which is the reverse of the rule 
stated above. Blanton v. Rice, 5 T. B. Mon. 253, applied the payment to the debts 
which were most precarious; but in Stone v. Seymour, 15 Wend. 40, Senator Tracy 
states that the course of decisions has been to reverse the civil law rule of application 
to the most burdensome debts. Goddard v. Cox. 2 Stra. 1194; Newmarch w. Clay, 
14 East, 239 ; Peters v. Anderson, 5 Taunt. 596 ; Jones v. Kilgore, 2 Rich. Eq. 63 ; 
Briggs V. Williams, 2 Vt. 283; Capen v. Alden, 5 Met. 268 ; Blanton v. Rice, 5 T. B. 
Mon. 253 ; Planters' Bank v. Stockman, 1 Freem. Ch. 502 ; Field v. Holland, 6 Cranch, 
8 ; Hammer v. Rochester, 2 J. J. Marsh. 14. See, however, in support of civil law 
rule, Meggot v. Mills, 1 Ld. Raym. 288 ; Dawe v. Holdsworth, Peake, N. P. 64 ; Robert 
V. Garnie, 3 Caines, 14. For a general statement of the rules by which courts will be 
governed wlien the application devolves upon them, see Emery v. Tichout, 13 Vt. 15, 
17; Stamford Bank v. Benedict, 15 Conn 437 ; Portland Bank v. Brown, 22 Maine, 
295; Smith v. Loyd, 11 Leigh, 512; Heilbron v. Bis.sell, 1 Bail. Eq. 435 ; 
V. Wray, 6 Taunt. 597. 

(i) Gwinn v. Whitaker, 1 Harris & J. 754 ; Frazier v. Hyland, id. 98 ; Peebles v. 
Gee, 1 Dev. 341 ; Spires v. Hamot, 8 Watts & S. 17 ; De Bruhl v. Neuffer, 1 Strobh. 
426 ; Bond i". Jones, 8 Smedes & M. 368 ; Righter v. Stall, 3 Sandf Ch. 608 ; Jenks v- 
Ale.xander, 11 Paige, 619; Hart v. Dorman, 2 Fla. 445. 

(j) Allstan V. Contee, 4 Harris & J. 351 ; United States v. Kirkpatrick, 9 Wheat. 
720; Fairchild v. Holly, 10 Conn. 175 ; Postmaster-General v. Furber, 4 Mason, 333 , 
McKenzie v. Nevius, 22 Maine, 138 ; Berghaus v Alter, 9 Watts, 3S6 ; Boody r. United 
States, I Woodb. & M. 1,50; Upham i.-. Lefavour, 11 Met 174 ; United States r. Brad- 
bury, Davcis, 146; Caldwell v. Wentworth, 14 N. H. 431. 

(k) Simson v. Ingham, 2 B. & C. 65, 3 Dowl. & R. 249. See note w, supra, p. 222. 

(/) In Birch ». Tebbutt, 2 Stark. 74, A had a legal claim against B, as the acceptor 
of a bill of exchange ; he had also possession of a certain mortgage deed from B to 
a third person, of which he was able to compel an assignment in equity to himself. 
B paid money to A, without prejudice to his claim on any securities, and the law 
ap])lied the payment to the bill of exchange. Moss v. Adams, 4 Ircd. Eq. 42; Jones 
V. Kilgore, 2 Rich. Eq. 63 ; Baine v. Williams, 10 Smedes & M 113. Gwinn v. Whic- 
aker, I Harris & J. 754, conflicts with the doctrine in the text, and favors the creditor; 
also, Dorsey v. Gassaway, 2 Harris &, J. 402. 


the surety. (m) If there be no reason to the contrary, the law 
will apply the money to a debt which is more burdensome to the 
debtor, rather than to one less so ; {?i) as to one bearing interest, 
or having a penalty annexed, rather than to one without. (o) If 
a partner, who owes personally one who is also a creditor of the 
firm, pays the money of the firm, the law will appropriate it to the 
notes of the firm ; (/>) and, by parity of reason, if lie jjays his own 
money, the law should appropriate it to his personal notes. (g) 

(m) Marryatts v. White, 2 Stark. 101. A promissory note was given by a surety for 
goods, to be supplied to his principal, and not in respect of a previous debt. Goods 
were subsequently supplied, and from time to time payments were made by the prin- 
cipal, on some of which, for his promptness, discounts were made. The court held, in 
favor of the surety, that all these payments were intended in liquidation of the latter 

(w) Supra, p. 227, note h. 

(o) Meggot V. Mills, I Ld. Raym. 286 ; Dawe v. Holdsworth, Peake, 64 ; and ob- 
servations in Peters v. Anderson, 5 Taunt. 596. In Meggot v. Mills, Holt, C. J. said, 
and was not contradicted by the other judges, that if a debtor owe a debt, contracted 
while a trader within the bankrupt act, and another debt contracted afterwards, a pay- 
ment will be applied by law to the debt upon which a commission of bankruptcy 
could be taken out It is said by Chitty, 8th ed , 403, that it should be noticed 
that bankruptcy was criminal. 

(/>) Thompson v. Brown, Moody & M. 40. In this case a partner was liable before 
the partnership, and was also liable on a copartnership debt. The creditor received 
money paid generally, but as the money so paid was partnership property, it was held 
that it could only be applied to a partnership debt. But in Smith v. Wigley, 3 Moore 
& S. 174, A and B were partners, and became indebted to C. B, after dissolution of 
the partnership, became personally indebted to C, and then made general payment. 
It was held, that these payments should be applied to the reduction of the earlier items, 
in the absence of any particular appropriation. It is frequently the case that one part- 
nership is dissolved and a new one formed by the admission of new parties. A party 
continues dealing with the new firm, and the same accounts are continued. The old 
firm, it seems, is not thereby discharged. Gough v. Davies, 4 Price, 200. If such a 
party makes payments, they should be carried by the new firm to the old account. 
Strange v. Lee, 3 East, 484 ; Bodenham v. Purchas, 2 B. & Aid 39 ; Newmarch v. 
Clay, 14 East, 239 ; Fairchild v. Holly, 10 Conn. 175. 

(q) Fairchild v. Holly, 10 Conn. 175, a leading case, sustain.s the principles laid 
down in the text. In this case there was an account against a copartnership, entire 
and unbalanced, upon which, however, sundry payments from time to time had been 
made. There was a secret partner in the firm, who had withdrawn before any pay- 
ment had been made. One of the remaining partners made the payment. These pay- 
ments, it was held, could not be presutned to have been made with money accruing 
out of the funds of the new firm. That it was to be applied to the benefit of the fund 
out of wliich it had accrued, and that it could not be a[)plied to the portion of the ac- 
•»nnt subsequent to the withdrawal, on the principle that it should be applied to that 
which was the least secure ; that the money should be applied to the oldest items in 
regular order. It did not appear but that the old and new firm were equally solvent, — 
If it is possible to add a member to a partnership without adding to its available means. 

VOL. IL 20 


If the creditor have demands personally, and also officially, as 
executor, for example, he may appropriate a general payment 
first to his personal debt.(r) If the several items of debt are 
continuous and connected as parts of one account, and notes 
were given, from time to time, as the debts successively became 
definite, the rule is, that money paid must be applied to the 
earliest fir^,(5) and the earliest part of one entire account is 
considered to be cancelled first. (^) And no appropriation will be 

In Sneed v. Wiester, 2 A. K Marsh. 277, after the dissohition of a copartnership, one 
partner continued to deal with a former creditor and made payments ; it was held that 
such payment might be applied to the individual deht. But we think this properly a 
question of fiict for the jury, and depending upon which was the owner of the money. 
Fowke V. Bowie, 4 Harris & J 566. 

(r) It is a general rule, that, when an agent is employed to receive money for his prin- 
cipal, he cannot appropriate such money to a debt due himself from the principal, un- 
less the principal consents. Morse v. Woods, 5 N. H. 297. But if both as agent and 
principal one has claims on another, an unappropriated payment must be applied to 
both debts ratably. Barrett v. Lewis, 2 Pick. 123 ; Cole v. Trull, 9 id. 325. When 
one, however, owes in personal and official capacity, it seems to be law and sense that 
the jury are to decide for which the payment is made. Fowke v. Bowie, 4 Harris & J. 
566. Here debts were due from A personally, and as an administrator. 

(s) See supra, p. 227, note h. 

{t) Clayton's Case, 1 Meriv. 585, 608 ; per Bai/ley, J., in Bodenham r. Purchas, 
2 B. & Aid. 39, 45. See 2 Bridg. Index, 586, 2d ed., tit. Trade; Harrison's Index, 
Vols. II. and III. pp. 893, 897, 2442, 3d ed., tit. Debtor and Creditor; Kilsby v. Wil- 
liams, 5 B. & Aid. 815 ; U. S. v. Kirkpatrick, 9 Wheat. 720 ; Postmaster- General v. 
Furber, 4 Mason, 333 ; Baker v. Stackpoole, 9 Cowen, 420 ; Pemberton v. Oakes, 4 Russ. 
154 ; Smith v. Wigley, 3 Moore & S. 174 ; Gass v. Stinson, 3 Sumner, 98; McKen- 
zie V. Nevius, 22 Maine, 138 ; Miller v. Miller, 23 id. 22 ; Fairchild v. Holly, 10 Conn. 
175; Smith v. Loyd, 11 Leigh, 512. See Logan v. Mason, 6 Watts & S. 9 ; Capen 
V. Alden, 5 Met. 272. If several notes are joined in one suit, and the execution recov- 
ered in such suit is satisfied only in part, a surety who is such on part of the notes only 
may insist on a proportional application of the money. Blackstone Bank v. Hill, 10 
Pick. 129 ; Marsh v. Houlditch, Sittings at Westminster after Easter Term, 1810, be- 
fore Mr. Justice Abbott, Chitty on Bills, 9th ed 404. The plaintiffs who sued upon the 
hill were nonsuited upon the following state of facts. The plaintift's discounted a bill, 
accepted by the defendant for the accommodation of the drawer, who, when informed 
of the dishonor, requested the plaintiffs not to apply to the acceptor. Afterwards, the 
balance with the bankers came to be in favor of the drawer of the bill, and it was re- 
garded as satisfied, although the drawer failed and became insolvent, with a large bal- 
ance unpaid with the bankers. Bloxsome i-. Neale, K. B. 1832, Chitty on Bills, 9th 
ed. 219 ; Hamraersley v. Knowlys, 2 Esp. 665 ; Dawe v. Holdsworth, Peake, 64. But 
see Tinson v. Francis, 1 Camp. 19 ; Atwood i'. Crowdie, 1 Stark. 483 ; Bosanquet v. 
Dudman, id. 1. In Hammerslcy ». Knowlys, 2 Esp. 665, a person who had cash on 
deposit with a banker left with him a note of a third person for a sum of monev, telling 
him that it was made for his accommodation, and afterwards paid a sum of money into 
the bank without making any specific appropriation of it. It was held that Jns money 
must be applied, as far as it would go,' to the discharge of the then existing dc.bt_ and 

CH. vul] appropriation of payment. 231 

allowed which has the effect of paying one man's debt with an 
other man's money. (w) And there can be no appropriatioi 
which will deprive a debtor of a benefit to whicli he is entitled , 
as, for example, the taxation of costs. (y) 

It has been held, that, if one of two debts be barred by the 
Statute of Limitations, a creditor is still at liberty to apply a 
payment to such a deht.(iv) And it should seem to be in accord- 
ance with reason and authority, that, if there be two debts, one 
of wliich is legal and the other illegal, the appropriation must 
be made to the one which is legal, (a;) 

that the maker of the accommodation note could only be held liable for what balance 
there at any time remained due on the note. In Field ;;. Carr, .5 Bing. 13, 2 Moore 
& P. 46, the defendant accepted a bill drawn by C, who indorsed it to his bankers, 
who entered it upon the credit side of C's account, but when it was dishonored en- 
tered it upon the debit side. A few days after the dishonor the defendant paid the 
amount of the bill to C, but omitted to take the bill out of the bank. C. afterwards 
paid into the bank more than enough to cover the items preceding the bill and the bill 
itself. The bankers treated the bill as paid for three years, and then sued the banker 
on his acceptance. He was held not liable. But then a bill may be given and con- 
tinue a security, if intended to be a continuing security. Pease ». Hirst, 10 B. & 
C. 122, 5 Man. & R. 88. But see Williams v. Rawlinson, 3 Bing. 71, 10 J. B. Moore, 
362, Ryan & M. 233. 

(«) Thompson v. Brown, Moody & M. 40. 

(») James v. Child, 2 Tyrw. 732, 2 Cromp. & J. 252. In Grigg v. Cocks, 4 Sim. 
438, the circumstances were peculiar. A, who was a solicitor in the country, received 
money from a client to pay for him into chancery. A got a bill for the sum from a 
country banker, and remitted it to his London bankers without notifying them of the 
above circumstances. A was indebted to his bankers for £ 450, for which they held 
securities, and tliis account was kept separate from the general account between the 
bankers and A. A died, and the bill became due a few days afterwards, and was 
paid, and the amount was carried to the general account by the bankers, and the ac- 
counts were still kept separate until after the bankers had been notified of the purpose 
for which the bill was given. Ultimately they paid over the balance of the proceeds 
of the bill, deducting the £450 of the separate account, to the executri.\ of A. It was 
held, that there was no agreement to keep separate accounts by the bankers, and that 
they had no notice at the time, or before the amount was received, of the purpose 
to which it was to be applied, and therefore the proceeds of the bill could not be col- 
lected of tiiem by the client. 

(w) Mills V. Fowkes, 5 Bing. N. C. 455, 7 Scott, 444. Where an action was l)rought 
for a balance of a banking account, a question arose whether a disputed sum above six 
years due had been paid by the plaintiffs by the defendant's authority. It was held 
that the jury, having found that the payment was authorized by the defendant, the 
plaintiffs were entitled to apply subsequent unappropriated payments of the defend- 
ants in discnarge thereof, so as to prevent the operation of the Statute of Limitations. 
Williams v. Griffith, 5 M. & W. 300. 

(x) Wright V. Laing, 3 B. & C. 165, 4 Dowl. & R. 782 ; Ribbans j;. Crickett, 1 B. & 
P. 264 ; Ex parte Randleson, 2 Deacon & Ch. 534. In Biggs v. Dwight, 1 Man. &, R 


When the appropriation comes to be determined by law, the 
merits and equities of the case are regarded, and the rights of 
third persons which have intervened are closely considered, so 
that where a factor has funds in his hands from goods sold for 
his principal and consignor, he cannot apply such funds to the 
bills of his principal alone, drawn against such proceeds, in pref- 
erence to bills drawn by his principal and a surety, which surety 
relied upon the credit of the goods which were in the factor's 
hands. (y) And where a bank holds security for the payment of 
notes made by the cashier of a bank, and there are balances on 
the books in his favor, such a balance may be appropriated to the 
payment of such notes, instead of being applied to reduce the 
damages for breach of his bond.(2r) 



A JUDGMENT on a bill or note, even without satisfaction, may 
be a discharge of it, as between the parties to the suit, for the 
judgment remains as a valid claim ; but without satisfaction it 
certainly does not discharge the other parties. The old doctrine 
of merger has been much qualified, but some questions in rela- 
tion to it are still undetermined. In regard to negotiable paper, 
it seems certain that a holder may recover a judgment against a 
party, and even take out an execution, without losing his rights 
against other parties, until the execution is satisfied. In fact, 
we should say that a judgment in any action cannot work a 
merger, except as between the parties to that action. (a) 

308, a payment was allowed to be appropriated by the creditor to a bill which was void 
for want of a stamp. But there were circumstances indicating that the consent of 
the debtor was given to such an application. Philpott v. Jones, 2 A. & E. 41 • 
Cruickshanks v. Rose, 1 Moody & R. 100. 

(y) Brander v. Phillipp, 16 Pet. 121. 

(s) Dedham Bank v. Chickering, 4 Pick. 314. 

(a) Bayley, 33.5; Claxton v. Swift, 2 Show. 441, 494, 1 Lutw. 882 ; Tarleton j;. All- 
husen, 2 A. & E. 32. In England, it has been contended that a mere warrant of attor- 
ney was a merger of the debt ; but in Norris t'. Aylett, 2 Camp. 329, an action was 
brought upon a bill of exchange by the payee against the acceptor. The defence was 
rested upon the following facts. An action had been previously commenced upsa the 


Nor would other parties be discharged by an execution issued 
against a party ; nor by the discharge of a party from execu- 
tion, but witliout payment; (6) nor by the taking of a higher 

same bill. It was, however, agreed by the parties that the defendant should pay the 
costs, renew the bill, and give a warrant of attorney to secure the debt. The defend- 
ant did renew the bill, and give tlie warrant of attorney, but did not pay the costs. 
The substituted bill was indorsed by the plaintiff, and was outstanding in the hands 
of a third party ; but was dishonored and taken up by the plaintiff before the trial, 
and was in his possession unsatisfied. Lord Ellenborouyh said, that, as judgment had 
not been entered up, the warrant of attorney was but a collateral security, which could 
not merge the original debt. The following circumstances present themselves in a 
number of cases. The maker and indorser, or the drawer and acceptor of a bill or note, 
respectively, are sued separately, and judgments recovered against them. The party 
who is not primarily liable pays the judgment against himself, and takes an assign- 
ment of the judgment against the party liable before him. In Bacon v. Searles, 1 
H. Bl. 88 ; Beck v. Robley, note a, a bill was drawn by A on B, and by him accepted, 
and then indorsed, payable to C. The bill not being paid by the acceptor, the drawer 
and indorser took it up, and it was held that no action could be maintained by them 
against the acceptor. But in Williams v. James, 15 Q. B. 498, a bill was drawn by 
P. payable to his own order, and accepted by the defendant. The drawer took up 
the bill, and redelivered it to the holder, who appeared as plaintiff, at the drawer's 
rcquest. Lord Campbell held that, prima facie, a payment by the drawer will operate 
for the benefit of the acceptor ; but it is in the power of the drawer when he pays 
the bill so to limit as to provide for remedies against the acceptor. He might under 
these circumstances take back tiie bill, and sue upon it in his own name, or he 
might pass the bill to another person to sue upon it for him, and to the indorser 
whom he has paid as lawfully and reasonably as to any other person. In Wilson 
17. Wright, 7 Rich. 399, J. gave his note to W., by whom it was indorsed to N , who 
recovered separate judgments against J. and W. ; the latter was paid by W., and an 
assignment taken by him of the one against J. On a rule to show cause why satis- 
faction should not be entered of the judgment of N. against J., now held by W., it was 
lield that the payment made by the latter was not a payment of tlie judgment against 
the maker, and that W., as assignee, might recover. O'Neall, J. said : " How that 
which was never intended to be satisfaction, and which by the assignment is con- 
clusively shown was intended to operate in discharge of the indorser merely, and as a 
purchase of the judgment against the maker, can have the implied effect of satisfac- 
tion of the judgment, I never have been able to comprehend It cannot be jus- 
tice, that he who is ultimately liable for a debt should be discharged by a payment 
made by one after him to discharge himself alone, and with the intent to keep the 
debt still against him who was liable before iiim." Callow v. Lawrence, 3 M. & S. 95. 
See Noonan v. Gray, 1 Bailey, 437, which may be considered overruled by Wilson v. 
Wright, or perhaps distinguishable because the iLssignment was not contemporaneous. 
The case was never satisfactory to the bar or the bench. Allston v. Allston, 2 Hill, S. 
Car. 362, 2 Rich 428, note a. Sec also Davis v. Barckay, 1 Bailey, 140; Tolbert v. 
Harrison, id. 599 ; Ex parte Clark, Dudley, S. Car. Ill; Cooper v. Scott, 2 McMullan, 
1.50; Baylcy on Bills, 352. In Rice v. Wright, 7 Rich. 407, there were .separate judg- 
ments against joint and several makers ; the bail of one of the parties paid the judg- 
ment and took assignments, whidi was held good against the other maker. 

(h) If judgment is no satisfaction, there seems to l)e no rea.son that an unsatisfied 
execution should so operate. Therefore, even if a party bo discharged from an execu- 


security as a specialty. (c) Even if a specialty be given and received 
only as security between the parties, it does not affect the original 
bill or note as to thera.(cZ) And if a bill or note is renewed, and 
the old bill held, the new one operates as an agreement to suspend 
the old one until the maturity of the new one;(e:) and if the new 
one be then dishonored, the old one revives; and if the new one, 
being paid, leaves the interest on the old one unpaid, that may be 
recovered by suit on the old one, unless there has been an agree- 
ment to the contrary. (/) If the note be for less than the old note, 
and the old note was given up for it, the new note has been held 

tion under a ca. sa., though this is satisfaction as to him it is not so as to the other parties, 
who are not the sureties of the party so discharged. Hayling v. Mulhall, 2 W. Bl. l:23o ; 
English V. Darley, 2 B. & P. 61, 3 Esp. 49; Mayhew v. Crickett, 2 Swanst. 185, 190; 
Clarke v. Clement, 6 T. R. 525, per Lord Kenton. See McDonald v. Bovington, 4 id. 
825. These cases hold that the holder of negotiable paper may give time or take 
security from a party on a bill without discharging those liable prior to the party so in- 
dulged ; but those subsequent to such a parly are discharged, — because if they had 
been compelled to pay they would have had iheir immediate resort to those who pro- 
ceded them, per Lord Eldon. But waiving a Ji.fa. against the goods of a party does 
not discharge any other party. Pole v. Ford, 2 Chit. 125. In Per Lee v. Onderdonk, 
19 Barb 562, O , the last indorsee of a promissory note, obtained a judgment against 
the makers and indorsers. An execution was issued, and had been levied upon tho 
personal property of the makers sufficient to satisfy the judgment (or, if the levy waa 
insufficient, it was the fault of the sheritf, who had rendered himself responsible). P., 
the third indorser, paid the judgment, with the understanding that it was to be assigned 
to him. The plaintiff's prayer was, that an assignment should be decreed, and that 
he should be allowed to recover on the judgment which was assigned to him. But 
it was held, inasmuch as the lien which was once acquired against the estate of tho 
maker had been lost and waived by the interference of the plaintiff, that, so far as tho 
indorsers were concerned, the debt on the note must be considered paid, and so they 
were not liable. 

(c) Bayley, 6th ed. 334 ; Bac. Abr., Extinguishment, D. 

(d) Bedford v. Deakin, 2 B. & Aid. 210, 2 Stark. 178. The plaintiff sued three de- 
fendants, Deakin, Bickley, and Hickman. The two last pleaded bankruptcy, and the 
last the general issue. The partnership had been dissolved. Before the dissolution 
the bills in suit were dishonored. After the dissolution, Bickley undertook by deed to 
pay the partnership debt on the bills. The holder of the bill of exchange consented to 
take the separate notes of one partner, Bickley, reserving the right against aFl three 
and the possession of the original bills. The plaintiff, when the separate notes proved 
unproductive, was allowed to resort to his remedy against all the partners ; and though 
the separate notes were several times renewed, this made no difference, and there was 
no satisfaction of the joint debt. Nor does it appear that Deakin, one of the partners, 
had any knowledge of the renewal of the securities, per Abbott, C. J. Bayley and Hol- 
royd, J. J. 

(e) Kendrick v. Lomax, 2 Cromp. & J. 405, 2 Tyrw. 438 ; Ex parte Barclay, 
7 Yes. 597 ; Bishop »;. Rowe, 3 M. & S. 362 ; Dillon v. Rimmer, 1 Bing. 100, 
7 J B. Moore, 427. 

( /') Lumley v. Musgrave, 4 Bing. N. C. 9. 5 Scott, 230 ; Lumlcy v. Hudson, 4 Bing. 
N, C. 15, 5 Scott, 238. An alteration may destroy and so discharge a bill; bu^ if 'he 


to be a full discharge and payment of the old note, and to be equiv- 
alent to a release under seal •,{ff) although the general rule is, that 
pavnient of part of a debt is no consideration for the release of the 
remainder, without some advantage gained by the creditor. 

It has been sometimes held as a rule of law, that any simple con- 
tract debt may be discharged, before a breach of it, by agreement 
only, without a seal, and without a consideration. (5^) If the con- 
tract is on both sides executory, it may certainly be rescinded ; and 
as the giving of each promise was a consideration for the other, so 
the giving up of each is a consideration for the giving up of the 
other.(/i) After a breach, it is said that there can be no valid 
release but for a consideration, or by a seal which implies one. 
Bills and notes are only simple contracts ; but upon this point, as 
in so many others, their peculiar nature (especially when nego- 
tiable) requires for them peculiar rules of law. What these are in 
respect to the present question may not be quite certain. We should 
state them, however, thus. 

If the holder and payee of a note or bill, whether negotiable or 
not, without a seal or a consideration, declare to the payor that 
he does, or promise that he will, renounce his right and claim, 
and will never sue the note, this declaration or promise, whether 
made before or after breach, will not bar any suit by the holder 
against the payor, provided the holder retains possession of the 

second bill be so discharged, it has been held that an action may be brought on the 
first. Sloman v. Cox, 1 Cronip. M. & K. 471, 5 Tyrw. 174. 

(Xf) Draper v. Hitt. 4.3 Vt. 4.39. 

(tj) Langdcn v. Stokes, Cro. Car. .383, Com. Dig., On the Case in Ass., G. ; Conier 
and IloUarui's Case, 2 Leon. 214 ; King v. Gillett, 7 M. & "W. 55. The case of Lang- 
den V. Stokes, Cro. Car. 383, was one of an agreement to go a certain voyage before a 
certain day. This it was held could be dis])cnsed with without consideration or seal. 
In King V. Gillett, there were mutual promises to marry. In Treswaller i'. Keyne, Cro. 
Jac. 620, the plaintiff agreed to travel and help the defendant to search for a will. It 
seems that in all the cases the mutual contracts were executory. It does not seem by 
any means clear that if the contract be on the one side executed, that a mere agree- 
ment would be a sufficient release ; for there appears no consideration. The rule seems 
to be correctly stated, "^Vxdi conse7isus ohligntio cotitrario consensu dissolvitur.'''' Even 
when l)0th parts of the contract are obligatory, the dispensation with performance must 
be mutual and assented to on either side. For one party cannot put an end to a con- 
tract, and refuse to do that for which there is a consideration, without the assent of 
the other |iarty. These doctrines cannot lie api)lied to negotiable j)aper. While in the 
hands of the original party, and between the maker and payee, tjie bill, if without con- 
sideration, is a nude pact; if with consideration, thcjre is an executed consideration on 
one side ; and the same effect results from taking the paper bona fide for value. Where 
such is the case, the contract cannot be rescinded except by release and satisfaction. If 
the money be paid back, and the contract so rescinded is rescinded by what may l)e 
termed witli perfect ixwuriwy sntisfnclion. See Jiuggies i'. I'attcn, H Mass. 4S(»; Craw- 
ford V. .\Iill.-paugh, 13 Johns. 87; Champlin v. Butler, 18 id. 16'J; Foster v. Dawber, 
6 Exch. 839, note by the American editors. After a breach there must be satisfaction 
or releasf. Hyjes, 182. 

(h) See preceding note. 


note. But if, when making this promise, and in execution of it, 
the holder gives up to the payor the note or bill, he can no longer 
maintain any action upon the paper (in the absence of fraud) 
against the payor, and all other parties are discharged as much as 
by a payment of the note or bill. 

If he make such a declaration or promise before or after matu- 
rity, for a valid consideration which is really beneficial to the 
holder, and retain possession of the note, this is a giving and 
receiving of satisfaction for the same, and it is the equivalent of 
payment as to all parties to the note, and as to all who may 
become holders of it after maturity, or with knowledge ; and his 
possession of the note gives him no more rights under it than if 
it had been paid. But if the transaction took place before matu- 
rity of the note (even if the release be for consideration or under 
seal) and afterwards, but also before maturity, the note is in- 
dorsed for value to an innocent holder, such holder is unaffected 
by this agreement. (i) But no agreement, even on consideration, 
not to sue a note for a limited time, has even the effect to bar a 
suit during that time.(y) All that it gives to the promisee is a 
right to bring his action for damages if an action be brought 
against him within that time. 

A bill of exchange is not satisfied by the drawer's bequeathing 
a legacy to the payee, though he be the holder at the time of the 
testator's death ; (k) but it has been held that an entry in the tes- 
tator's book, in his own handwriting, that the maker of a note, 
which he, the testator, held, should pay no interest, and should 
not be called upon for the principal, discharged the note.(/) 

(i) Dod V. Edwards, 2 Car. & P. 602, per Tetiterden, C. J. Brougham, in defence, 
said : " I am in a condition to show that the bill was indorsed on November 21 ; that 
on October 4th, the drawer put it out of his power to indorse by giving a general re- 
lease to the defendant." Lord Tenlenlen said : " You must show that the plaintiff knew 
it. If you cannot show that the plaintiff was aware of the release, your defence fails 
If it were not so, you would put an end to the circulation of bills " 

(/) Thimbleby r. Barron, 3 M. & W. 210, holds that the covenant not to sue for a 
limited time will not suspend the right of action, but will only operate by way of giv- 
ing the covenantee damages for a breach of covenant. A subsequent or contempora- 
neous collateral agreement, on a good consideration, not to sue for a limited time on a 
bill or note, has precisely the same effect. Ford v. Beech, 11 Q. B. 842 ; Webb i". Spi- 
cer, 1.3 Q. B. 894. 

(k) Carr v. Eastabrooke, 3 Ves. 561. 

(/) Ashton V. Pye, cited Edon v. Smyth, 5 Ves. 341, 350, note. 


CH. Vin.] RELEASE. 23T 



What is called a technical release, or an express release, is a 
release under seal. The seal implies a consideration ; it therefore 
makes the release as effectual as if it were made for a valid con- 
sideration, hut not any more so. 

An express release, or a release for a consideration, is good as 
between the parties, although the releasor is not at the time the 
holder of the bill.(w) But a release of a drawee, before he 
becomes acceptor, is no bar to an action against him on his 
acceptance. (w) A release of one of joint promisors, or of one 
of joint and several promisors, is a release of all.(o) Judgment 
and execution against one of several debtors would, it seems, 
operate a discharge of all.(;7) A mere parol agreement cannot 
defeat a release. (^) Payment by one joint promisor or debtor is 
an extinguishment of the debt or note.(r) 

(m) Scott V. Lifford, 1 Cainp. 246, 9 East, 347. In an action bj a payee against 
the drawer of the bill of exchanjre, a release to the acceptor by the defendant renders 
the former a competent witness for the latter. In this case the counsel urged that when 
the drawer had paid the bill he could maintain an action against the acceptor. At that 
time (when the release was given ) the drawer had not possession of the bill. 

{n) In Ashton i>. Freestun, 2 Man. & G. 1, 2 Scott, N. R. 273, it is held that the plea 
must show that the acceptor had accepted the bill before the release was given by which 
he claims to be discharged. In Drage v. Netter, 1 Ld. Raym. 65, Hartley v. Manton. 
5 Q. B. 247, a release to a drawee before*acceptance was held inoperative. This waa 
upon the ground that a release can only onerate upon existing rights. 

(o) Co. Lit. 232a,- Nicholson v. Revill, 4 A. & E. 67.5, 6 Nev. & M. 192, 1 Har. & 
W. 7.53 ; Tuckerman v. Newhall, 17 Mass. .581. The rule applies to a release of one of 
several joint trespassers. Co. Lit., s. 376. The following are cases of joint and several 
debtors. Solly v. Forbes, 2 Brod. & B. 38 ; Ex parte Gilford, 6 Ves. 805. See, how- 
ever, NichoNon v. Revill, 4 A. & E. 675, quoted supra. 

(p) See Brooks r Stuart, 1 Per. & D. 615, 9 A & E. 854 ; Cocks v. N.ash. 9 Bing 341, 
in which cases the terms of the instrument have restrained the operation of the release. 

(7) 2 Rol. Ah. 412; Lacy v. Kynaston, 2 Salk. 575, 2 Saund. 47, note t ; Cheetham 
V. Ward, I B. & P. 6.30; Nicholson v. Revill, supra; Brooks v. Stuart, 9 A. & E. 854, 
1 Per & D. 6L5. 

(.-) Steele v. Harmer, 14 M. & W. 831. Tuckerman v. Newhnll, 17 Mass. 581. 
This was a case of a joint and several promissory note. It was held that in relation to 
release and discharge, there was no difference between a joint note and a joint and sev- 
eral one. In Bryant v. Smith, 10 Cnsh. 169, A, as guardian of an itisane person, re- 
ceived a joint note signed by B and C. B, being afterwards appointed guardian of the 


A covenant not to sne generally, although at law the equiv- 
alent of a release, operates only against the covenanter, and 
those who can make out their claim only by him or through him ; 
brit not against one who is liable jointly with him.(6') And if 
one of two joint creditors make a covenant not to sue, it seems 
that this has not the effect of a release. (^) 

A release of a debt discharges all sureties ; and the reason is, 
first, that the debt is paid by the release ; and secondly, that if 
the principal be released, and the sureties are made to pay, 
they cannot recover against the principal, because his debt was 
already discharged. Therefore neither the reason nor the rule ap- 
plies, where there is a covenant never to sue a principal, or even 
a technical release under seal of a principal, provided there is an 
express reservation of all rights against the siireties ; for this 
will give them by implication a right to sue their principal. 
This question has arisen in the case of assignment, in trust for 
creditors ; where the debtor stipulates that any creditor who 
becomes a party shall release and discharge him, but shall re- 
tain his rights against his indorsers or other sureties. The 
effect of the rule is beneficial to the indorsers, because, the prin- 
cipal being insolvent, the creditor would look wholly to them.(w) 

insane person, received the ward's property, including the note, and gave A a receipt 
in full. B afterwards brought an action against C on the note, in the name of A, the 
promisee It was held that the note was paid by such surrender and that no action 
could be sustained. The maker of an indorsed note, in one case, Gloucester Bank v. 
Worcester, 10 Pick. 528, assigned his property in trust for the benefit of creditors. The 
indenture was signed by the indorser, and contained a general release by the creditoi"s, 
but reserving all collateral securities to the holders thereof The indorser was still held 
on the note, and estopped to deny that he knew the contents of the indenture. See also 
Parsons i-'. Gloucester Bank, id 533. 

(s) Dean v. Newhall, 8 T. R. 168; Hutton v. Eyre, 6 Taunt. 289. In Dean ;;. 
Newhall, the obligee of a bond covenanted not to sue one of two joint and several 
obligors, and that, if he did, the deed of covenant might be pleaded in bar, — but he 
was allowed to sue the other obligor. See Fitzgerald v. Trant, 11 Mod. 2.54 ; Lacy v. 
Kinnaston, Holt, 178, 1 Ld. Raym. 688, 12 Mod. 548. In the last case it is said : " A 
is bound to B, and B covenants never to put the bond in suit against A ; if afterwards 
B will sue A on the bond, he may plead the covenant by way of release. But if A and 
B be jointly and severally bound to C, in a sum certain, and C covenants with A not to 
sue him, that shall not be a release, but a covenant only ; because he covenants only not 
to sue A, but does not covenant not to sue B ; for the covenant is not a release in its 
nature, but only by construction to avoid circuity of action ; for wiien he covenants not 
to sue one, he still has a remedy, and then it shall be construed as a covenant and no 
more." Lord Keni/on approved of this case in Dean v. Newhall, cited supra 

(t) Walmesley v. Cooper, 1 1 A. & E. 216, 3 Per. & D. 149. 

(u) See note v, infra, p. 239. 

cfl. san.] RELEASE. 239 

Whereas, under such an arrangement, the creditor will get what 
he can from the insolvent, and come on the indorsers, as sure- 
ties only, for the balance ; and tlien they are at liberty to get 
what indemnity they can from their principal. So, if a liolder 
of a bill renounce or suspend, or for valid consideration prom- 
ise to renounce or suspend, his right of action against an ac- 
ceptor,(y) the drawers and indorsers are discharged, unless it is 

(w) Tindal v. Brown, 1 T. R. 167. The holder of a promissory note called upon 
the maker upon the day of payment, and also upon the two days next following. This 
was done before notice of dishonor was given to the defendant, an indorser. The in- 
dorser was held to be discharged, and Duller, J., said : "As to giving time the holder 
does it at his peril." In this case, the defendant, when the tardy demand was made 
on him, was quite correct in his remark that "the plaintiff' had made it his own." 
English V. Darley, 2 B. & P. 61. This was a case of composition, and the indorser 
was discharged. Hubbly v. Brown, 16 Johns. 70 ; Beardsley v. Warner, 6 Wend. 
610 ; Woodman v. Eastman, 10 N. H. 359 ; Fowler v. Brooks, 13 N. H. 240. Story on 
Notes, § 413. It makes no difference whether the agreement for delay be made before 
or after the maturity of the note. Bradford »;. Hubbard, 8 Pick. 155 ; Lobdell h. Niphler, 
4 La. 294; Millaudon v. Arnous. 15 Mart. La. 596; Burrill v. Smith, 7 Pick. 291 ; 
Wild V. Bank of Passamaquoddy, 3 Mason, 505 ; Sargent v. Appleton, 6 Mass. 85. But 
of course such an agreement, as far as the promisor is concerned, must be founded on a 
valuable consideration. Gould v. Hobson, 8 East, 576 ; Clark v. Devlin, 3 B. & P. 363 ; 
Anderson v. George, 1 Selw. N. P., 11th ed. 410 ; Price v. Edmunds, 10 B. & C. 578 ; 
Smith (•. Becket, 13 East, 187; Wood v. Jefferson Co. Bank, 9 Cowen, 194 ; Nolle v. 
Creditors, 19 Mart. La. 9 ; 1 Pardes. 423,424; Philpot v. Briant, 4 Bing. 717, 1 Moore 
& P. 754; Bank of U. S. v. Hatch, 6 Pet. 250. In this case it was held that an 
agreement to continue till the next term an action against the drawer on the bill, 
made with him for a valuable consideration, operated a discharge of the indorser. 
Had the continuance been voluntary and discretionary on the part of the plaintiff^s, 
the case would have been different. M'Lemore v. Powell, 12 Wheat. 554. The 
ground taken was that it was an agreement to suspend and delay the remedy, and 
not an agreement to allow the particular suit to stand continued, leaving the bank 
at liberty to discontinue it, and commence a new suit on the l)ill immediately. 
This too, although such continuance would not postpone the remedy or recovery a.* 
long as the discontinuance and renewal of proceedings. " If the holder enters into a 
valid contract for delay, he thereby suspends his own remedy on the bill for the stipu- 
lated period ; and if the indorser were to pay the bill he could only be subrogated to 
the right.s of the holder, and the drawer could or might have the same equities against 
him as against the holder himself. If, therefore, such a contract be entered into without 
his assent, it is to his prejudice, and discharges him." King v. Baldwin, 2 Johns. Ch. 
554, per Chancellor Kent; Laxton v. Peat, 2 Camp. 185. In this case the l)ill was 
drawn by II. and accepted by the defendant for his accommodation. Of this the holder 
was aware, and at maturity received part payment from II., and gave him time to pay 
the rest. The acceptor was held merely a surety, and therefore discharged. See Ellis 
V. Galindo, 1 Doug. 250, note. In Lee v. Levi, 1 C. & P. 553, the holder, after he had 
sued the acceptor and the indorser, had taken from the former a cor/noo// for the amount of 
the bill, payable by instalments. Abbott, C. J. thought at the trial that the indorser was 
ilischarged by the time given. This case was revised, Lee v. Levy, 6 Dowl. &, II., by tho 


a part of the contract, that if the acceptor do not pay the bill, 
the holder shall have a judgment against him as early and as 

whole court; and although the decision was reversed, it was upon a point foreign to the 

ruling of the Chief Justice stated above. That the Chief Justice was not overruled is tlie 
opinion of Mr. Justice Story in U. S. Bank v. Hatch, 6 Pet. 2.50, 2.59, where he delivers 
the decision of the whole court. Lobdell v. Niphler, 4 La. 295 ; Millaudon v. Amous, 
15 Mart. La. 596; Hefford v Morton, 11 La. 115; Browne v. Carr, 7 Bing. 508; 
Philpot V. Briant, 4 id. 717, 719, 721, 1 Moore & P. 754, 3 C. & P. 214 , Wild v. Bank 
of Passamaquoddy, 3 Mass. 505 ; Hewet v. Goodrich, 2 C. & P. 468. In Sargent v. Ap- 
pleton, 6 Mass. 85, the drawer was held not to be discharged by a discharge of the acceptor, 
where such acceptor had no funds of the drawer in his hands. When this is the case, the 
rule seems to be that even demand of the drawer of a bill or check may be dispensed with. 
In English v. Darley, 3 Esp. 49, the indorser and acceptor of a bill had been sued. 
Against the latter there had been an execution, and afterwards a compromise, — the 
holder having accepted £ 100 in part discharge, and taken a bond and warrant of at- 
torney for payment of the remainder by instalments. This was held to discharge the 
indorser. Dyke v. Mercer, 2 Show. 394 ; Walwyn v. St. Quintin, 1 B. & P. 652. If 
security be taken with assent of indorser, the holder is not deprived of his remedy. 
Clark V. Devlin, 3 B. & P. 363. In Gould v. Robson, 8 East, 576, Lord EUenborough 
said ; "How can a man be said not to be injured if his means of suing be abridged by 
the act of another 1 If the plaintiffs, holders of the bill, had called immediately upon 
the defendants for payment as soon as the bill was dishonored, they might immediately 
have sued the acceptor and the other parties to the bill. I had some doubts at the trial, 
but am inclined to think now that time was given. The holder has the dominion of 
the bill at the time ; he may make what arrangements he pleases with the acceptor ; but 
he does that at his peril, and if he thereby alter the situation of any other person on 
the bill to the prejudice of that person, he cannot afterwards proceed against him. As 
to the taking part payment, no person can object to it, because it is in aid of all the 
others who are liable upon the bill ; but here the holder did something more ; he took 
a new bill from the acceptor, and was to keep the original bill till the other was paid. 
That is an agreement that in the mean time the original bill should not be enforced ; 
such is at least the effect of the agreement, and therefore I think time was given." 
See remarks of Chief Justice Best, Philpot v. Briant, 4 Bing. 717, 719, 721. The same 
rule of law holds in the case of an agreement for delay with one of joint makers with- 
out consent of indorsers. Kennard v. Knott, 4 Man. & G. 474, reporter's note. It 
must be remembered that any agreement for delay without consideration, though not 
communicated to the indorser, is no defence to the latter. M'Lemore v. Powell, 12 
Wheat. 554 ; Walwyn v. St. Quintin, 1 B. & P. 652. It appeared that, after the bill 
had become due and been protested, the acceptor was told that he should not be pressed. 
This was held no discharge of the drawer, by Lord C. J. Eyre. Lord Edson, in Eng- 
lish V. Darky, 2 B. & P. 61, said, as long as the holder remains passive, his remedies 
remain. Arundel Bank v. Coble, Chiity on Bills, 413 ; Badnall v. Samuel. 3 Price, 521 ; 
Creath n. Sims, .5 How. 192. See Bay v. Tallmadge, 5 Johns. Ch. 305 ; Lenox v. 
Prout, 3 Wheat. 520; Rees v. Berrington, 2 Ves. Jr. 540; Reynolds v Ward, 5 
Wend. 501 ; Bank of Utica v. Ives, 17 Wend. 501 ; Norris v. Crummey, 2 Rand. 
323 ; Hunter v. Jett, 4 Rand. 104 ; M'Kenny v. Waller, 1 Leigh, 434 ; Alcock v. 
Hill, 4 id. 622. All these cases show that there must be a binding agreement to 
give delay to the principal debtor. Hill v. Bull, Gilmer, 149 ; Jones v. Bullitt, 2 Littell, 
49, 467 ; Hunt v. Bridgham, 2 Pick. 581 ; Crane t;. Newell, id. 612 ; Bellows v. Lot- 
ell, 4 id. 153, 5 Pick. 307 : Boultbee v. Stubbs, 18 Ves. 20 ; Strafford Bank v Crosby, 


eflfectiial as he could have by any proceedings. (zy) Then, tlie 
drawer and indorsers may profit by tliis agreement, but cannot 
be hurt. But, unless the agreement to give time be made with 
one who is a party to the bill, it will not operate a discharge of 
other parties. (.^) 



It is a general rule, resulting from a principle very frequently 
applied, that anything whatever done by a holder of a bill or 
note,(y) which must necessarily have the effect of destroying,(2) 

8 Greenl. 191 ; Frye v. Barker, 4 Pick. 382; Oxford Bank r. Lewis, 8 id. 4.58 ; Black- 
stone Bank v. Hill, 10 Pick. 129; Hunt r. United States, 1 Gallis. 32 ; Claridge v. 
Dalton, 4 Maule & S. 232, per Bayley, J. ; Hall v. Cole, 4 A. & E. 577 ; Scarborough 
V. Harris, 1 Bay, 177 ; Robertson v. Vogle, 1 Dall. 252; James v. Badger, I Johns. 
Cas. 131 ; Kenworth v. Hopkins, id. 107. 

(w) Kennard v. Knott, 4 Man. & G. 474, 5 Scott, N. R. 247. See Price v. Edmunds, 
10 B. & C. 578, 5 Man. & R. 287. See also Hall v. Cole, 4 A. & E. 577, 6 Ncv. & M. 
124; Huline v. Coles, 2 Sim. 12 ; Michael w. Myers, 6 Man. & G. 702. Action by in- 
dorsee against an indorser. It was held no defence that in an action against the 
drawer the plaintiff had consented to a judge's order, that upon payment of debt and 
costs in one month all proceedings should cease, otherwise the plaintiff to be at liberty 
to sign final judgment. This too, though the plea stated that judgment could have 
been obtained before the end of the month, inasmuch as such order did not amount to 
an absolute stay of proceedings. 

(x) Lyon v. Holt, 5 M. & W. 250. The plaintiff was an indorsee of a bill of ex- 
change which he alleged had been drawn and indorsed to the defendant, by him to 
W., and by VV. to the plaintiff. The defence was, that the defendant had indorsed to 
H. for the latter's accommodation, and without consideration, and H. had indorsed to 
W., from whom the plaintiff had it. After the bill was due and dishonored, the 
plaintiff and H. stated an account respecting this and other dishonored bills, on which 
H. was liable to the plaintiff, and agreed to take from B. renewed bills in place of them. 
and not to press any parties for payment of the original bills, &c. This agreement was 
proved at the trial, but it appeared that no imiorsement was made by H. to W. This 
was held to be material, and as H. was not a party to the bill, no agreement with him 
with regard to the bill could discharge the defendant. The plaintiff had a verdict. 

(y) As a release to an acceptor or maker. So a general covenant not to sue has 
been held to enure as a release. Com. Dig. Release. A covenant not to sue upon a 
simple contract for a limited term is not pleadable in bar to an action of contract 
against the principal debtor. Thimbleby v. Barron, 3 M. & W. 210. 

(2) Couch t;. Waring, 9 Conn. 261. The holder of a j)romissorj' note commenced 
suit against the maker and recovered judgment, and execution was satisfied, f)Ut then 
the holder instituted a suit against the indorser for a balance of interest due on the note 

Vol. II.— Q 21 


delaying, (a) lessening, or in any way embarrassing the rights 
or remedies of other parties against parties to them, discharges 
all the parties thus injuriously aflfected {b) from any claim by 
the holder himself, or by any who must claim by or through 
him.(c) But a parol promise, with or without consideration, 
to look to one only of two johit promisors, or a parol dis- 
charge of a note, has been held to be no discharge of such 

The question, what degree or what kind of indulgence or 

and not included in the judgment which was still unsatisfied. But the Supreme Court 
of Connecticut held that the maker was discharged from all further liability, because of 
the rule nemo debet bis vexari eadeni causa, and that there was no remedy against the 
indorser. The discharge of any party to a note will be a discharge of all those whose 
liability is subsequent to that of the party so discharged. Sargent v Appleton, 6 Mass. 
85. In Ex parte Smith, 3 Bro. Ch. 1, Cooke, B. L. 171, 8th ed., it was held that, 
where an indorser becomes bankrupt, and the holder proves the bill under his commis- 
sion, and afterwards compounds with the acceptor, whom he discharges, without notice 
to the indorser's assignees, the estate of the indorser is-thereby discharged, and the 
proof of the debt must be expunged. Lynch v. Reynolds, 16 Johns. 41 ; Lewis v. 
Joues, 4 B. & C. 506; English v. Darley, 2 B. & P. 61 ; Clark v. Devlin, 3 id. 363. 
See also Nisbet v. Smith, 2 Bro. Ch. 579, in notis. In English v. Darley, the plaintiff 
sued the drawer, and took in payment of the judgment cash and security for the re- 
mainder. The indorser was held discharged thereby. Withall v. Masterman, 2 Camp. 
179 ; Laxton v. Peat, 2 Camp. 185 ; Gould v. Robson, 8 East, 576; Claridge v. Dal- 
ton, 4 M. & S. 226 ; Fentum v. Pocock, 5 Taunt. 192. 

(a) Supra, p. 239, note v. 

(h) See p. 243, note jr. Trimble v. Thome, 16 Johns. 152 ; Sterling v. Marietta, &c. 
Trading Co., 11 S. & R. 179 ; Beardsley ». Warner, 6 Wend. 610; Freeman's Bank 
V. Rollins, 13 Maine, 202. The holder may remain passive. It is the business of the 
surety to see that the principal pays. If he does not, the surety may pay and take 
measures for his indemnity, unless the holder binds himself to give further time. 
M'Leinore v Powell, 12 Wheat. 554 ; Frye v. Barker, 4 Pick. 382 ; Hunt v. Bridgham, 
2 id. 585, 2d ed., note 3, and cases cited ; Beebe v West Branch Bank, 7 Watts & S. 
375; Oxford Bank". Lewis, 8 Pick. 458; Central Bank v. Willard, 17 id. 150. 

(c) Kennard v. Knott, 2 Man. & G. 474 ; Michael ;;. Myers, 6 id. 702. In those 
cases it was agreed, to be sure, that the right of action should be suspended ; but there 
was also a stipulation to the effect that, in case of any default, the holder should have 
judgment at as early a period as he could have obtained it had hostile proceedings 
been continued. See also Isaac v. Daniel, 8 Q. B. 500. It appears that, unless some 
such stipulation be inserted in the agreement, the plea disclosing such an agreement 
need not aver that the time was postponed within which the plaintiff might have ob- 
tained judgment. It lies upon the one who asserts it to reply specially, or, if the form 
of the plea admits it, to prove it under a traverse of the forbearance. The decision 
in Sizer v. Heacock, 23 Wend. 81, is very much akin to those above. In that case it 
is held, that, if the holder accepts judgment against the maker, and gives time on that, 
the indorser will not be discharged if the time given would not be greater than would 
have elapsed had a suit been commenced and pursued with diligence. 

(dj Ruggles V. Patten, 8 Mass. 480. 


delay shall have the effect of discharging indorsers, presents in 
some cases considerable difficulty. The indorser's or drawer's 
contract is a species of siiretyship,(e) and there are two ways in 
which this state of things may be viewed. In one, as soon as a 
due presentment and demand have been made, and due notice 
given of dishonor, the indorser's liability is fixed. (/) He is 
now a principal debtor himself, and no longer a mere surety ; 
and no delay or indulgence to the maker or prior party dis- 
charges the indorser, and he has no right to require of the 
holder any further effi^rts or diligence to obtain payment from 
the prior party, (g-) Tlie indorser can pay the note when he 
pleases, and so making it his own, proceed against a prior party 
at his own pleasure, (/i) The other view would regard an in- 
dorser as a surety only on certain conditions, the first of which 
are presentment, demand, and notice ; and when these conditions 
are complied with, his liability is fixed, and attaches to him defi- 
nitely. But it attaches to him still only as a surety. He was in 
the beginning and is now a surety, only responsible for the debt 
of another ; and it remains the duty of the holder to protect tlie 
interests of the surety still, by exerting due care and diligence to 
get payment if he can from the prior party. Tliis care and dil- 
igence, and the rights of the indorser to require suit, and the 

(e) Clark v. Devlin, 3 B. & P. 363, 366. In Griffith v. Reed, 21 Wend. 502, a bill 
was drawn on one party by another; a third party subscribed his name under that of 
the drawer, adding the word surety. This was held to be an undertaking with the 
payee or subsequent holder that the bill should be accepted and paid, but that the 
signer incurred no obligation to the drawees. 

{/) Beardsley v. Warner, 6 Wend. 610, 613. The moment the note is dishonored, 
and notice of that fact duly given to the indorser, the holder's right to sue him is per- 
fect, and this right is not impaired so long as he remains passive. Wood v. Jefferson 
Co. Bank, 9 Cowen, 194, 206 ; English v. Darley, 2 B. & P. 61. 

((/) In Pain v. Packard, 13 Johns. 174, the doctrine laid down was this : that, if 
an obligee or holder of a note were requested by the surety to proceed without delay and 
collect the money of the principal, who is then solvent, and he neglects to comply with 
the request, and the principal afterwards becomes insolvent, the surety is exonerated. 
See Beardsley v. Warner, 6 Wend. 610. It has been expressly decided in New York 
that the princii)le above stated is not applicable where the indorser is called upon to 
t>ay. Trimble y. Thome, 16 Johns. 152. "The indorser, though in the nature of a 
surety, is answerable upon an independent contract, and it is his duty to take up the 
bill when dishonored." Mere delay to sue the maker of a note docs not discharge the 
indorser. Powell v. Waters, 17 Johns. 176; Worsham v. Goar, 4 Port. Ala. 441 
Where an indorser neglected to sue a previous indorser for three years, ho was held 
free from any neglect. 

(h) Supra, p. 242. note 6. 


like, .sre, in this view of the case, the same we have already con- 
sidered in relation to sureties generally. (i) And accordingly, if 
there be any want of due care and diligence, and the indorser is 
damnified thereby, his loss is, just as far as it goes, a defence 
against a claim or suit by the holder.(j) 

It will be observed, that this latter view restores the parties to 
negotiable paper, after dishonor, demand, and notice, to the com- 
mon law of contracts ; while the former considers the relations 
created by indorsement as permanent, and as always continuing 
under the law merchant and the peculiar rules which attach to 
negotiable paper. The American authorities are very much 
divided upon this subject ; (k) but on the whole, we think the 
stronger authorities, as well as the better reasons, are in favor of 
the former view.(/) 

{{) See Chapter on Principal and Surety. In Beardsley v. Warner, 6 Wend. 610, 
613, it was said, " the indorser cannot require of the creditor to exhaust his remedies 
against the maker before he calls upon him to perform his contract. It is not of the 
essence of the contract between the holder and indorser, that he should seek payment 
of the maker and not of the indorser only on the contingencj' of an inability on the 
part of the maker to pay. King v. Baldwin, 17 Johns. 393; Ruggles v. Holden. 3 
Wend. 216." In Trimble v. Thorne, 16 Johns. 152, it was held, that if the holder of 
a promissory note be called on by the indorser, after the note has become due, to 
prosecute the maker, of whom the debt might then be collected, but who afterwards 
becomes insolvent, and he neglects to do so, this is no defence for the indorser. 
Beebe v. West Branch Bank, 7 Watts & S. 375. 

(j) The following American cases are to the same effect. Couch v. Waring, 9 
Conn. 261 ; Wood v. Jefferson Co. Bank, 9 Cowen, 194 ; Okie v. Spencer, 2 Whait. 
253; Seventh Ward Bank v. Hanrick, 2 Story, 416 ; Newcomb ». Raynor, 21 Wend, 
108; Hawkins ». Thompson, 2 McLean, 111 ; Woodman v. Eastman, 10 N. H. 359. 

(k) In some States of the Union it appears that the indorser is under the same rules 
of law as an ordinary surety, and that due diligence must be used to bind him, as is the 
case with the latter. Lee v. Love, 1 Call, 497 ; Bronaugh v. Scott, 5 id. 78 ; Small- 
wood i\ Woods, 1 Bibb, 542 ; Perrin i\ Broadwell, 3 Dana, 596 ; Horton v. Frink, 5 
Day, 530; Huntington v. Harvey, 4 Conn. 124 ; Treadway v. Drybread, 4 Bhickf. 20; 
Bishop V. Yeazle, 6 id. 127 ; Pillard v. Darts, 6 Misso. 358 ; Kilpatrick v. Heaton, 3 
Brev. 92 ; Ricketson v. Wood, 10 Misso. 547 ; Bestor v. Walker, 4 Oilman, 3 ; Hopper 
V- Sisk, 1 Smith, Ind 102. Merriman v. Maple, 2 Blackf. 350. This. was a case in which 
the assignee of a note delayed to sue the maker for thirty days after it became due. 
The indorser was held excused unless the holder could show an earlier proceeding use- 
less or impossible. But where an assignee did not collect the note because he did not 
resort to an extraordinary process of law, this was held no laches. Oldham v. Bengan, 
2 Littell, 132. See also Perrin v. Broadwell, 3 Dana, 596 ; Henshaw v. Coe, Kirby, 
50 ; Alday v. Jamison, 3 Port. Ala. 112. 

(/) That mere indulgence or delay will not have the effect of discharging the in- 
dorser of negotiable paper — that there is no obligation to use that diliger ce which the 
surety has a right to demand of the principal, at least wiien the suretv •■^lls upon the 


The giving of time to a maker or acceptor (in) before maturity, 
so as to prevent a demand when due, or any neglect to make a 
demand, will, of course, discharge other parties. There is no 
rule relating to negotiable paper more nearly universal than this, 
and we have collected in our note some of the almost innumera^ 
ble cases on this subject which might deserve the name of 
leading cases. (w) But an arrangement, the intention of which 

principal to use it — appears in the following cases. Bank of South Carolina v. Myers, 
1 Bailey, 412 ; Powell v. Waters, 17 Johns 176 ; Worsham r. Goar, 4 Port. Ala. 441 ; 
Stafford v. Yates, 18 Johns. 327; Sterling v. Marietta Co., 11 S. & R. 179; State 
Bank r. Wilson, 1 Dev. 484. Freeman's Bank v. Rollins, 13 Maine, 202. In this 
case it was held that the holder must so bind himself to give time on the note that an 
action on said instrument cannot be maintained. In this case there was a request by 
the indorser to the holder to commence a suit against the maker. The holder also 
released property attached on a writ by failing to enter the action, and the property 
was afterwards conveyed. Bank of U. S. v. Hatch, 6 Pet. 250 ; Lenox v. Prout. 3 
Wheat. 520; Fulton v. Matthews, 15 Johns 433; Bank of Utica ;;. Ives, 17 Wend. 
501. In this case the holder received securities, but did not make any binding agree- 
ment not to sue. Orme v. Young, Holt, N. P. 84 ; Hunt v. Bridgham, 2 Pick. 581 ; 
Frye v. Barker, 4 id. 382 ; Crane v. Newell, 2 id. 612 ; Oxford Bank v. Lewis, 8 id 458. 

(m) It is settled law in the courts of equity, that giving time to a principal without 
the concun-ence of a surety discharges the latter. Bank of Ireland v. Beresford, 6 
Dow, .33 ; Archer v. Hale, 4 Bing. 464, 1 Moore & P. 285. Where the obligee of a 
bond with a surety, without communication with the surety takes notes from the prin- 
cipal and gives further time, the surety will be discharged. Rees v. Berrington, 2 Ves. 
Jr. 540; English v. Darley, 2 B. & P. 61 ; Tidd, 9th ed., 1260. See 2 Am. Lead. 
Ca.s., Hare & Wallace's ed. 98 ; Hunt v. Bridgham, 2 Pick. 581, 585, notes, and cases 
sited; King v. Baldwin, 2 Johns. Ch. 554; Miller v. McCan, 7 Paige, 451 ; Gifford v. 
Allen, 3 Met. 255 ; Rathbone v Warren, 10 Johns. 587 ; Solomon v. Gregory, 4 Har- 
rison, 112 ; Crosby v. Wyatt, 10 N. H. 318 ; New Hampshire Savings Bank c. Ela, 1 1 
id. 335; Bank of Steubenville v. Hoge, 6 Ohio, 17; Comegys r. Booth, 3 Stew. 14; 
Clippinger v. Creps, 2 Watts, 45 ; Wayne v. Kirby, 2 Bailey, 521 ; Harnsberger v. 
Geiger, 3 Grat. 144 ; Shirtliffe v Gilbert, I Bay, 466 ; Sharpe v. Bingley, 3 Const. R. 
373; Moodie v. Morrall, id. 367 ; Kiddell v. Ford, id. 678. If the holder of a note 
accepts a check from the maker payable six days after the note falls due, in full 
payment of the note when the check is i)aid, the indorser is thereby discharged. Okie 
e. Spencer, I Miles, 299, 2 Whart. 253. And the Pennsylvania rule is, that, if the 
holder accepts part of the money from the drawer, and gives time to the rest, the 
indorser is discharged. Robertson v. Vogle, 1 Dall. 252. 

(n) Moss V. Hail, 5 Exch. 46. The pica disclosed consideration. The drawee was 
held discharged. Suydam v. Vance, 2 McLean, 99. The defendant was an indorser 
of a promissory note, and seems to have been considered as a surety. In Lee v. Levy, 
I B. & C. 390, 6 Dowl. & R. 475, the indorsee having brought actions against indorser 
and acceptor, took of the latter a cognovit for payment of the debt by instalments. 
The verdict was for the defendants. In Isaac v. Daniel, 8 Q. B. 500, the holder gave 
time for a valuable consideration ; held a defence. Gould v Robson, 8 East, 576 ; 
Fiddy v. Campbell, 2 Brcv. 21. In Kilpatrick v. Heaton, 3 id 92, it appeared that 
the holder had received part payment of the maker, and waited a year; it was iield 


is to give time,(o) has no s\ich effect if there be no bargain 
for delay, and this bargain or agreement must be made valid by 
a sulHcient consideration, to have the efifect of discharging the 
indorser.(/?) The reason is, that taking a new note, (q) or new 
security, (r) affects other parties only beneficially, (5) if the whole 
right of immediate demand and suit is retained5( t) and there be 

that the indorser was discharged. These cases seem to take the ground that exclusive 
credit given to the maker will discharge other parties. See contni, James v. Badger, 
1 Johns. Cas. 131 ; Farmers' Bank v. Reynolds, 13 Ohio, 8.5; Hubbly v. Brown, 16 
Johns. 70; Mayhew v. Boyd, 5 Md. 102, is a very strong case; Payne v. Commercial 
Bank, 6 Smcdes & M. 24 ; Okie v. Spencer, 2 Whart. 253 ; McDowell i-. Bank, I 
Barring. Del. 369. 

(o) It has been contended and declared, that any credit given by the holder of the 
bill to drawer, acceptor, indorser, or promisor, is a consent to hold the demand upon 
their responsibility, and that a holder has no remedy afterwards against any other 
parties. Shaw v. Grifith, 7 Mass. 494. 

(p) Baglcy ». Buziiell, 19 Maine, 88. A note was payable on demand, and wa« 
transferred when overdue by an indorsement in these words : " Accountable in eight 
months from the above date" (the date of the indorsement). The indorsee gave 
the indorser a bond not to sue the maker in eight months. This bond was held to be 
given on a collateral agreement to which the maker was no party, and no extension 
of time was thereby given, and that the indorser was liable without demand or notice. 
Ashley v. Gunton, 15 Ark. 415. "After the indorser has been fixed by demand, 
protest, and notice, mere forbearance by the holder not based upon any obligatory 
contract with the holder for day (delay ?), and which does not impair any of the sub- 
stantial rights of the indorser, ca«not work his discharge," per Scott, J. See Peake v. 
Dorwin, 25 Vt. 28 There must be a valid contract, per Mam, J. See Talmage v. 
Burlingame, 9 Barr, 21 ; Mathews v. Aikin, 1 Comst. .595; Wilkes v. Harper, 2 Barb. 
Oh. 338 ; Sawyer v. Patterson, 11 Ala. 523 ; Draper v. Romeyn, 18 Barb 166. 

(q) Robertson r. Vogle, 1 Dall. 2.52. The holder received a check from the maker, 
payable six days after the note, and to be in full when cashed. This was held a dis 
charge of the indorser. Shaw v. Nolan, 8 La. Ann. 25. A new note was taken, pay 
able one day later. Held, indorser discharj;ed. Gould v. Robson, 8 East, 576 ; Wal- 
ters V. Swallow, 6 Whart. 446 ; Okie v. Spencer, 2 id. 253. 

(r) Pring v Clarkson, 1 B. & C. 14, 2 Dow & R. 78. See also Bedford v. Deakin, 
2 B & Aid. 210, 2 Stark. 178 ; Twopenny v. Young, 3 B. & C 208 ; Ripley v. Green- 
leaf, 2 Vt. 129 ; Oxford Bank v. Lewis, 8 Pick. 458 ; Badnall r. Samuel. 3 Price, 521. 

(s) In Hightower v. Ivy, 2 Port. Ala. 308, the indorsee had brought a suit against 
the maker, and during its pendency refused to receive part payment thereof. The maker 
was held thereby to have lost so much of his claim against the indorser. 

(0 The People v. Jansen, 7 Johns. .332 ; Hunt v. The United States. 1 Gnllis 32 ; 
Deming v. Norton, Kirby, 397 ; Ludlow v. Simond, 2 Gaines, Cas. 1 ; Walsh v. Bailie, 
10 Johns. 180 ; Rathbone v. Warren, id. 587 ; Com. of Berks Co v. Ross, 3 Binn. 520 ; 
King V. Baldwin, 2 Johns. Ch. 554 ; Burn v. Poaug, 3 Desaus Ch. 596 ; Butler v. Ham- 
ilton, 2 id. 226; Rutledge v. Greenwood, 2 id. 389; Huie v. Bailey, 16 La. 213. In 
Kurd j;. Little, 12 Mass. 502, a bill was protested for non-acceptance, and due notice 
given to the other parties. The holder then took collateral security from the I'.rawcr, 
which he relinquished upon learning that the drawee would probably pay the bill at 


due demand and notice. (m) It seems, however, to be generallj 
admitted that the receiving of security, pajaljle at a future time, 
implies an engagement to wait until the security becomes due.(y) 
A mere refusal or neglect to pursue all remedies against a maker 
or acceptor, (2^;) or an agreement not to press him, there being 

maturity. The bill was partly paid at maturity, and was regularly protested for the non- 
payment of the residue. It was held that the holder had not given any time to the 
drawer, merely having taken new security without any additional credit. In Wood v. 
Jeff. County Bank, 9 Cowen, 194, the holder agreed with the maker to sue the iiidorser; 
if he failed to collect the debt, then he was to have security at two years. This agree 
ment was held to deprive the indorser of no rights, and therefore he had no defence to 
the suit. 

(u) In Grain v. Colwell, 8 Johns. 384, the holder received part payment, and gave no 
notice to the indorser, who was of course thereby discharged. See also Lynch v. Rey- 
nolds, 16 Johns. 41. In James v. Badger, 1 Johns Cas. 131, and Kennedy v. Motte, 3 
McCord, 13, the holder received part payment and gave due notice to the indorser, 
who was thereby made liable for the balance. Hurd v. Little, 12 Mass. 502 ; Bank of 
South Carolina v. Myers, 1 Bailey, 412 ; Hoffman b. Coombs, 9 Gill, 28.5. 

(») Sigourney v. Wetherell, 6 Met. 553. holds that the guarantor of a note is not 
discharged by the holder's taking collateral security from the maker, if he does not 
also give him time. But the doctrine of the text is favored by the following authori- 
ties. Baker v. Walker, 14 M. & W. 465 ; Gahn v. Niemcewicz, 11 Wend. 312 ; Wood 
». Jefferson Co. Bank, 9 Cowen, 194 ; Hill v. Bostick, 10 Yerg. 410 ; Hurd v. Little, 12 
Mass. 502. In Hail v. Cole, 4 A. & E. 577, 6 Nev. & M. 124, 1 Har. & W. 723, A, the 
drawer of a bill, indorsed it to B. B indorsed it back to A, who indorsed it to C. 
C then took a cognovit from A, and by this B was held to be discharged, provided C 
knew that A, the drawer, and the indorser, were identical. And so taking a bond or a 
negotiable security, payable at a future time, without the assent, of the other parties, will 
discharge them from liabilitv. Claxton v. Swift, 3 Mod. 86 ; Bank of Wilmington v. 
Simmons, I Harring. Del. 331. In Gould v. Robson, 8 East, 576, the holder accepted 
part payment, and agreed to take acceptances for the balance due on the bill. This 
was very properly held to amount to an agreement to give further time or a new credit, 
and to work the discharge of an indorser who was no party to the contract, although at 
the time the drawer had no effects in the hands of the acceptor. Mohawk Bank v. Van 
Home, 7 Wend. 117; Bailey v. Baldwin, id. 289 ; Union Bank v. Hall, Harper, 245. 

(w) A holder of a bill may forbear to sue as long as he pleases. The negligence 
mast be active, not merely passive Orme v. Young, Holt, N P. 84 ; Eyre v. Ev- 
erett, 2 Russ. 381 ; Samuell v. Howarth, 3 Meriv. 272 ; Wright v. Simpson, 6 Ves. 
734, per Lord A'Wwn ; Trent Navigation Co. v. Harley, 10 East, 34 ; Clarke ?;. Wil- 
son, 3 M. & W. 208 ; Combe v. Woolf, 8 Bing. 156, 1 Moore & S. 241, is the case of 
a guaranty. But see Brown v. Carr, 7 Bing 508 ; Powell v. Waters, 17 Johns. 176, 
8 Cowen, 669; Stafford v. Yates, 18 Johns. 327; Lenox v. Prout, 3 Wheat. 520; 
Hunt V. Bridgham, 2 Pick. 581, id. 2d ed., 585, note 3 ; Stout v. Ashton, 5 T. B. Mon. 
251. The case of M'Lemore v. Powell, 12 Wheat. 554, is one in which it is held 
that anything which is a mere agreement, without consideration, will not discharge an 
indorser. In Philpot ». Briant, 4 Bing. 717, 1 Moore & P. 754, the executrix of an 
acceptor verbally promised to pay the holder out of his own estate if he would forbear 
♦o sue. He forbore accordingly, but as the contract was not binding under the Statute 
of Frauds, the drawer was held not to be discharged. In Beardsley v. Warner, 6 


due demand and notice,(a;) does not discharge other parties ; 
and, under similar circumstances, a gratuitous agreement by 
the holder of a bill with the acceptor, made on the last day of 
grace, to look alone to him for payment, and neither to present 
the bill nor notify the drawer, will not relieve the drawer if 
the protest is made and notice given. (//) 

It has also been held that prior parties are not discharged by 
the holder's releasing the acceptor, where the drawer retained 
funds of the acceptor to meet the bill ; {z) nor where an as- 
signment with release contained a proviso that nothing in it 
should " impair or affect any lien or pledge hereafter created 
or obtained, as security for a debt or claim due," because such 
a proviso saves the claim by indorsement, as it is now well set- 
tled that an agreement between the creditor and the principal 
debtor that the surety shall not be discharged, will prevent the 
surety from being discharged, although he is no party to, and 
has no knowledge of, the stipulation. (a) But it also seems to be 

Wend. 610, nom. Warner v. Beardsley, 8 id. 194, it was held that the principle of law 
that a surety is discharged if a creditor on request neglects to pursue his remedy 
against his principal, solvent at the time, and who subsequently becomes insolvent, 
is not applicable to the case of an indorser of a promissory note. See for this rule, 
Pain » Packard, 13 Johns. 174, which case holds that, if an obligee or holder of a 
note is requested by the surety to proceed without delay, and collect the money of 
the principal, Avho is then solvent, and he neglects to comply with the request, and the 
principal afterwards becomes insolvent, the surety is exonerated. Trimble v. Thorne, 
16 Johns. 152 ; Thibodeau v. Patin, 13 Mart. La. 478. 

(x) Supra, p. 247, note w. 

[y) De Witt v. Bigelow, 1 1 Ala. 480. This is but another phase of the general rule 
that an agreement to give time must be legally binding on the holder in order to dis- 
charge the indorsers. Low v. Underbill, 3 McLean, 376 ; Lockwood v. Crawford, 18 
Conn. 361. 

(z) In Sargent v. Appleton, 6 Mass. 85, the acceptor was discharged. The drawer 
had retained the acceptor's funds in his hands for the express purpose of meeting the 
bill. In this case the drawer, who stands in the place of the indorser of a note, was 
held not to be discharged. See also Hubbly v. Brown. 16 Johns. 70. In Bank of 
South Carolina v. Myers, 1 Bailey, 412, a judgment was confessed by the maker to the 
indorser for security, and was held equivalent to notice to him. 

(a) Burke's Case, cited 6 Ves. 809 ; Boultbee v. Stubbs, 18 id. 20 ; Ex parte Glen- 
dinning, Buck, 517 ; Ex parte Carstairs, id. 560 ; Harrison v. Courtauld, 3 B. it Ad. 
36 ; Nichols v. Norris, id. 41, note; Cowper v. Smith, 4 M. & W. 519 ; Smith i;. Win- 
ter, id. 454; Kearsley «>. Cole, 16 id. 128. It appears also from Cowper y. Smitli, 
that it is by no means uncommon to insert a stipulation to the effect that a composi- 
tion with the principal shall not affect the release of the surety. In Pannell ;•. M'Me- 
hen, 4 Harris & J. 474, A made a negotiable note to B, who indorsed it to C, by vhoin 
it was indorsed to D. A and B made a composition deed with their creditors, snd cou- 


settled, that the stipulation, to have this effect, must appear on the 
face of the instrument, and cannot be supplied by parol. And it 
is clear that whenever the indorser or surety, by words or acts, 
assents to what has been done, this will be a waiver of his 
discharge. (6) 

If a holder accepts from one maker an order on a third 
party for a part of the amount, with a verbal agreement that it 
should satisfy his whole claim against tbat maker, and that he 
would look to the other for the balance, (c) he is not thereby 
prevented from suing that maker from whom he received the 
order ; nor does a release to a payee discharge a maker, unless 
the releasor knew that the note were only for the accommodation 
of the payee ; [d) nor is a maker discharged by a release to an 
indorser, even, perhaps, when the releasor knew that the maker 
was in fact only a surety to the indorser ; (e) nor by a holder's 

veyed all their estate to trustees, among whom was C, and were discharged with this 
proviso, " that the said release shall not operate in favor of, or be construed to release 
any persons or person who may be bound, &c. for A and B, or either of them, or who 
may have indorsed any note or notes drawn or indorsed by the said A and B, or eithei 
of them." D brought an action against C, who had received proper notice, and he was 
held liable. See Gray v. Brown, 22 Ala. 262. 

(b) Mayhew v. Crickett, 2 Swanst. 185 ; Smith v. Winter, 4 M. & W. 454. See 
also Stevens v. Lynch, 12 East, 38, 2 Camp. 332. The drawer, not knowing that he 
was discharged (as he really was) by time given the acceptor, said : "1 know I am 
liable, and if the acceptor docs not pay, I will." This was held a waiver of his dis- 
charge. We think, however, that this case carries the doctrine of waiver very far 
indeed, and we doubt whether the reason of the law of the case is sound. It has been 
held, that, where a bill was received, and an indorsee said, " It was the best thing tiiai 
could be done," this was no recognitioa of liability. Withall v. Mastcrrnan, 2 Camp. 
179; Clark v. Devlin, 3 B. & P. 363; Tindal v. Brown, 1 T. U. 167; English ». 
Darley, 2 B. & P. 61. 

(c) Wright V. Allen, 4 Vt. 572. 

(</) Carstairs v. Rolleston, 5 Taunt. 551, 1 Marsh. 207. It was held formerly, if a 
liill be accepted without consideration, that, since the acceptor is tiie surety for the 
drawer, the release of the drawer or time given him would discharge the acccj)tor ; but 
lime given the acceptor would not release the drawer. Laxton v. Peat, 2 Camp. 185 ; 
Yallop V. Ebers, 1 B. & Ad. 698; CoUott v. Haigh, 4 Camp. 281. But this distinc- 
tion has been overruled in Fentum v. Pocock, 5 Taunt. 192, 1 Marsh. 14 ; Carstairs v. 
Rolleston, 5 Taunt. 551, 1 Marsh. 207. In Price v. Edmunds, 10 B. & C. 578; Parke, 
J. thought Fentum v. Pocock " good sense and good law " ; but Lord Jihlon doul)ted 
it in equity. Ex parte Glendinning, JJuck, 517 ; Bank of Ireland v. Bcresford, 6 
Dow, 2.33. See, however, Harrison v. Courtiiuld, 2 B & Ad.36; Nichols v. Norris, 
S B. & Ad. 41, note. An accommodation acceptor, it seems, is entitled to all instru- 
ments and securities given by the principal. Dowbiggin v. Bourne, Younge, 111. 

(e) When a drawee had an open account with a drawer, and it was understood and 
•greed that he should accept and pay the bill, the bill is lo be treated as for value, and 


rolinquishiiig attachment, if in good faith, and on receipt of 
othor security, although the substituted security fails ; (/) nor by 
receiving partial payment ; (g-) and in one case it was held to be 
uo bar to an action against one of joint promisors, that another 
had paid his share, and in consideration thereof the payee had 
acquitted all the promisors. (/i) If principal and interest on a 
protested bill be received of a guarantor, an action may be main- 
tained against the drawer for damages, and we think it should 
be so held, even if there were no express reservation of the right 
to sue for damages, as there was in the case decided. (/) So a 
joint and several maker of a note, who is in fact a surety for 
the other, is not discharged by the holder's receiving interest in 
advance of the principal after the note is due, if he make no 
valid contract to give time ; ( /) nor will a general discharge of a 

no regard is to be paid to the state of accounts between acceptor and drawer, nor doe* 
the discharge of the hitter discharge the former. The holder's rights are the same as 
when he took the bill, notwithstanding subsequently acquired knowledge. See Eng- 
lish V. Darley, 2 B. & P. 61 ; Claridge v. Dalton, 4 il & S. 226 ; Bagnall i-. Andrews, 7 
Bing. 217; Orr v. Maginnis, 7 East, 359; Blackhan i;. Doren, 2 Camp. 503; In ro 
Brown, 2 Story, 521 ; Mallet !'. Thompson, 5 Esp. 178. Laxton v. Peat, 2 Camp. 185. 
conflicts, perhaps, with the doctrine in tiie text. So Collott v. Haigh, 3 Camp. 281 . But 
see Kerrison v. Cooke, 3 Camp. 362 ; Fentum c Pocock, 5 Taunt. 192. Also Yallop 
t'. Ebers, 1 B. & Ad. 698 ; Price v. Edmunds, 10 B. & C. 578 ; Nichols v. Norris, 3 B. 6; 
Ad. 41, note ; Harrison v. Courtauld, id. 36 ; Rolfe i-. Wyatt, 5 0. & P. 181 ; Bank of 
Montgomery Co. v. Walker, 9 S. & IJ. 229, nom. Walker v. Bank of Montgomery Co , 
12 S. & R. 382 ; White i;. Hopkins, 3 Watts & S. 99 ; Lewis v. Hanchman. 2 Barr, 
416 ; Commercial Bank r. Cunningham, 24 Pick. 270; Church v. Barlow, 9 id. 547 ; 
In re Babcock, 3 Story, 393 ; Lambert i-. Sandford, 2 Biackf. 137 ; Clopper r. Union 
Bank of Md., 7 Harris & J. 92; Claremont Bank v. Wood. 10 Vt. 582; M'Donald 
V. Magrudor, 3 Pet. 470; Flint v. Day, 9 Vt. 345 : Brown v. Mott, 7 Johns. 361 ; Bank of 
Ireland r. B'-resford, 6 Dow, 233, per Lord Eldon ; Ex parte Glendinning, Buck, 517. 

(/) Bank of Montpelier v. Dixon, 4 Vt. 587. 

[g] Engli.<h v. Darley, 2 B. & P. 61 ; James v. Badger, 1 Johns. Cas. 131. 

(h) In Ruggles v. Patten, 8 Mass. 480, the plea in bar by the defendant was that ono 
promisor other than himself had paid his share or proportion of the money to the 
promisee before the note was assigned, and in consideration thereof the promisee had 
acquitted all the promisors from any further demand on the note. It was lieid, that, 
if the defendant would avail himself of such a defence, he must plead it in abatement, 
and that a payment of a part by one promisor cannot operate as a discharge of the rest. 

(i) In Tombeckbe Bank v. Stratton, 7 Wend. 429, the obligation of the surety 
was distinct and independent, and the payment by the surety could in no way be con- 
sidered a payment by the agents of the defendants. The case appears to have been put 
by the counsel for the defence upon the ground that it is a rule of law that the pay- 
ment of the principal of a debt operates as an extinguishment of the interest and bar? 
its recovery in a suit. 

( /) Oxford Bank r. Lewis, 8 Pick. 458. Action on a joint and several promi.ssory 
note, payable to the order of the plaintift", signed by H. B. and U. H. and by S. I and 


mere guarantor of a bill discharge an acceptor ; ,(fc) nor will tho 
filling of an early blank indorsement to make it payable to the 
holder, and a suit thereon, discharge the later indorsers, if theii 
names are not stricken out,(/) and if one of them pay the note 
he may sue a prior one ; and if an indorser whose liability has 
been properly fixed writes on the back of the note, at the re- 
quest of the holder, that he will be holden for a certain time if 
the maker be not sued, it is no discharge or limitation of his 
legal liability ; and where the holder of a protested bill drew a 
new one on drawer and acceptor jointly, for the old one with 
damages, and this was accepted by the acceptor of the first but 
not by tlie drawer, it was held that the drawer was not dis- 
charged, (w) 

But, on the other hand, it has been held, that, if a holder of a 
note that is overdue agrees to receive payment of the maker in 
certain goods at a certain price, at a future day, this agreement 
discharges an indorser ; and if holder, drawer, and acceptor agree 
that acceptor shall pay anything less than the whole that is due, 
the drawer is said to be discharged ; (n) and so will the giving 
up to the maker of property held from him as security for the 
note discharge an indorser, unless the holder can show that 
the indorser is not injured ; (o) and where an insolvent drawer 
assigned his property for his creditors, providing among the rest 
for an indorser on liis bill, and tlie indorser signed the inden- 
tures, thereby releasing the drawer, it was held that this ac- 
cepted the provision instead of any further claim on the acceptor, 
whom he could no longer sue. The bill was accepted and in- 
dorsed for the accommodation of the drawer, who was to take 
it up.(//) 

It may be important, however, to distinguish between the 

the defendants as sureties. R. H. made two payments on the note, and afterwards paid 
interest for sixty days in advance, then absconded, carrying all his property with him 
The defendants were not held to be discharged because the holders retained the powei 
of Buinfr. 

{k) Supra, p. 250, note i. 

(I) Cole V. Cushinir, 8 Pick. 48. 

(m) For a discussion of the subject of the remainder of this section, see also chapter 
on Payment by Bill or Note, where may be found a full collection of all the authoritiea 
m Ensriand and the United States. 

(n) l)e la Torre v. Barclay, 1 Stark. 7. 

(o) Haslert v. Ehrick, 1 Nott & McC. 116. 

(pj BradforJ v. Hubbard, 8 Pick. 155. 


extinguishment of a claim and the satisfaction of it ; for many 
of the cases we have already cited show that while a holder's 
claim is extinguished as to some of the parties, it is not always 
thereby affected as to the rest ; but if it be once satisfied as to 
any party, it is satisfied as to all. 

A bank when it has refused payment of a draft or check dur- 
ing business hours, and after business hours receives funds, and 
is then called on by the notary, is not, it is said, bound to pay 
the bill ; but should inform the notary of the receipt of the 
money. (7) But tlie distinction might be open to the objection, 
that the notice can be of little use, because the notary must still 
go on with his protest and notice, &c., or take the risk upon 

If a bank which holds a note receive money of the maker on 
deposit after dishonor, it is said not to be obliged to apply the 
money to the note, but may permit the depositor to draw it out, 
and still hold an indorser.(r) 

If one of two who are joint holders sue a maker, this does 
not bar an action by both jointly against a guarantor or in- 
dorser.(A') So a judgment against one of two joint makers is 
no bar to a joint action against both.(^) But if a note be pay- 
able by instalments, a judgment on the note, for any instalment, 
has been held, as we have intimated, a bar to any future action 
upon it.(M) 

As satisfaction to one partner is satisfaction to all the members 
of the firm, so, if a person be a partner in two firms, a satisfac- 
tion which would bar one firm woidd bar both ; although tho 
person who belongs to both knows nothing of the transaction. 
So, if a house receive funds from the drawer to meet a bill, and 

{q) Whitaker ». Bank of Enorland, 1 Cromp. M. & R. 744. 

(r) Martin v. Mechanics' Bank, 6 Harris & J. 235. 

(s) Cobb V. Little, 2 Greenl. 261. In the action against Crague, the maker, Cobo 
declared upon the note that it was indorsed to hitn, and being a blank indorsement it 
might be alleged to have been indorsed to a person to whom Cobb had transferred it by 
delivery. For convenience he might sue in his own name, only as indorsee, though he 
was not the sole owner. But as to the guaranty which was sued upon, under the words 
of guaranty were written (by one of the plaintiffs, to be sure) : " To Matthew Cobb 
and Nathan Kinsman," the plaintiff's. 

(t) Sheehy v. Mandeville, 6 Cranch. 25.3. The two defendants did not join in the 
same plea in bar, but severed ; had the former been the case, the question presented 
would have been one of much greater intricacy, per Chief Justice ilarshull. 

(u) Siddall v. Rawcliff", 1 Moody & R 263. 


misapply them, neither that house, nor any firm a member of 
which is also a member of the first house, can sue the drawer ; 
or the acceptor, if he is entitled to^this defence of the drawer, (v) 



If two or more persons are jointly liable, (w) or jointly and 
severally liable, on a note or bill, in any way, or on any ground, 
or to any extent, and one or more of them pay more than his 
aliquot share of the amount, the parties paying can recover of 
the others who were bound to pay, their share, by way of contri 
bution.(a:) And it makes no difference that the debt, if it be the 
same or different portions of the same, is received by different 
histruments and executed by different sureties. (7/) But the pay- 
ment must be by compulsion of law ; not necessarily by a suit 
or process, (sr) but by a legal and fixed obligation, (a) which rests 
on all alike. The right of a co-surety to contribution from his 
fellows is not prejudiced by his possessing a security against the 
principal which the defendant neither has nor knows anything 
about. (6) And if a co-surety on a note give a bond for it, and 
pay the bond, he still has this claim, although the co-sureties 
knew nothing of the bond. And if a surety release one co- 
surety, this does not affect his claim on the rest. This obliga- 
tion arises when the relation of co-promisor or co-surety begins ; 

{v) Jacaud v. French, 12 East, .317. 

{w} Harris v. Warner, 13 Wend. 400. The party must appear distinctly to bo in 
the position of a co-surety before he can be held liable as one to contribution. In 
this case the defendant had signed his name after that of the plaintiff and two other 
sureties, " as surety for the above names." He was held not to liave assumed the lia- 
bility of a co-surety. In fact ho disiinctly refused to be so held. 

(x) In Davis v. Emerson, 1" Maine, 64, the co-surety, who had paid the debt and costs, 
was allowed to recover the aliquot pait of the debt and the costs also. Henderson v. 
McDuffee. .5 N. H. .39 ; Pitt v. Purssonl, 8 M. & W. .538 ; Gould v. Fuller, 18 Maine, 
364 ; Boardman v. Paige, 11 N. H. 431 ; Fletcher v. Jackson, 23 Vt. .581. 

[y) Deering v. Winchelsea, 2 B & P. 270; Mayhew v. Crickctt, 2 Swanst. 184. 

Iz) The costs of a suit cannot be recovered of a co surety unless the plaintiff is au- 
thorized to defend the suit. Knight v. Hughes, 3 Car. & P. 467, Moody & M. 247. 

(a) Pitt ('. Purssord. 8 M. & W. 538 ; Davies v Humphreys, C id. 153. 

(!>) Done v. Walley, 2 Exch. 198. 

VOL. II. 22 


and ilio discharge of one as to his principal, does not discharge 
him as to the co-sureties, if they pay on the original obligation. 
But the right of action for contribution begins only when one 
actually pays more than his share, and consequently the Statute 
of Limitations does not begin to run until then.(c) Tlie right to 
contribution rests upon an implied promise ; (d) and the law will 
not raise it against an express agreement, or against a stronger 
and opposite presumption, and therefore not in favor of one 
against a co-surety who became surety at his request, (c) 



No doubt silence with regard to -negotiable paper will, after a 
certain time, give rise to the presiuuption that it lias been paid, 
although it should remain in the possession of the holder who 
was entitled to receive payment on it.(/) As where a check was 
given by the plaintiff to the defenda,nt, and many years after- 
wards the defendant made a note to tlie plaintiff, to be indorsed 
by him for the accommodation of the defendant, it was held that 
the presumption would be that the check had been settled or 
accounted for.(o') 

In Connecticut, the same presumption of payment from lapse 
of time is applicable to non-negotiable promissory notes as to 
bonds, and the absence of the debtor from the State during the 
greater portion of the time relied on to raise such a presumption 
will rebut the presumption itself, whether his absence is in an 
adjoining or a remote State. (/t) 

(c) Davies v. Humphreys, 6 M. & W. 153 ; Cowell v. Edwards, 2 B. & P. 268 ; 
Browne v. Lee, 6 B. & C. 689. 

(rf) Kemp V. Finden, 12 M. & W. 421, in which case it was held that the proper ac- 
tion of a co-surety against another co-surety was assumpsit for money paid to the co- 
surety's use. 

(e) Turner v. Davies, 2 Esp. 478. 

(f) Especially if connected with other circumstances. Perkins v. Kent, 1 Root, 312. 
See Bailey v. Jackson, 16 Johns. 210 ; Wells v. Washington, 6 Munf. .532. 

(9) M'Hae v. Boast, 3 Rand. 481. Of course such a presumption may be rebutted 
and met by contradictory evidence. 
{h) Daggett v. Tallman, 8 Conn. 168. 






"When a note, bill, or check is lost or stolen, it is proper and 
prudent for the loser to give immediate notice of the loss to all 
the parties to the paper. («) Tliis notice should require the 
parties liable not to pay the amount, except to the loser, or his 
order ; (b) and in tlie case of an unaccepted draft, the drawee 
should be ordered also not to accept it on presentment for 
acceptance. A drawee who, without knowing the loss of a 
negotiable bill, pays it bona fide, and duly, and in the course of 
business, to any holder, is discharged thereby from all further 
liability upon the bill.(c) 

But if he pay the amount before it is due, although he pay it 
without notice, and to a bona fide holder, he is still liable to the 
loser,((^) for the payment is out of the ordinary course of busi- 
ness. The same rule would doubtless apply to any other pay- 
ment of the note which was a distinct departure from the course 

(a) Beckwth v. Corrall, 2 Car. & P. 261, 3 Bing. 444, II J. B. Moore, 335 ; Both. 
Du Contrat de Change. 

(6) " Whenever a i)ossessor discovers that he hath lost a bill, he ouijjht instantly, or at 
least before the daj- of payment, to advise the acceptor thereof, with the precaution not 
to pay it to any other than him or his order, and in case another come to recover, to 
stop it, and advise him thereof" Beawes, Lex Merc, Bills of Exch. 179. Mariiis 
advisp* that the notice and warning should be delivered to the acceptor in the presence 
of a notary and two witnesses. Beawes, pi. 185. 

(c) Lawson v. Weston, 4 Esp. 56; Anonj-mous, I Salk. 126, 3 id. 71. The loser 
" may have trover against the finder, for he had no title, though a payment to him 
had indemnified the bank." Id., per Lord Holt. Sec Smith v. Shcppard, cited in 
Chitty on Bills, 9th ed. 395. 

(d) Da Silva v. Fuller, Sel. Cas. 238, quoted in Cliitty on Bills, 9th ed. 395. 


of business. One reason is, that such conduct creates a sus- 
picion of fraud. Another is, that if a bill or note be paid before 
maturity, a notice of loss might reach the owner before its 
maturity, though after the actual day of payment ; and the 
owner's right of countermanding payment, which continues 
until maturity, unless he loses it by gross negligence, or by 
this premature payment, has been wrongfully taken away.(e) 

Perhaps the rule, as gathered from the authorities and the 
reason of the case, may be stated thus. A loser of a bill has no 
claim on a payor who pays it because he is bound to pay it, but 
may have, and generally would have, a claim against a payor 
who paid it without legal necessity, although without notice. 

If, after notice of the loss of a bill, check, or note, the maker, 
acceptor, or banker discount or pay it to any holder who has not 
given value for it, he does it at his peril, and will be liable again 
to the owner. (/) If the person presenting the note be its bona 
fide holder for value, it would probably be held that the payor 
may make payment, notwithstanding the loser has forbidden him 
to do so, and the payment will be a full discharge, because the 
bona fide purchaser of a note before maturity holds it by an 
absolute title. 

It is well, however, for the drawee with notice to obtain indem- 
nity even from a holder for value, as he may not be able to prove 
that the assignment was in perfect good faith. It seems quite 
clear that it is no sufficient ground of defence in such case by the 
acceptor of a bill, that the payee has written to him, stating that it 
was lost, and ordering him not to pay it to any one but himself. (^) 

Besides the notice to the parties, the loser of a bill or note 
should also immediately (A) inform the public of his loss, warning 
all persons from negotiating the lost instrument, (f) 

(e) This reason may be illustrated hy an analogous case stated by Marias, in hi*, 
work on Bills, 2d ed., Phila., 1790. pp. 72, 73. 

(/) Lovell V. Martin, 4 Taunt. 799. 

(ci) Lambeth v. Rivarde, 16 La: 572. 

(h) In Beckwith v. Corral!, 2 Car. & P. 261, supra, note a, the plaintiff was robbed 
of a negotiable security eight days before it was payable, and did not give notice of his 
loss till the end of seven days, and then only to the payor, givijig no notice of any 
kind to the public. It was held that he did not use due diligence, and could not re- 
cover in trover from the party who discounted the security six days after the loss. 

((■) Beckwith v. Corrall, supra, note h ; Snow v. Peacock, 3 Bing. 406, 11 J. B. 
Moore "S6 ; Lawson v. Weston, 4 Esp. 56 ; Matthews ». Poythress, 4 Ga. 287- 


In case of theft, this notice is proper for an additional reason, 
namely, that it may assist in the apprehension of the ro!)bcr.(^') 
The notice should contain, if possible, a full and accurate de- 
scription of the instrument, in all its particulars, and the terms 
employed in the advertisement must not be such as to mislead 
a reader. (A:) 

In England, the custom seems to be, by the reported cases, 
not only to forward notice to all the banking-houses where the 
missing bill is likely to be taken, but also to circulate handbills 
and post placards through the city where it is lost,(/) and in case 
of bills which will probably be sent to the Continent, to advertise 
the notice there. (?n) 

Ordinarily, the newspapers are the most natural and conven- 
ient vehicles of a notice to the public. But they are not tlie 
only valid means, since handbills, placards, and the like, may 
answer the same purpose. (%) But in Louisiana, by statute, the 

ij) Lancaster v. Walsh, 4 M. & W. 16 ; Bridger v. Heath, Chittv on Bills, 9th ed., 
253, note m. See Stockley v. Clement, 12 J. B. Moore, 376, 4 Bing. 162. 

{k) In Beckwith v. Corrall, 11 J. B. Moore, 335, the plaintiff was rohbed of a 
pocket-book, containing, amongst other things, a bill of exchange. In advertising the 
loss he merely stated that the pocket-book contained " papers of no use to any person 
but the owner." The court said that the loser was bound to give notice of his loss as 
extensively as possible, but so far from having done so in that case, he had rather mis 
led than assisted parties to whom the stolen note might be offered, by the deceptive 
terms of his notice. The jury having found the plaintiff's advertisement an improper 
one, the court refused to disturb the verdict. But when, in an action on a lost note, an 
inaccuracy in the advertisement was caused by information given to the plaintiff who 
could neither read nor write, by one of the defendants, the latter could not take advan- 
tage of the error. Lebleu v. Rutherford, 9 Rob. La, 95. In Cohen v. Morgan, 6 
Dowl. & R. 8, A, having lost a bill of exchange, got a warrant from a magistrate to 
apprehend B for "feloniously stealing" the same, (language which A did not use in 
his complaint to the magistrate,) but it turned out to be no felony. Held, that B could 
not sustain case against A for maliciously procuring a warrant, because A's charge was 
not wilfiilJij false. 

(/) Snow V. Peacock, 3 Bing. 406, 1 1 J. B. INIoore, 286 ; Strange v. Wigncy, 4 
Moore & P. 470, and the cases in note .9, itifrn. 

[m] De la Chaumette v. Bank of England, 9 B. & C. 208, 2 B. & Ad. 385 ; Ra- 
phael V. Bank of England, 17 C. B. 161, 33 Eng. L. & Eq. 276. 

(n) Strange v. Wigney, 4 Moore & P. 470, 6 Bing. 677. The jury having decided 
that the plaintiff had duly advertised her bill, a rule nisi, was moved, on the ground that 
the steps taken by tjic plaintiff to make known her loss were not such as were calcu 
latcd to give notice to commercial men, or to those who were likely to receive such 
an instrument Having lost the bill in a hackney-coach, slic immediately caused hand- 
bills, describing the property, and offering a reward for its restoration, to be printed 
«nd circulated at all the coach-stands and adjacent public houses, and on the same day 
Vol. II.— R 22* 


legal way of giving notice of the loss of a bill or note is through 
the public papers. (o) 

Parol testimony has been admitted to prove that the lost bill 
of exchange in suit was duly advertised, without the production 
of the advertisement itself, or of the newspaper in which it was 
published. (;?) But public notice not brought home to the buyer 
will not affect his title, for here, as in other cases of advertise- 
ment, the notice operates upon those only whom it reaches. (9) 
But a jury may draw the conclusion that the payor or buyer had 
seen the advertisement, from any evidence rendering it suffi- 
ciently probable ; as his taking the paper, or being in the habit 
of reading it, or the like. And it has been intimated that due 

when the defendant took the bill put an advertisement to the like effect in the Morning 
Advertiser. It was urged that this single advertisement could not possibly have reached 
the defendant at the time he took the bill. The court, in refusing a new trial, said that 
the principal point was, whether the plaintiff had used due diligence in making her loss 
known. " It was insisted that the plaintiff ought to have advertised her loss. I told 
the jury, that, although that might be a very good method of making known a loss, 
yet that there was no law to compel a party to advertise ; and that the whole circum- 
stances of the case must be impartially weighed, to ascertain whether the defendant 
had fairly and honestly used means to make public the loss of the note." 

(0) Civil Code, Art. 2258, 22.59. " Nor does it appear that the loss was advertised 
in a public paper, which the law deems equallj' necessary to a recovery in all cases 
where a lost instrument is made the foundation of a suit or defence." Lewis n. Splane, 
2 La. Ann. 754 ; New Orleans & C. Railroad Co. ». Armstrong, 2 La. Ann. 829. 

(p Miller v. Webb, 8 La. 516. 

(7) Lawson v. Weston, 4 Esp. 56 ; U. S. Bank v. Sill, 5 Conn. 106 ; Matthews v. 
Poythress, 4 Ga 287 ; Beltzhoover v. Blackstock, 3 Watts, 20. In Lawson v. Wes- 
ton, the person who bona fide discounted a lost bill for the fraudulent finder, recovered 
upon it against the acceptor, although the latter had previously advertised the loss in 
the newspapers. Lord Keni/on said that the plaintiffs might or might not have seen the 
advertisement, and that it would be going great length to say that a banker was bound 
to make inquiry concerning every bill brought to him to discount. In Beltzhoover v. 
Blackstock, the court said : " The publication in the gazette, with the evidence of one 
of the plaintiffs being a subscriber, that his paper was duly sent, and no complaint 
made of omission, is relied on as visiting the plaintiffs with notice of the defence which 
the defendants intended to make. But such a publication cannot be considered as 
affecting the plaintiff with direct notice of the contents of the advertisement, nor even 
as a circumstance for the jury to infer it. It would be of dangerous consequence to hold 
an advertisement in the gazette to be such an actual notice as to visit a party with all 
the consequences of full and express notice In the present instance, the news- 
paper may not have been delivered to the party ; if left at his abode, he may not have 
read it, or not till subsequently to the transaction it related to. It would be hard to 
subject a man to the consequences oi mala fides, when perhaps he never had knowledge 
of the matter alleged." See also, Rowley v. Home, 3 Bing. 2, where an adrertisenient 
for three years was held no notice. 


diligence in advertising, and so forth, by the loser, may raise a 
presumption of knowledge on the part of one to be affected by 
it ; and on this ground it was formerly held, that the loser of a 
note could not recover upon it, without having exercised due 
diligence in giving a public and accurate notice of its loss.(/*) 
This question of diligence in notice is left to the jury.(s) It is, 
however, certain that the want of proper notice on the part of 
the loser will not excuse dishonesty on the part of the purchaser, 
though the negligence of the one might in general be an excuse 
for the negligence of the other. And since, also, the modern 
doctrine is that notliiiig but dishonesty on the part of the pur- 
chaser can invalidate his title to the lost note, the question of 
the loser's diligence in advertising has become of little impor- 
tance, and the chief point is the holder's bona fides. {t) 

(r) Beckwith v. Conall, II J. B. Moore, 3.3.5. " Per Curiam. If, in this case, the 
plaintiff had used due dilii,'ence, and hud given proper notice of the loss of ttie bill in 
question, the defendants might have been presumed to have been apprised of that fact. 
Where a person loses, whether by accident or robbery, a negotiable security, he should, 
before he can be entitled to recover it in an action of this nature, be prepared to show 
that he has done all that could be required on his part to make known his loss, and 
that the party who has received it has, in doing so, failed in observing due caution." 

(s) Beckwith 17. Corrall, 11 J. B. Moore, 335 ; Strange v. Wigney, 4 Moore & P. 
470, 6 Bing. 677; Snow v. Peacock, 11 J. B. Moore, 286, 3 Bing. 406 ; Easley ». 
Crockford, 3 Moore & S. 700, 10 Bing. 243 ; Backhouse v. Harrison, 5 B. & Ad. 109S, 
3 Nev. & M. 188. In the case first quoted, the jury found the want of advertisement 
fatal negligence, but immaterial in all the others. 

(t) In Snow V. Peacock, 1 1 J. B. Moore. 280, Best, C. J. said : " I think I should have 
been well warranted in putting this case to the jury simply as one of mala Jides. On the 
loss of a bank-note, or bill payable to bearer, immediate notice of the loss should be 
given to the public, in the manner most likely to prevent persons who would otherwise 
be ignorant of the fact from taking it; but even if the lost note be not duly adver- 
tised, still, if a person receive it under circumstances reasonably calculated to induce 
a belief that he knew the holder to have possessed himself of it improperly, the loser 
is entitled to recover for the negligence of the one is no excuse for the dis- 
honesty of the other, though it might be for the mere negligence. In the latter case, 
the maxim that has been referred to at the bar, potior est conditio jmssidentis, might 
apply." In Strange v. Wigney, note n, ante, the jury decided that the plainiiff had 
properly advertised her lost bill. A rule nisi was moved, on the ground that the ad- 
vertisement was insufficient. But the rule was refused. Bosanr/net, J. said : " I am 
not prepared to say, that, because there happens to have been some degree of negli- 
gence on the part of the loser of a note, he is therefore to be precluded from recovering 
it from a person to whose hands it has come, and who has received it without due cau- 
tion or inquiry." In Easley v. Crockford, 3 Moore & S. 700, Tindal, C. J. said : " If, 
indeed, the plaintiff had been guilty of negligence in not duly advertising and giving 
notice of the robbery, that might give the defendant an opportunity of showing that he 
had fairly and honestly acquired the note. But it appears to me that the defendant 


Hence, it has been held in this country, also, that though pub- 
lic notice of the loss or theft of a note is proper and commenda- 
ble, it is not essential to sustain the loser's case, provided it be in 
other respects maintainable. (w) But under the Louisiana Code, 
as we have seen,(i;) notice through the public prints is a pre- 
requisite to recovery upon a lost draft or note. 



It must be remembered that the owner of a lost note or bill 
should make a regular and formal application for payment, when 
the note falls due. For, as it has been well said, the loss of a 
note does not materially change the contract entered into by its 
several parties : its only effect is to give tlie parties called upon 
to pay a right to demand security against any different liability 
than that which they originally assumed. (^^;) The rule and the 
reason apply also, thougli tlie note should be destroyed. (rf) 

Accordingly, as has been stated before, the owner of a lost 
note must make, as far as possible, the same presentment and 
demand, (y) at the proper time and place, (2) and give the same 

cannot set np the prior negligence of the plaintiff, in order to excuse his own." In 
that case, the plaintiff had duly advertised. In Backhouse v. Harrison, 5 B. & Ad. 
1098, the jury found that the plaintiff had taken certain lost hills bona Jide, but without 
due caution, and also that the defendant had not used due diligence in making the loss 
known. Alderson, J. then directed the jury to find a verdict for the defendant, but 
reserved liberty to the plaintiff to move to enter a verdict, " if the court should be of 
opinion that the defendant, having been guilty of the first negligence, was thereby 
estopped from setting up the negligence of the plaintiff." The case was decided upon 
the point of the plaintiff's mala fides, but Lord Denman said : " I think the omission 
of the defendant here to advertise the loss of bills which had gone to the bottom of 
a canal was not such negligence as to deprive liim of a right of defence which he othfa"- 
wise might have had." 

(u) Matthews v. Poythress, 4 Ga. 287, 307. 

(v) Supra, p. 2.58, note o. 

{w) Edwards, Bills, 305. 

{x) Thackray v. Blaekett, 3 Camp. 164. 

{>/) Pothier du Contrat de Change, 14.5. See on this subject ante. 

(z) Streater v. Bank of Cape Fear, 2 Jones Eq., N. Car., 31. In this case, t!/e de- 
fendant's note was made payable at their branch bank. It was cut into haVe<, one 


notice of dishonor for non-acceptance (a) and non-payment, (&)• 
with the same protest, and this by the aid of a copy, if 
practicable, (c) — though formerly, wherever a new bill could be 
had of the drawer, protest upon a copy was not admissible, (c?) — 
with all other precautions that he would employ if the note 
were in his manual possession. In short, mutatis mutandis, the 
parties should proceed, so far as practicable, precisely as if the 
note were in existence, changing the mode, indeed, of demand 
and notice, so far as necessary, but not omitting them. 

A failure in these duties may bar the owner's recovery from 
those who would otherwise be liable ; for it is obvious that prior 
parties, from want of notice of dishonor, may have been pre- 
vented from pursuing their respective remedies against the par- 
ties liable to them. 

Tliis necessity of notice is as binding in equity as at law ; (e) 
and the loss of a note is no more excuse than the bankruptcy or 
insolvency of its parties, (/) for a failure to give notice of dis- 
honor. Although, as we have said, it may be advisable in many 
cases to make presentment, demand, and protest upon a copy, 
there seems to be no rule requiring a copy. But a regular pre- 
sentment must be made, since it is evident that in some cases the 
maker would be willing to waive the objection to the non-pro- 
duction of the note, and in others, would pay upon receiving 
full indemnity against a future claim on the same note.(^) 

half lost, and the other presented for payment at the counter of the mother-bank at 
Wilmington. No demand was made of the branch bank, and payment was refused at 
the Wilmington bank. It was held, tliat a bill in equity would not lie against the lat- 
ter, because no demand of payment had been made at the place designated. 

(a) Pardessus, 408. 

(b) Thackray v. Blackett, 3 Camp. 164; Smith v. Rockwell, 2 Hill, 482. 

(c) Kyd, Bills, 3d ed., 139; Molloy, 281 ; Beawes, Bills, 182, 185; Dehers v. Har- 
riot, 1 Show. 163. Demand of payment of a lost note on a copy is .sufficient, and 
satisfies the usual averment of due presentment. Hinsdale v. Miles, 5 Conn. 331. 

(d) Dehers i-. Harriot, 1 Show. 163 ; Glen on Bills, 199. 

(e) Streater v. Bank of Cape Fear, 2 Jones, Eq., N. Car. 31. 
(/) See supra, Vol. I. p. .528. 

(g) But in Aborn v. Bosworth, 1 K. I. 401, it was decided, that the fact that a hill is 
lost is an excuse for delay in making a demand upon the drawee, but for no more tiian 
reasonable delay- The bill was dated Apalachicola, March 4, 1847, drawn upon John 
Hart of Alabama, and payable to Aborn or order, who seems to have resided in Rhode 
Island. In its transmission to the agent of J. A. Aborn the bill was lost on board a 
steamer. Demand was made upon the drawee June 17, 1847, and payment refused. 
No protest was made for non-payment, nor did it ai)pcar conclusively that the drawer 


When the owner of a lost note demands payment of it, he 
should be ready to tender to the payor sufficient indemnity in 
some form against any future claim by a finder or holder, upon 
the lost instrument. For, ordinarily, whenever a demand of 
payment is made, it must be accompanied with the note, to be 
delivered upon payment. And the payor is usually not com- 
pelled to pay, unless the instrument, whicli is his vouclier, is 
produced and handed to him ; since otherwise he might be again 
called upon to pay the same note, and if it were lost, a bona 
fide transferee for value would have an indisputable claim upon 
him for its amount. 

But a tender of satisfactory indemnity will excuse the produc- 
tion of the note, and make the demand of payment valid. (A) It 
is obvious that such a security can seldom be so absolutely cer- 
tain as the delivery of the note itself; but still the rule is the 
only one that can be devised, and is perfectly established. (i) 

had any effects in the hands of the drawee, or was authorized to draw upoa him. 
Greene, C. J. charged the jury, that the want of protest discharged the drawer, unless 
he had no effects in the hands of the drawee, and no authority to draw; thus indicating 
that a protest is still necessary in the case of lost paper. This we think is law, for the 
plain reason that it may be made on a copy. 

{h) Freeman v. Boynton, 7 Mass. 483, 486, per Parker, J.: " Whenever a deiwand 
of payment is made, the person making the demand should have with him the evidence 
of the debt ; for otherwise the debtor may well refuse to pay, on the ground that he 
has a right to have iiis obligation or contract, or to see it cancelled, when he is called 
upon to discharge it. And this rule will especially apply to negotiable securities, 
which may be legally transferred to another, at the very time the original payee makes 
his demand of payment. This rule may admit of exceptions ; as where the security 
may he lost; in which case a tender of sutBcient indemnity would make the demand 
valid, without producing the security." 

(i) " When any one misses his accepted bill, whether payable directly to the possessor 
or to his order, or if such a one receive advice from his correspondent that he has re- 
mitted such a sum, in such and such a bill, &c., though on opening his letter he finds the 
bill is not enclosed, or if the letter and bill have miscarried, of whose forwarding he has 
advice by the succeeding post, and finds that the day of payment draws so near as to 
hinder his getting other bills in room of the lost one, he may, when it comes due, de- 
mand payment upon his letter of advice, with the tender of security to free and dis- 
charge the acceptor from any future demands of that sum, by virtue of the lost bill ; 
and if the acceptor will not pay on those terms, he may be protested agamst for re- 
exchange and charges," on the ground that he wilfully occasioned them. Beawes, 
Bills of Exchange, 182, 18.5; Marius, 80. In this country we have no law, like the 
statute of Wm. III., quoted in Beawes, 18.5, providing for a resort to the drawer for a 
fopy of a lost bill. Thomson, Bills, p, 322, controverts the opinion of Marius, that, 
if the acceptor refuses payment on offer of full indemnity, he will be liable .ti all dam- 
ages, and adds : " It is doubtful whether any of the parties could be obhged lO pay, 


This tender of indemnity should be made to all the parties 
on lost bills of whom payment is demanded, whether maker, ac- 
ceptor, or indorser. For since the maker or acceptor is not 
compelled to pay without indemnity offered, payment should 
not be demanded of the indorser till he has the means of 
immediate recourie against his principal or his prior indorsers. 
Upon receiving prompt security, he may be able to pay the 
demand at any time after notice, and look to the maker. But 
if the indoi'ser should sustain any injury by reason of the 
owner's neglect in this particular, an application to equity to 
enforce payment against such indorser would, we think, be 

It has been said, accordingly, that the holder should take the 
necessary steps with all reasonable diligence to secure a speedy 
resort to that court in behalf of the surety ; as the consequences 
of delay would justly fall upon the holder, so far as the indorser 
or any other party standing in that relation upon the paper is 
concerned, (j) 



Having considered so far the duties of the owner upon the 
loss or theft of his note, we will turn to the respective rights 
and liabilities of the finder, the assignee of the finder, and the 
loser. The finder of a lost bill or note lias no title to it whatso- 
ever, as against the real owner. Accordingly, trover may be 
maintained against him by the owner for the note itself, or for 
its amount, for in this respect, mercantile paper is like any other 
property, (/fc) 

But to maintain this action, the note must be traced, and its 
identity ascertained ; the question of identity being left with the 

until the loss was proved in an action, and security found against its reappear- 

/ /) Smith V. Rockwell, 2 Hill, 482. 

(it) Anonymous, 1 Salk. 126, .3 Salk. 71 ; Lucas v. Haynes, 1 Salk. 1.30, 2 Ld 
Uavm. 871 • Greenstreet v. Carr, 1 Camp. 551 ; Adkins v. Blake, 2 J. J. Marsh, 40. 


jury.(/) It has also been held, that, in such cases, it is not 
enough for the plaintiff to prove his own title, and that after- 
wards the defendant converted it, but so much suspicion must be 
l.hrown upon his conduct in the transfer, as to render it neces- 
sary for him to prove consideration. For the legal presumption 
is that the holder of a note is not its finder, but its transferee for 
value. (m) But when there is no question as to the conversion 
by the finder, the loser may recover without the strongest proof 
of his own title. (w) 

The question may also be asked, how far a finder of bills or 
coin, who has used them, is liable to the owner for their value. 
We should say decidedly, that he is fully liable, uidess he can 
show that he did all that could reasonably be asked, by tlie use 
of proper means, and by delay, to preserve them for the owner ; 
and only when all these means were unavailing, had used them. 

And we should say further, that even then he would be clearly 
liable to the owner, but the value of the services or expense in- 
curred by finding, or perhaps in trying to find an owner, should 
be deducted from the amount of the note. The general rule 
must be, that the finder should be liable to the owner, so far as 
he could be made so without being prejudiced by the finding and 
proper use of the bills or coins, and no further. 

The finder, however, has no lien in any case,(o) (as in the 
civil law,) but a finder of other property than bills, as is held by 
high authorities, may maintain assumpsit for his reasonable and 
proper expenses on account of the thing found. (p) If so, in an 

(/) Burn V. Morris, 2 Cromp. & M. 579. 

(m) King v. Milsom, 2 Camp. .5. 
. (n) Greenstreet v. Carr, 1 Camp. 5.51 ; Holiday v. Sigil, 2 Car & P. 176. It was 
proved in Greenstreet v. Carr, that the defendant had picked up a pocket-hook contain- 
ing the notes ; and the only question raised was, whether there was sufficient evidence 
that they were the property of the plaintiffs. A banker's clerk swore that he had de- 
livered those notes in payment of a check payable to '" R. Greenstreet or bearer" ; but 
he could not state to whom. This was held to be prima facie evidence of property, 
and plaintiff recovered. In Holiday v. Sigil, Abbott, C. J. said to the jury : " The 
question to be considered is, whether you are satisfied that the plaintiff lost this note, 
and that the defendant found it ; for if you are, the plaintiff is entitled to your ver- 
dict I should observe that it is scarcely possible for a plaintiff', when his property is 
stolen, or accidentally lost, to prove the loss by direct evidence ; and therefore, that 
must in almost all cases be made out by circumstances." 

(o] Binstead v. Buck, 2 W. Bl. 1117 ; Nicholson v. Chapman, 2 H. Bl. 254. 

(p) In Reeder v. Anderson, 4 Dana, 19.3, the court said : " It seems to us that there 
is an implied request from the owner to all other persons, to endeavor to. secure to bim 


action upon lost bills, such expenses would probably be set off 
against the owner's claim. We do not perceive why a greater 
deduction than this should be made, for the money has been 
used by the finder, and is plainly so much had and received to 
the use of the owner. 

Where no question is made as to the expenses of the finder, 
he is liable for the full value of the bill which he has sold to a 
purchaser, or received payment of from the acceptor. (^) And 
this is true, though payment of full value, in due course of 
business, to a finder or thief, vests complete property in the 
purchaser or discounter who takes the bill without knowledge 
of the loss or theft, (r) 

The finder cannot sue the acceptor or maker for the amount 
of the note, but he probably has enough property in it as con- 
structive bailee, to sue anybody who tortiously converts it, 
except the owner ; but this point, so far as notes and bills are 
concerned, has not been adjudicated. 

The thief of a stolen note has obviously no property or title in 
it himself, (5) although one ignorant of the theft may derive title 
from him. A bailee who tortiously converts the note or bill left 
hi his keeping has no title to it, and may be sued in trover, or in 
case for money had and received. (f) And it makes no differ- 
ence, in such cases, whether the owner was himself the bailor, or 
whether his clerk or agent performed the act of bailment and as- 
sisted the detention. 

lost property, which he is anxious to retrieve ; and that, therefore, there sliould be an 
implied undertaking to (at least) indemnifi/ any person who shall, by the expenditure 
of time or money, contri()ute to a reclamation of the lost property." See also dictum in 
Nicholson v. Chapman, 2 H. Bl 254. 

{q) Holiday v. Sigil, 2 Oar. & P. 176. 

(r) See post, p. 268, et seq. 

(s) Martin v. Bank of U. S., 4 Wash. C C. 2.53. 

(t) Fancourt v. Bull, 1 Bing. N. C. 681 ; Knight v. Legh, 4 Bing. 589 ; Patenson v. 
Hardacre, 4 Taunt. 114; Haynes v. Foster, 4 Tyrw. 65 ; Cranch v. White, 1 Bing. 
N. C. 414 ; Bleaden v. Charles, 7 Bing. 246 ; Evans v. Kymer, 1 B. & Ad. 528 ; Marston 
V. Allen, 8 M. & W. 4 94 ; Palmer v. Richards, 1 Eng. L. & Eq. 529 ; Garlock v. Geort- 
ner, 7 Wend. 198. In Bleaden v. Charles, A, the plaintiff's debtor, dei)osited with the 
defendant, as a security for goods sold, a bill acce|)ted by plaintiff, for wiiich plaintiff 
had received no value. A afterwards paid for the goods, and asked for the restoration 
of the bill ; but the defendant indorsed it for value to B, who sued the |)laintiff and 
recovered. Held, that the plaintiff might recover the amount of the bill in an action 
'or money paid to the use of the deft;ndant, but not the costs of the action by B against 
plaintiff. See Collins r. Martin, 1 Bos. & P. 648. 

VOL. II. 23 


On similar ground trover will lie by the bona fide holder for 
full value, who must be the real owner, against a banker, who, 
receiving the bill to be cashed, detains it for the reason that it 
has been stolen, (i;) The same thing is true if the maker of a 
note wrongfully seizes and detains it when presented to him for 
payment. (lo) So, if a bill be lost by the drawee, to whom it has 
been delivered for acceptance, tlie payee may have trover for its 
recovery. (.^) 

The mala fide assignee of the finder, or the robber of negotiable 
paper, acquires no title to it as against the owner, or any party 
legally claiming under him. And, speaking generally, whoever 
had knowledge of the failure of his assignor's title in a note, 
takes no stronger title therein himself. Hence, a lost or stolen 
note may always be pursued into the hands of its mala fide 
transferee, (y) either by trover or assumpsit, or by an action for 
money had and received. (2) But the notes must be traced, and 


(v) De la Chaumette v. Bank of England, 9 B. & C 208, 2 B. & Ad. 385 ; Millei 
V. Race, 1 Burr. 452. 

(u>) Gray v. Kernahan, 4 Const. R. 65 ; Knight v. Legh, 4 Bing. 589 ; Reynolds v. 
French, 8 Vt. 85 ; Edgell v. Stanford, 6 Vt. 551. With regard to dispensing with no- 
tice to produce, in suits against fraudulent or wrongful possessors of notes, see post, 
p. 292, note s. 

(x) Lucas V. Haynes, 1 Salk. 130, 2 Ld. Raym. 871. 

(y) Clarke v. Shee, 1 Cowp. 197; s. c. nom. Clarke v. Johnson, Lofft, 756; Burn ». 
Morris, 2 Cromp. & M. 579, 4 Tyrw. 485 ; Hinton's Case, 2 Show. 235 ; Fancourt v. 
Bull, 1 Bing. N. C. 681 ; Cranch v. White, id. 414 ; Downe v. Hailing, 2 Car. & P. 
11,2 Dow. &, R. 455 ; Snow v. Leathain, 2 Car. & P. 314 ; Lovell v. Martin, 4 Taunt. 
799; Heath v. Sanson), 2 B. & Ad. 291 ; Smith v. Braine, 16 Q. B. 244; Mason v. 
Waite, 17 Mass. 560; Kingman v. Pierce, id. 247 ; Patton v. State Bank, 2 Nott & 
McC. 464 ; Henderson v. Irby, 1 Speers, 43 ; Munson v. Cheesborough, 6 Blackf 17 ; 
Small V. Smith, 1 Denio, 583. In Hinton's case (1682), Pembertan, C. J. said that, if 
the holder of a bill " come to be bearer by casualty or knavery, he shall not have the 
benefit of it." In Clarke v. Shee, Lord Mansfield declared, " where money or 
notes are paid liona fide, and upon a valuable consideration, they never shall be brought 
back by the true owner ; but where they come mala fide into a person's hands, they 
are in the nature of specific property." As to what is viala fides, and the evidence of 
negligence, see post, p. 268, et seq. 

{z) "It is true, in such a case, trover would have been the proper action; and, per- 
haps, would have been the better action in this case, but for the difficulty of identify- 
ing bank-notes. We do not see, however, why the action for money had and received 
will not lie. The notes were paid and received as money ; and as to any want of piiv- 
ity, or any implied promise, the law seems to be, that where one has received the money 
of another, and has not a right conscientiously to retain it, the law implies a nof"*sa 
that he will pay it over." Per Parker, C. J., Mason v. Waite, 17 Mass. 560 


their identity thoroughly established. (a) And it makes no dif 
ference whether the assignee is a discounter or a trader, that is, 
whether he gave in exchange cash or merchandise. 

It is only the iimocent taker of bank-bills, lost or stolen, who 
acquires title to them. And it may be a question, whether a re- 
ceiver who knew or believed that the bills had been found, and 
that the finder had done what he could to restore them, and now 
honestly used them, would be regarded as an innocent taker un- 
der this rule of law. 

We do not know that this question has passed under adjudica- 
tion. We should say, however, on principle, that whether the 
payment were made in bills or in coin, a receiver who had knowl- 
edge that the payor liad found the bills or coin would not have 
all the rights of a bona fide holder, but would be liable for their 
value to the actual owner, in the same manner in which the 
finder would have been, had he retained them in his own hands. 

In the case of an ordinary bill, the reason for this conclusion 
would be still stronger, because the finder might at once resort 
to the original parties on the face of the bill, and through them 
trace out the owner ; and until this was accomplished, the finder 
could not be said to have made all possible search for the 

It has been held, that although the allowance and approval of 
A. negotiable instrument, as a claim against the estate of the 
maker, will not destroy its negotiability, yet it seems it would 
subject it when assigned, to defences against it in the hands of 
the assignor ; and if lost or stolen, or if it have otherwise come 
unlawfully into the possession of a holder, it is subject to a recov- 
ery from his hands, or from any holder for value, by the true 
owner. (6) 

The bona fide assignee for value of lost or stolen negotiable 
notes and checks, has a valid and complete title in them, even 
though his transferrer had no title whatever. This transferrer 

(a) " If their identity can be traced and ascertained, the party has a right to recover. 
It is of puhiic bcnelit and example that he should ; but otherwise, if they cannot be 
followed and identified, because there it mi<;iit be inconvenient, and open a door to 
*raud. Miller v. Race, 1 Burr. 4.52; and in Golii;litly w. Reynolds, the identity was 
craced through different hands and shops." Clarke v. Shee, 1 Cowp. 197; Burn p. 
Morris, 2 Cromp. & M. .579; Mason v. Waite, 17 Mass. 560, ante, p. 266, note z. 

(b) Weathered i: Smith, 9 Texas, 622. 


may be the finder, the thief, the bailee, (c) or the tortious 
agent or factor (</) of the owner. Such a holder for value, 
being without knowledge of the loss, theft, or fraud when lie 
takes the paper, may recover the amount from the acceptor 
or other parties liable, and the loser has no remedy whatever 
against the holder. This rule excepts negotiable paper from 
the universal principle with regard to other property, namely, 
that only he who has a title himself to a personal chattel 
can convey one to another, (e) The leading case which first (/) 
decisively laid down this doctrine was decided in the year 
1798.(0-) A bank-note, payable to bearer, was stolen from the 
mail, and on the day after came into the hands of the plain- 
tiff for a full and valuable consideration, and in the usual 
course of business, and without any notice or knowledge of 
the bank-note being taken out of the mail. It was held, that 
the plaintiff" might recover the note from a clerk in the bank, 
who had detained the note when presented for payment. Lord 
Mansfield said, that " 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 consequences to trade and commerce, which would 
be mucli incommoded by a contrary determination." This 
cogent reason of the " general course of business " is reiterated 
by Lord Mansfield, it being precisely the reason urged by Lord 

(c) See cases quoted supra, p. 265, note t. 

(d) Johnson v. Windle, 3 Bin":. N. C. 225, 2 Hodses. 202 ; Wookey v. Pole, 4 B. & 
Aid. 1, 15 ; Bay »• Coddington, 5 Johns. Ch. 54 ; Coddin<rton v. Bay, 20 Johns. 637 ; 
Greneaux v. Wheeler, 6 Texas, 515. So the assig-nor may be the curator of an estate. 
McKinney v. Beeson, 14 La. 255. 

(e) According to the same rule, it has been held, that trover will not lie against the 
bona Jide holder of an annuity ticket, which had been lost by or stolen from a former 
proprietor, if such ticket has been regularly transferred to such holder, pursuant to the 
statute by which it was issued. Devallar r. Herring, 9 Mod. 44. See Lee r. Newsam, 
Dow. & ii. N. P. 50. 

(f) In Hinton's Case, 2 Show. 235, which was an action against the drawer of a bill 
payable to bearer, it was held that the plaintiff '' must intitle himself to it on a valuable 
consideration, though among bankers they never make indorsements in such case ; for 
if he come to be bearer by casualty or knavery, he shall not have the benefit of it " In 
Anonymous, 1 Salk. 126, a bank-bill payable to A or bearer, being given to A and 
lost, was found by a stranger, and transferred for value to C. Holl, C. J. held that "A 
cannot maintain trover against C by reason of the course of trade, which creates a 
property in the assignee or bearer." This was in the year 1698. 

'j» Miller v. Race, 1 Burr. 452, I Smith, Lead. Cas. 250. 


Holt,(A) sixty years before. It was declared by Lord Mantfield, 
that, if there had been any collusion, or any circumstances of 
unfair dealing, the case would have been otherwise. His Lord- 
ship adds, that a bank-bill " never shall be followed into the 
hands of a person who bona fide took it in the course of cur- 
rency, and in the way of liis business," for " 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 tlieir currency 
should be established and secured." Lord Mansfield's doctrine 
in this case has been adopted in numerous other cases, both 
in England and in this country. (i) 

The title of a bona fide holder for value of a bill acquired 
before it was due being thus absolutely established, the next 
great question obviously was, what shall be proof or presumptive 
proof of mala fides. The earlier cases (j) seem to have nega- 
tively implied, without finding it necessary to decide the ques- 
tion, that undue negligence in taking a suspicious note would 

(A) Anonymous, 1 Salk. 126. 

(?) The next case after Miller v. T?aoe, 1 Burr. 452, was Grant ». Vaughan (year 
1764), 3 Burr. 1516, 1 W. Bl. 485, in which the pJaintitF was allowed to recover, be- 
cause he took a lost note '• fairly and bona fide in the course of trade, and even with 
the greatest caution : he made inquiry about it, and then gave the change for it. And 
there is not the least imputation or pretence of suspicion, that he had any notice of 
its being a lost note." Next, in Peacock v. Rhodes (year 1781), 2 Doug. 633, Lord 
Mansfitld affirmed his two former decisions, and said : " The law is settled, that a 
holder, coming fairly by a bill or note, has nothing to do with the transaction between 
the original parties ; unless, perhaps, in the single case (which is a hard one, but has 
been determined), of a note for money won at play." Lawson v. Weston, 4 Esp. 56, 
decided in 1801, carried the doctrine of Miller v. Race to a great length. In Lowndes 
P.Anderson, 13 East, 130, 1 Rose, 99 (decided 1810), Lord Ellenhorough said: "It 
would be a grievous inconvenience if bank-notes could be followed in the manner now 
attempted through the hands of }x>nafide. holders for a valuable consideration, without 
notice." The rest of the court concurred. In Solomons v. Bank of England, 13 
East, 135, note, the same doctrine was reiterated. But when suspicious circumstances 
in the transfer were shown. Lord Kenyon left it to the jury to say whether such evidence 
proved the plaintiff privy to ihe original fraud. The doctrine of Miller v Race was 
also applied to a transfer obtained by forgery, in Price v. Neal, 3 Burr. 1354, 1 W. 
Bl. 390. And see Wookey »;. Pole, 4 B. & Aid. 1,15. In a late case, when an agree- 
ment was made to the acceptor, to deliver up certain bills drawn in sets, and the first 
set only was given up, the other two being accidentally miscarried, it was held, that the 
igreement was not performed, because the defendant would still be liable to the bona 
fide holder for the value of the missing sets. Kearney v. West Granada, &c. Mining 
Co., 1 H. & N 412, 38 Eng. L. & Eq. 327. 

(j) See the cases in note i. 


d(ifb.i,t the receiver's title. But a contrary doctrine was laid 
down by Lord Kenyon,(Ar) namely, that it is not enough to prove 
against the receiver for value of negotiable paper that he has 
not been properly diligent in inquiring the title of his transferrer. 
Actual mala fides will alone destroy his title. The next step 
was taken by Lord Tenterden, in a case to wliich we have else- 
where referred ; he laid down the rule, that the title of the 
holder of negotiable paper would not be protected, where he 
had acquired it under circumstances which ought to have ex- 
cited the suspicions of an ordinarily prudent and careful man.(/) 

{k) Lawson v. Weston, 4 Esp. 56. The bill having been lost and advertised in the 
newspapers, was discounted by the plaintiff, a banker, for a stranger, who was desired 
to put his name on the back of the bill, and did so. No inquiry was made as to his 
owner:ship. Accordingly, the counsel for the defendants, the acceptors, insisted that 
" a banker, or any other, should not discount a bill for a person unknown without us- 
ing diligence to inquire into the circumstances, as well respecting the bill as of the 
person who offered to discount it." But Lord Keiiyon said : " If there was any fraud 
in the transaction, or if a bona fide consideration had not been paid for tlie bill by the 
plaintiffs, to be sure tliej' could not recover; but to adopt the principle of the defence 
to the full extent stated would be at once to pamlyze the circulation of all the paper 
in the country, and with it all its commerce. The circumstance of the bill having been 
lost might have been material, if they could bring knowledge of that fact home to the 
plaintiffs. The plaintiffs might or might not have seen the advertisement; and it 
would be going great length to say that a banker was bound to make inquiry concern- 
ing every bill brought to him to discount; it would apply as well to a bill for £ 10 as 
for £ 10.000 " Compare the same judge's opinion in Solomons v. Bank of England, 
3 East, 13.5, note, supra, note i. 

(I) Gill p. Cubitt, 3 B. & C. 466, 5 Dow. & R. 324, 1 Car. & P. 487. The bill was 
stolen during the niglit, and discounted next morning by a person whose name was 
unknown to the broker, but whose features were known, and the latter discounted the 
bill as usual without further inquiries. Abbott, C. J. asked the jury whether the plain- 
tiff took the bill under circumstances which ought to have excited the suspicion of a 
prudent and careful man. If so, then, though he gave its full value for it, they must 
find a verdict against him. They found for the defendant. In overruling Lawson v. 
Weston, 4 Esp. .56, Abbott, C J. said : " It appears to me to be for the interest of com- 
merce, that no person should take a security of this kind from another, without using 
reasonable caution." Bat/lei/. J. said : "If there was not due caution used, the plain- 
tiff has not discounted this bill in the usual and ordinary course of business I con- 
sider it was parcel of the bona fides whether the plaintiff had asked ail those questions 
which, in the ordinary and proper manner in which trade is conducted, a party ought to 

ask A party cannot in law be considered to act bona fide, or with due caution and 

due diligence, if he takes a bill of exchange from a person whose features alone ht 
knows, without knowing what his name is, where he lives, or whether he is a person 
with whom he has been in the habit of trading." HoJroyd, J. said : If the discounter 
" takes it merely because it is drawn upon a good acceptor, then he takes it at a risk (or 
what ought, in the contemplation of a reasonable man. to be a risk), whether the bill bo 
stolen or not : he takes it at his peril. I cannot agree with the doctrine laid down iii 


The question of negligence was left with the jury, as before. fwi) 
Lord Tenterden's rule appears to have proceeded on the ground 
that it would encourage theft to say that the receiver of a not^e 
or bill is not bound to inquire about it before taking it. Ac- 
cordingly, it was held, that, thougli a discounter's good faith was 
unquestionable, yet if he were guilty of undue want of caution 
in taking it, he could not sue for its amount himself, nor defend 
in the loser's suit for its recovery. («) However, the same degree 
of caution was not required in all cases, — a less degree being 
expected in taking a note on a bet at a race-course than in taking 

Lawson v. Weston." The verdict was affirmed. Gill v. Cubitt, decided in 1824, was 
adopted in Egan v. Threlfall, 5 Dow. & R. .326, note a ; Down v. Hailing, 4 B. & C. .3.30, 
6 Dow. & R. 4.05, 2 Car. & P. 1 1 ; Snow v. Peacock, 3 Bing. 406, 11 J. B. Moore, 286, 
2 Car. & P. 21.5 ; Beckwith v. Corrall, 3 Bing. 444, 2 Car. & P. 261, 11 J. B. Moore, 
335 ; Snow v. Sadler, 11 J B. Moore, 506, 3 Bing. 610; Haynes v. Foster, 4 Tyrw. 
65 ; Strange v. Wigney, 4 Moore & P. 470, 6 Bing. 677 ; Slater v. West, 1 Dans. & 
L. 15, 3 Car. & P. 325 ; Snow v. Leatham, 2 Car. & P. 314 ; Easley v. Crockford. 10 
Ring 243 ; De la Chanmette v. Bank of England, 9 B. & C. 208, 2 B. & Ad. 385. In 
Down V. Hailing, Abbott, C. J. told the jury there was no evidence that the defendants 
had taken the check fraudulently, but the question was, whether they had not acted 
negligently. The jury thereupon found for the plaintiffs, and a new trial was refused 
in bank. In Snow ?•. Peacock, Best, C. J. said : " I thought, and told the jury, that it 
could not impede the circulation of bank-notes to require every man that dealt with 

them to use a proper degree of caution and circumspection No other caution is 

required than that which is necessary to ascertain that a man who tenders a bank-note 
of large value to a person to whom he is an utter stranger is not likely to be a thief or 
the agent of thieves." Gaselee, J. said : " I agree with the court that this case was 
properly left to the jury, on the question whether due diligence or due caution had been 
used, without its being necessary to go. further, and prove that there had been mala 
Jides." In Slater v. West, Lord Tentt^den, in summing up, said : " If the manner in 
which the bill was offered by a perfect stranger, making verbal representations, and de- 
siring the goods to be sent to such a place, but betraying no consciousness of suspi- 
cion, and buying to a larger amount than the amount of the bill, leads you to conclude 
that the plaintiffs ought to have had their suspicions excited, then I am of opinion 
that you should find your verdict fo^ the defendant." Verdict for the defendant. In 
this case, decided in 1828, the bill was taken in payment for goods, and hence the doc- 
trine has been considered extreme. As to what is proper caution for bankers in appro- 
priating notes, see Cunliffe v. Booth, 3 Bing. N. C. 821, 5 Scott, 17. 

(m) But the loser of a check, lost after it bears date, having proved his own title and 
the defendant's negligence, may recover, though he gives no evidence of how he lost 
it, or of how it got out of his possession. Down v. Hailing, 2 Car. & P. 11. 

(n) Compare with Lord Tenterden's doctrine of negligence the case of Hatch v. 
Searles, 31 Eng. L & Eq. 219, where, in a suit for administration, a claim was made 
by the holder of a bill ; but it being proved that the holder, who was indorsee of the 
bill, was aware of the fact of the acceptance being in blank, he was taken to have had 
as full knowledge of the circumstances of the origin of the bill as he might have ac- 
quired if he had made proper inquiry. 


it from a tradesman. (o) So the magnitude of the note will affect 
the question of diligence, more carelessness bsing excusable in 
taking a small, than in taking a large note.(/?) 

The next change in the English doctrine took place under 
Lord Denman, by whom it was determined, that gross negli- 
gence in the transfer would destroy the title of one who takes 
lost or stolen negotiable paper, but nothing less than gross negli- 
gence. (^) This rule was adopted because it was properly thought 
that the former rule impeded the free circulation of negotiable 
paper, and was contrary to the spirit of the law-merchant. Be- 
sides, it was somewhat difficult to define what " reasonble cau- 
tion " in such matters was, and it became a dangerous question 
to leave to the jury. A fourth and final step of the English 
courts was to make even gross negligence of the purchaser or 
discounter no defence in his action for the amount. Lord Ten- 
terden's doctrine is therefore decidedly overruled, and the law, 
as it was before that decision was announced, is re-established. (r) 

(o) Snow V. Sadler, 11 J. B. Moore, 506, 3 Bing. 610. 

(p) Miller v. Race, 1 Burr. 452 ; Snow b. Sadler, supm, note o ; Easley ». Crock- 
ford, 10 Bing. 243; Snow v. Peacock, 3 Bing. 406, stijira, note /. But, contra, see 
Lawson v. Weston, 4 Esp. 56, where Lord Kenyon said : " The magnitude of the bill 
has been pressed as a ground of suspicion by the defendants' counsel ; I do not feel it 
of such importance." But he was speaking of a special case. 

iq) Crook v. Jadis, 5 B. & Ad. 909, 3 Nev. &, M. 257 ; Backhouse v. Harrison, 5 B. 
-%. Ad. 1098, 3 Nev. & M. 188 ; Foster v. Pearson, 5 Tyrw. 255, 1 Cromp. M. & R. 849 ; 
Bridger v. Heath, Chitty, 9th ed., 253, note ?h. In Crook v. Jadis, Lord Denman told the 
jury to find for the plaintiff, unless he had been guilty of gross negligence in taking the 
bill, and said, on the motion for a new trial : " I used the expression gross negligence ad- 
visedly." Littledale, J. said : " There must be gross negligence, at least, in a case like the 
present, to deprive a party of his right to recover on a bill of exchange." Taunton, J. 
said : " I cannot estimate the degree of care which a prudent man should take. The 
question whether the plaintiff was guilty of gross negligence was more definite and 
appropriate." Palteson, J. concurred, and said : •" I never could understand what is 
meant by a party's taking a bill under circumstances which ought to have excited the 
suspicion of a prudent man." In Backhouse v. Harrison, the jury found, upon ques- 
tions specially submitted, that the plaintiff took the bills bona fide, but under such cir- 
cumstances that a reasonably cautious person would have refused them. The whole 
court affirmed the distinction, and no gross negligence being proved against him, hut 
only a censurable want of care, the plaintiff recovered. The same doctrine was held in 
Foster v. Pearson, but the point was obiter, and was only suggested as a semble. A 
fourth case was Bridger v. Heath, supra. 

(r) Foster ?;. Pearson, and Stephens v. Foster, 5 Tyrw. 2.55, 1 Cromp. M. & R- 849; 
Goodman ». Harvey, 4 A. & E. 870, 6 Nev. & M. 372 ; Uther v. Rich, 10 A. & E. 784 ; 
Arbouin v. Anderson, 1 Q. B. 498 ; Bank of Bengal v. Fagan '' Moore, P. C. 61. 72 , 
Bank of Bengal v. Macleod, id. 35 ; Raphael v. Bank of Eng., 1 7 C B. 1 61 , J3 Eng. I. 


" "We have shaken oflf," said Lord Deiiman, " the last remnant 
of the contrary doctrine." Indeed, the last case upon the point 
seems to have gone considerably beyond what was contemplated 
even by Lord Mansfield. (.9) 

& Eq. 276. In Foster v. Pearson, Parke, B. had said : " If the defendants took the bills 
for value, and honestly and with due care and caution, in the ordinary course of business 
(and even that is probably an unnecessary qualification), they would have a good title 
to hold them." This was in 1835. But tiie modern doctrine was first clearly laid down 
in Goodman v. Harvey, in 1836. Lord Dcnuian, at nisi prius, had told the jury that 
the plaintiff, in taking a bill with the notarial protest written on it, had been guilty of 
gross negligence, for he had received it, " with a death-wound apparent on it," and 
therefore took the bill with no title at all. A nonsuit being entered, a rule nisi was 
moved, argued, and granted ; and in bank, Lord Denman delivered the opinion thus : 
" The question I offered to submit to the jury was, whether the plaintiff had been 
guilty of gross negligence or not. I believe we are all of opinion that gross negligence 
only would not be a sufficient answer, where the party has given consideration for the 
bill. Gross negligence may be evidence of mala Jides, but is not the same thing. 
We have shaken off the last remnant of the contrary doctrine. Where the bill has 
passed to the plaintiff, without any proof of bad faith in him, tliere is no objection to 
his title. The evidence in this case as to the notarial marks could only weigh as ren- 
dering it less likely that the bill should have been taken in perfect good faith. The 
rule must be absolute." Littledale, Patteson, and Coleridge, JJ. concurred. In Uther 
V. Rich, Lord Denman said : " With respect to the doctrine laid down in Gill v. Cubitt 
and other cases, we adhere to the more recent decisions, and to wiiat is said in Good- 
man V. Harvey, that gross negligence alone would not be a sufficient answer ; that it 
may be evidence of mala Jides, but is not the same thing " In Arbouin v. Anderson 
(1841) his Lordsliip pronounced Goodman v. Harvey, "the law now prevailing," and 
held that honesty was implied prim<i facie by possession, and that, to meet the inference 
so raised, fraud, felony, or .some such matter, must be proved. In Bank of Bengal v. 
Fagan, 7 Moore, P. C. 61, Lord Broufjham said that " it may be taken as estal)lishcd, that, 
■whatever may have been the law laid down in Gill v. Cubitt, and Down r. Hailing, and 
one or two other cases, and not abandoned, at least as far as the language went which 
the court used in some subsequent cases, their doctrine is now law no longer ; and that 
the negligence of the party taking a negotiable instrument does not fix him with the 
defective title of the party passing it to him." He adds : "I cited the cases of Gill v. 
Cubitt and Down v. Hailing, as having gone far to overrule Lawson v. Weston, 4 Esp. 
56. These cases are no longer law, and Lord Keni/on's opinion is set up and supported 
by all the lawyers." Compare with these the analogous cases of Marston v. Allen, 
8 M. & W. 494 ; Masters v. Ibberson, 8 C B. 100. 

(s) Li 3 Camplicll's Lives of the Chief Justices, 310, speaking of Lord Tcnterden, 
the author remarks, that lie had a very indifferent opinion of human nature, and was 
prone to suspect fraud, and he established accordingly the rule, tliat a holder of a note 
which had been lost or stolen could not maintain an action upon it if the jury should 
think he took it under circumstances which ought to have excited the suspicion of a 
prudent man. Lord Campbell, after staling that the new rule was universally 
adopted, says : "But the rule died with its author. It was soon much carped at; 
some juflges said that fraud and gross negligence were terms known to tlie law, but 
of ' the ciicumstances which ought to excite suspicion,' there was no definition in Coke 
or in Cowell ; and the complaint of bill-brokers rcsoundcil from the Royal F^xchange 

Vol. II.- S 


The present English law is, that whoever takes a bank-note or 
other negotiable security bona fide — that is, giving value for 
it, and having no notice at the time that the party from whom he 
takes it has no title — is entitled to recover upon it, even al- 
though he may at the time have had the means of knowledge of 
that fact, of which means he neglected to avail himself. (/) It 
follows from this doctrine, that, in pleading, mala fides must 
be distinctly alleged, and an allegation that a party was not the 
bona fide holder is not equivalent to such an averment. (w) The 
proper way of implicating him in the alleged fraud by pleading, is 
to aver that he had notice of it, leaving the proof of notice to be 
estabished in evidence. 

The American law on the transfer of lost or stolen notes seems 
to have taken a similar course to the English. It has been laid 
down in a multitude of cases in this country, and, indeed, has 
never been disputed, that negotiable paper may be transferred 
fraudulently by a finder, thief, bailee, or tortious agent, so as to 
bind the original owner against the holder, if the latter took it 

to Westminster Hall, that they could no longer carry on their trade with comfort or 

(0 Raphael v. Bank of England, 17 C. B. 161, 33 Eng. L. & Eq. 276. This case, 
decided in 1 855, is a very strong one. Victor St. Paul, a money-changer at Paris, 
twelve months after he had received notice of a robbery of bank-notes at Liverpool, 
took one of the stolen notes (for .£500) at Paris, — giving cash for it less the current 
rate of exchange, — from a stranger, whom he merely required to produce his passport 
and write his name on the back of the note. It was held, that the circumstance of his 
forgetting or omitting to look for the notice was no evidence of mala fides. The judge 
left it to the jury to say, 1st, whether St. Paul & Co. paid the value for the note ; 2d, 
whether the notice of the loss was served upon them ; 3(1, whether, at the time of taking 
the note, they had the means of knowing that it had been stolen ; 4th, whether they 
took it bona fide. The jury answered all these questions affirmatively, and Jtrvis, C. J. 
ordered a verdict for the plaintiffs for £534. On the motion for a new trial, it was 
urged that, giving value and being ignorant of the loss did not alone constitute bona 
fides, under the circumstances, and that the banker should have looked over his tile of 
notices. But it was held that his want of recollection of the notice was no evidence 
of mala fides ; that the suspicious circumstances would not outweigh the giving value, 
and actual ignorance of the loss, and that proof of giving value is evidence of bona 
fides. Lord Tenterden's doctrine was pronounced to be " long since exploded." 

(m) Uther v. Rich, 10 A. & E. 784 ; Masters i: Ibberson, 8 C. B. 100. In this last 
case, the defendant being sued on his note, made payable to the order of A, and in- 
dorsed by A to B, pleaded that the note was obtained from him by the fraud of D and 
others ; that there was no consideration for A's indorsement, and that the plaintiff had 
notice of the fraud. The plea was held bad. on special demurrer, because it did not 
allege that the payee was a party to the fraud, or that he had given no consider? tion 
for the note. 


honestly and for value. (y) But it is strictly held that the as- 
signee must have taken it in the usual course of business, 
without knowledge of the loss, theft, .or fraud, and for a full 
and valuable consideration, (z^;) 

Before the announcement of Lord Tenterden's doctrine re- 
quiring caution in the purchaser of bills and notes, two Ameri- 
can cases had taken nearly the same ground, though tlie opinions 
upon that point were somewhat obiter. Other decisions followed 
in which that doctrine was expressly adopted. And though 
some of them might have been decided on other grounds, and 
especially upon the fact that suspicious circumstances appeared 
on the face of the note, which were really constructive notice of 
fraud, still it is unquestionable, although the contrary has some- 
times been stated, that Lord Tenterden's doctrine was accepted 
here as law.(.'c) The rule was frequently applied, that wherever 

(v) Adkins v. Blake, 2 J. J. Marsh. 40; Robinson v. Bank of Darien, 18 Ga 65; 
Wheeler v. Guild, 20 Pick. 545 ; Weathered v. Smith, 9 Texas 622 ; Wyer v. Dorches- 
ter & Milton Bank, 11 Cush. 51. In all these cases of lost or stolen notes, Miller v. 
Race, 1 Burr. 452, was adopted as unquestionable law. For other cases, turning upon 
fraudulent transfer, and establishing the same doctrine, see chapter on Transfer. 

(w) Bay V. Coddington, 5 Johns. Ch. 54; Hall v. Wilson, 16 Barb. 548 ; Goldsmid 
r. Lewis Co. Bank, 12 id. 407; Greneaux v Wheeler, 6 Texas, 515; Wheeler ». 
Guild, 20 Pick. 545. In Dupeux v. Troxler, 8 La. 92, the holders sued the note, but 
intervenors claimed it, alleging it to be the property of their ancestor from whom it was 
stolen, coming unfairly and without value to plaintiffs. Held, that whenever testimony 
shows that a note was not obtained in a fair course of trade, the holder is not consid- 
ered bona fide, and cannot recover as against the true owner. ' 

(r) Aycr v. Hutchins, 4 Mass. 370 ; Wiggin v. Bush, 12 Johns. 306 ; Brown v. Ta- 
ber, 5 Wend. 566 ; Adkins v. Blake, 2 J. J. Marsh. 40; Hall v. Hale, 8 Conn. 336 ; 
Cone V. Baldwin, 12 Pick. 545 ; Hunt v. Sandford, 6 Yerg. 387 ; Beltzhoover ?;. Black- 
stock, 3 Watts, 20; Nicholson v Patton, 13 La. 213 ; Lapice v. Clifton, 17 id. 152 ; 
McConnclI v. Hod.son, 2 Gilman, 640; Russell v. Hadduck, 3 id. 233 ; Vairin v. Hobson, 
8 La. 50 ; Lanfcar v. Blossman, I La. Ann 148 ; Louisiana State Bank v Orleans Navi- 
gation Co., 3 id. 294 ; Marsh v. Small, id. 402 ; Holbrook v. Mix, 1 E D. Smith, 1 54 ; 
Sandford v. Norton, 14 Vt. 228, 17 id. 285; Pringle r. Phillips, 5 Sandf 157 ; Dick- 
son r. Primrose, 2 Miles, 366. Ayer v. Hutchins, the earliest American case on the 
point, Wius decided in 1808, sixteen years before the decision in Gill v Cubitt, Parsons, 
C. J. said : " If the indorsee receives the note under circumstances which might rea- 
sonably create sus()icions that it was not good, he ought, before he takes it, to iiujuiro 
mto the validity of the note ; and if he does not, he must take it subject to any legal 
defence, which might he made against a recovery, by the promisee." Perhaps, how- 
ever, this langungc was broader than the decision of the case required. Similar ground 
was taken in Wiggin v. Bush, in 1815. In Brown v. Tabcr, the defendant indorsed 
on accommodation note at sixty days, to enable the maker to discount it at a bank. 
TS latte . on the bank's refusal, passed it off, when it had but eighteen days to run. 


a party taker; a note or bill without due caution, and under cir- 
cumstances which ought to have excited the suspicions of a pru- 
dent and careful man, the maker, acceptor, or prior indorser, is 
let into his defence, of fraud, loss, or theft. This ground was 

in the purchase of lotterj'-tickets at retail price, the vendor knowing that he was not a 
dealer in tickets, and having been informed that the note had been in the bank, and the 
bank-marks being upon it; it was held that the circumstances combined were sufficient 
to put the plaintiff on inquiry, though no one was decisive, and that thus he was 
chargeable with notice of the misapplication of the note, and that the indorser was not 
liable. Adkins v. Blake, 2 J. J. Marsh. 40, was decided in 1829, a few years after 
Gill V. Cubitt, and a doctrine very similar to that of the latter case was announced, al- 
though, since no reference was made to Gill v. Cubitt, which, indeed, had not up to 
that time, we believe, been cited uf)on the question of negligence in any American re- 
ports, perhaps it may be inferred that it was not in the mind of the Kentucky Court iti 
rendering judgment. B lost bank-notes, which came into the possession of H, " by 
finding or otherwise, and he exchanged them with Adkins for a negro, the latter (i. e. 
Adkins) not knowivg that they belonged to B." The court held, that " a purchaser from 
the finder or the thief may be subjected to the payment of the value of the note to the 
owner, if he knew, or had sufficieiit reason, to suspect, that it had been lost or stolen. 
While the interests of trade require that the negotiability of mercantile paper shall not 
be affected by occult circumstances, not apparent or ascertainable in the ordinary circu- 
lation of it, moral honesty demands that all who trade in such commodity shall act with 
probity and a reasonable vigilance. As no honest and just man would buy a bank-note, 
when he knew, or had strong grounds for suspecting, that it had been lost or stolen." 
The court say that thi.« rule of suspicion is deduced from Lord Mansfield's doctrine in 
Grant v. Vaughan, Miller v. Race, &c., which they cite. This circumstance conOrms 
the opinion we ventured to express above, viz. that the recent doctrine making grosa 
negligence only evidence of fraud, was not contemplated by the earlier leading cases in 
Lord Mansfield's time. It has frequently been stated that Lord Tenterden's doctrine 
was a gross departure from Miller v. Race, and that Lord Denman's suVjstitnte was a 
direct return to*the latter. In Hall v. Hale, Hosmer, C. J. adopted the rule of Gill v. 
Cubitt, saying, "It is equally well settled that if an indorsee takes a bill without due 
caution, and under circumstances which ought to have excited the suspicion of a pru- 
dent and careful man, the maker, acceptor, or prior indorser may be let into his defence. 
The ordinary and prudent circumspection which is exercised by men who trans- 
act their concerns with care and caution is demandableof the plaintiff." The plainiifTs 
actual good faith was not questioned. In Hunt v. Sandford, Green, J said : " In any 
case in which the indorsee takes the paper under circumstances which might reasonably 
create suspicion that it was not good, he takes it at his peril. This rule is usually ap- 
plied to the case of notes overdue, but the principle is of general application." Gill r. 
Cubitt was affirmed. In Cone v. Baldwin, the court said, a little obiter : " If the cir- 
cumstances attending the transfer were such as to put the plaintiffs upon their guard, 
they were bound to make inquiry ; and if they did not, they purchased at their peril." 
In Beltzhoover r. Blackstock. Sergeant, J. said : " I concur in the position, that if an in- 
dorsee takes a note heedlessly, and under circumstances which ought to have excited 
the suspicions of a prudent and careful man, the maker or indorser may be let into his 
defence. Gill v. Cubitt, 3 B. & C. 46G." Nicholson v. Parton was a case in which a 
note had been lost by a notary public. Best, J. said : " We take the rule as settled 
m England, in the case of Gill v. Cubitt, for our guide," and that when a broker 


taken in strong terms, by some courts, as late as 1851. (^) Bui 
in 1836 the then recent doctrine of Lord Denman was substi- 
tuted for the previous one by the Supreme Court of Connecti- 

takes a note under suspicious circumstances, for the sake of profit, or because the 
names on it are good, he takes it at his peril, and hence it behooves him to make 
inquiries for his transferrer's title. In Russell i'. Hadduck, in 1846, it is said: "The 
rule undoubtedly is, that where a party is about to receive a hill or note, if there 
are any such suspicious circumstances accompanying the transaction, or within the 
knowledge of the party, as would induce a prudent man to inquire into the title of 
the holder, or the consideration of the paper, he shall be bound to make such in- 
quiry, or if he neglects to do so, he shall hold the bill or note subject to any equi- 
ties which may exist between the previous parties to it. In other words, he shall 
act in good faith, and not wilfully remain ignorant, when it was his duty to inquire 
into the circumstances, and know the facts." In Vairin v. Hobson, a check for 
4' 6.50, having been lost by accident, was sold at St. Louis, 1,.500 miles from its place 
of payment, New Orleans, by a passenger in a steamboat to a merchant fiom New 
Orleans, twenty-five days after date, for its full value in goods and money, and the 
latter sold it at five per cent discount to the plaintiffs, who sued the drawers. It 
was held that payment of value is not alone sufficient evidence of good fiiith and 
fair dealing in the purchaser of a lost or stolen instrument. Gill v. Cubitt and 
Down V. Hailing, were completely adopted, and the court added : " The principles 
recognized in these decisions we believe to be reasonable and just." The decision 
was expressly put upon these grounds, independently of the check being overdue. In 
Marsh v. Small, in 1848, a suit was brought on a lost check, drawn by the defend- 
ants. It was pleaded, that the plaintiff's received the check incautiously. But the 
court, without objecting to the plea, thought it not proved, and said : " The circum- 
etances under which it was offered were not such as to excite suspicion, nor put 
the plaintiffs on inquiry whether the person presenting it was the bona Jide holder. 

The off"er of such a check would not of itself necessarily excite the inquiry 

of the most prudent and cautious No negligence has been disclosed fiom 

which bad faith can be inferred, and in .such cases the holder is to be protected, 
although the note or check may have been lost or stolen." In Sandford v. Norton 
(1842), Rcdfield, J. said : " When it is shown that the note was without considera- 
tion, or void in its inception by being obtained by force or fraud, or that it had 
been lost, this does so far impeach the title of the holder as to impose upon him the 
obligation of showing that he paid value, and, in niaiiy cases, that he was guilty of 
no want of ordinary care in taking it. Gill v. Cubitt, which has reference to lost 
notes, turns upon tiie point of being taken without due caution. Some of the later 
cases, in regard to this particular point, seem to have receded a little from this case. 
But the doctrine of the case of Gill v. Cubitt is in the main adhered to And we do 
not well sec how any other rule could consist with a tolerable regard to justice." 

(y) Pringle v Phillips, ?> Sandf. 1 .57, decided in 1 851 , is a strong Duer, J., quot- 
ing Crook V. Jadis, Backhouse c. Ilarri.son, and Goodman v. Harvey, says : '• Bui with 
all possible respect for the learned trii)unal by which these cases were decided, we can- regard them as evidence of the law that we are bound to follow It may well 

excite our surprise that the judges of the King's Bench have felt themselves at liberty 
fo repudiate a doctrine to which their predecessors, in all the courts, in the fullest con 
viction of its justice and expediency, had so long and so inflexibly adhered. Either 
the maxim that it is the duty of judges 'stare decisis' must be exploded as ground- 

VOL. 11. 24 


cut, anl now we believe that it may be considered as generally, 
if not universally, adopted in this country.(z) 

We have presented the law on this subject in connection with 
various topics and at much length, because we regard it as of 
great importance. Very few of the questions which have grown 
out of negotiable paper have given rise to so much conflict, 
fluctuation, and uncertainty. And few or none of them demand 
so imperatively, that they should be answered by a rule gener- 
ally adopted, uniformly applied,- and well understood. 

less, or cases which involve its flagrant violation must be disregarded." In Holbrook 
V. Mix, 1 E. D Smith, 154, decided the same year, it was held, that the plaintiffs, upon 
taking a certain note, fraudulently obtained, had suiBcient notice to put them upon 
inquiry ; that not having made any inquiry, they acted at their peril. 

(2) Brush V. Scrihner, 11 Conn. 388; Matthews v. Poythress, 4 Ga. 287; Hall v. 
Wilson, 16 Barb. .548 ; Worcester Co. Bank v. Dorchester & Milton Bank, 10 Cush. 
488 ; Goodman v. Simonds, 20 How. 343 ; Magee v. Badger, 30 Barb. 246. Matthews 
V. Poythress (1848) was one of the first American cases that adopted Lord Denman's 
last doctrine. The plaintiff', in trover for his stolen note, proved that the defendant, in 
taking the note, became suspicious, thought the note was not genuine, or that the maker 
■was not solvent, and disliked the appearance and manner of the two strangers from 
whom he had the note ; and that he inquired of the genuineness of the note, and the 
solvency of the makers, and, becoming satisfied upon tiiese two points, took tiie notes. 
The judge below held, that the defendant had inquired sufficiently, that general suspi- 
cion was not enough to put the purchaser upon inquiry as to the title, and a foilure to 
do so was not such nuilajiJes as to enable the loser to recover. The court above, after 
a very elaborate opinion, concluded thus : " It is the judgment, therefore, of this court, 
that the title of the purchaser of a negotiable bill, note, or other security transferable by 
delivery, who takes it before due, from one who himself has no title bona Jide, and for 
value, is a good title. And that such title is not defeated by the want of such caution 
in the purchase as a careful and prudent man will take of his own aff"airs, or by gross 
negligence." In Brush v. Scribner, as early as 1836, Williams, C. J. decidedly objected 
to Lord Tenterden's notions of a bona JiJe U-nnsfer. Goodman ». Simonds (1858) is 
a leading case on this topic. An accepted and indorsed bill of exchange was placed 
by the drawer, as collateral security for his own debt, in the hands of his creditor ; and 
when the creditor came to sue the acceptor, the court instructed the jury, " that if such 
facts and circumstances were known to the plaintiff^ as would have caused one of ordi 
nary prudence to suspect that the drawer had no interest in the bill, and no authority 
to use the same for his own benefit, and by ordinary diligence he could have ascertained 
these facts, then the jury would find for the defendant." This instruction was held to 
be erroneous. The whole question was very thoroughly considered, and it was said 
that " Gross negligence is defined to consist of the omission of that care which even 
inattentive and thoughtless men never fail to take of their own property; and if such 
neglect would not defeat the right to recover, — and clearly it would not unless at- 
tended by bad fiiith, — it cannot require any further reasoning to demonstrate that the 
instruction was erroneous." In Worcester Co. Bank v. Dorchester & Miltiin Bat k, 
Metcdlf, J. affirmed Lord Denman's doctrine, and said that even gross negligence in 
the holder is not tantamount to fraud, although it may be given in evidence to a jury 
as tending to prove fraud. In Magee v. Badger, the most recent case on the subject. 


And we say, in conclusion, that the rule applicable to these 
questions should rest upon these three principles, all of which 
were devised, and are well adapted, to insure the unrestricted cir- 
culation of mercantile securities : — 

1. That, though at common law no man can acquire a title to 
any personal chattel from one who has no title to it himself, ex- 
cept by purchase in market overt,(a) a complete exception to 
this rule is made in favor of negotiable paper. 

2. The bona fide holder of a lost, stolen, or tortiously trans- 
ferred note or bill, transferable by mere delivery, and not over- 
due or otherwise apparently dishonored, who has taken it withoul 
knowledge, or actual, or constructive notice of the loss or fraud, 
in the usual course of business, and for a full and valuable con- 
sideration, has a perfect title to that note or bill against the 
world, and becomes by the taking it, its true owner. 

3. The title of such a holder is not defeated by proof that he 
was negligent, or even grossly negligent in taking the note or 
bill, and that he omitted to make inquiries which common pru- 
dence would have dictated. But while gross negligence is not 
itself mala fides, it may be evidence thereof for a jury. 

It may be added, that in Scotland Lord Tenterden's doctrine 
was never adopted as law. (6) 

"Where the defect in title appears on the face of the lost or 
stolen instrument, at the time of transfer, as where it is trans- 
ferred after it is due,(c) or after dishonor, the party obviously has 
constructive notice of his assignor's infirmity, and can have no 
better title than he. It is an obvious case of transfer witli notice, 
and follows the ordinary rule of paper overdue or otherwise de- 
fective, ((i) 

decided December, 1859, the-judge below had charged, that if the plaintiff took the note 
with notice of certain suspicious facts, it would he void in his hands ; and that even if 
he had knowledge of such facts as should have prompted further inquiry, that might 
have led to a knowledge of the facts, the note would for that cause he void. It was 
licld that " this latter branch of the charge went beyond the settled rule of law in 
regard to the validity of negotiable paper in the hands of a holder for a valuable con- 
sideration." Kcutgen v. Parks, 2 Sandf 60, bears upon this question. 

'a) Peer v. Humphrey, 2 A. & E. 495. 

\h) Thomson, Bills, 314, 316. 

[c) Down V. Hailing, 4 B. & C. 330 ; Weathered v. Smith, 9 Texas, 622. 

(rf) Ayer v. Hutchins, 4 Mass. 370; Wiggin v. Bush, 12 Johns. 306; Fowler v. 
Brantly, 14 Pet. 318 ; Goodman v. Simonds, 20 How. 343. " A person who takes a 
bill which upon the face of it was dishonored, cannot be allowed to claim the privileges 


And where the consideration for which a stolen note is given 
is illegal by statute, the transferee for such consideration can- 
not hold it, and will not be regarded as a holder for value ; 
because it is a value which the law cannot recognize. The two 
principal illustrations of this last rule are notes tainted with 
usury, and notes given for money lost at play.(e) 

Witli respect to the burden of proof in actions by bona fide 
holders, it may be remarked, in brief, that the holder of nego- 
tiable paper, payable to bearer, as bills of exchange and prom- 
issory notes, may ordinarily recover their amount from the 
promisors, without proving how he came into possession of 
them ; for prima facie^ possession of mercantile paper is honest 
possession. But when the defendant in such a suit has proved 
tliat the instrument was originally witliout consideration, was 
obtained by illegal means, as by fraud, felony, or force, or has 
since been the subject of fraud, or felony, or loss, then the 
holder must take np the burden of showing that he gave value 
for the instrument. This proof of value being established, if 
the pi'omisor would defend, he must now show tbat the transfer 
to the plaintiff was fraudulent. (/) 

Tliese principles are applied, also, in the cases upon lost and 
stolen notes. (g-) But with respect to the burden of proof, a 
broad distinction has been drawn, in some cases, between bank- 
bills, lost or stolen, and other negotiable paper. For the holder 

of a bona fide holder without notice. If he chooses to receive it under such circum- 
stances, he takes it with all the infirmities belonging to it ; and is in no better condition 
than the person from whom he received it. There can be no distinction in principle 
between a bill transferred after it is dishonored for non-acceptance, and one transfeired 
after it is dishonored for non-payment." Andrews v. Pond, 13 Pet. 6.i. 

(e) Peacock v. Rhodes, Dong. 633 ; Clarke v. Shee, 1 Cowp. 197 ; Mason v. Walte, 
17 Mass. 560. Lord Mansfield, in Peacock v. Rhodes, stating the rule that a bona fide 
holder for value of a note is discharged from preceding equities, adds : '"Unless, per- 
haps, in the single case (which is a hard one, but has been determined) of a note foi 
money won at play." 

(/) But it is held in Louisiana that a simple denial of the plaintiff's right to sue 
as the holder of a negotiable instrument, cannot authorize the maker to contest his title 
to it, when he holds by a blauk indorsement, unless it has been lost or stolen. 
McKinney ». Beeson, 14 La. 2.54. 

(g) Solomons v. Bank of England, 13 East, 135, note; Miller v. Race, 1 Burr. 452; 
Grant v. Vaughan^ 3 id. 1516 , Peacock v. Rhodes, Doug. 633 ; Paterson v. Hardacre, 
4 Taunt. 114 ; De La Chaumette ;,•. Bank of England, 9 B. & C. 208, 2 B. & Ad. 385 ; 
Raphael v Bank of England, 17 C. B. 161 ; Nicholson v. Patton, 13 La. 213; Wor- 
cester Co. Bank v. Dorchester & Milton Bank, 10 Cush. 488; VVyer i;. Doj ".heater & 
Milton Bank, 11 id. 51 


of an ordinary note of hand, on proof tliat it has been lost, 
stolen, or fraudulently dealt with, must show how it came into 
his possession. But it is said that no such burden is thrown 
upon the holder of a stolen bank-bill. (/t) 

The ground of this distinction is tlie unquestionable fact that 
bank-bills are not ordinary bills of excliange, and should not be 
hampered by those restrictions which are necessary for the latter. 

(h) Worcester Co. Bank v. Dorchester & Milton Bank, 10 Cush. 488; Wyer ?;. 
Dorchester & Milton Bank, 11 id. 51. In the first case, Metcalf, J. said : '• It is well 
settled in this Commonwealth, that, in a suit by the holder of a promissory note or bill 
of exchange, which has been stolen, or which has otherwise been fraudulently put into 
circulation, the i)urden is on the plaintiff to jirove that he came fairly into possession of 
it, under such circumstances as entitle him to recover. And it was contended by the 
counsel for the present defendants, in his learned and able argument, tliat the same 
rule of evidence is to be applied to the case of a stolen bank-bill. We doubt this, but 
need not decide the point now." In the second case, cited supra, the same judge said : 
" We are now to decide whether the rule of evidence, which is applied to promissory 
DOtes and bills of exchange that are stolen, or otherwise fraudulently put into circu- 
lation, is applicable to bank-bills that are circulated after they have been stolen. In the 
case of such bills of exchange and promissory notes, the burden is on the holder to 
prove that he took thera in good faith. According to the recent decisions, that burden 
is very light. See 10 Cush. 491. But we are of opinion that the rule of evidence is 
different in the case of a bank-bill." Accordingly, the plaintiffs were held entitled 
to recover, without showing how they came by the bills, as the bank showed no rea- 
sonable ground for doubting their honesty. The same doctrine had been held in Louis- 
iana Bank v. Bank of United States, 9 Mart. La. 398, as early as 1821. Mathews, J. 
said that though it might be the duty of the holder of a stolen note, other than a bank- 
note payable to bearer, to prove his title by good faith and value, " an exception is 
adopted in law in case of bank-notes. The facility with which they pass from hand to 
hand, the circumstance of their not being esteemed, like bills of exchange, as mere se- 
curities of debt, but treated as money in the ordinary course and transaction of busi- 
ness, by the general consent of mankind, shows that they may with propriety be placed 
on a footing different in some re>pccts from that of ordinary bills and notes Posses- 
sion is prima facie evidence of property in them, and the holder is entitled to all the 
benefits resulting from a rightful ownersliip, until the contrary be made apparent." So 
as early as 1749, in Scotlajid, the holder of a b;iiik-bill lost, stolen, or fraudulently ac- 
quired, was not compelled to prove value. In Crawfurd v. Royal Bank, the plaintiff 
lost a bank-note, which came to the Bank by discount. On being sued for the amount, 
the bank pleaded that they were bona Jide purchasers, and therefore not subject to a rei 
vtndicatio, because such a claim would be an impediment to commerce. The plaintiff 
answered, that bank-notes have no privilege by the law of Scotland above bills of ex- 
change, except freedom from the necessity of indorsiition, and that j)ossession of a 
bank-note, like that of money, though it presumed property, yet suffered all presump- 
tions to be rebutted by positive proof But the court were unanimous on two points. 
'' Ist. That money is not subject to any vilium realt; and that it cannot be vindicated 
from the bona Jide possessor, however clear the proof of the theft may be. 2d. That 
liank-notes, serving the of money, must l)e entitled to the same privileges ; 
and therefore that Mr. Crawfurd had no claini t<j the note in (luestiuii." Crawfurd v. 
Royal Bank, Ross's Lead. Cas. on Bills, 229. 


We have already seen that, at an early date, bank-notes were 
pronounced by Lord Mansfield to be " 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." (i) 

The reason referred to by Lord Holt, as stated on a previous 
page, why money forms an exception to the common rules 
of transfer and title, namely, that " it has no ear-mark," also 
comes in ; for it is said, in the two cases referred to, that while 
ordinary bills and notes can always be identified, and can gen- 
erally be traced through their whole course of circulation, — 
their negotiation being as much a matter of entry in the books 
of traders and of banks as any other of their transactions, — 
bank-bills cannot, in most cases, be identified. For, since they 
pass as money, their number and denomination, the name of 
the bank tiiat issued them, would not be noted on account- 
books, except in a special case, and for some special reason. 
Accordingly, while it is no hardship to call on the holders 
to show how they acquired ordinary bills and notes, when dis- 
honesty has been practised upon the promisor, such a requisi- 
tion would be a grievous burden upon the holder of a common 
bank-bill. (» 

(?) Miller v. Race, 1 Burr. 452. 

(j) Worcester Co. Bank v. Dorchester & Milton Bank, 10 Cush. 488 ; "Wyer v. Dor- 
chester & Milton Bank, 11 id. .t1. We tliink, however, that not all the earlier cases 
recognized the distinction hetween bank-bills and other bills, in respect of the onus 
probandi. For although all hold that possession of bank-bills raised the presumption 
of ownership, some regarded it as the duty, at least, of such holders to account for 
their possession, on proof of a previous fraud or felony with regard to them. Thus, 
in Solomons v. Bank of England, 13 East, 13.5, note, a bank-note was fraudulently 
obtained, and the party presenting it for payment, subsequently, was desired to inform 
the bank how he came by it; but the only account he would give of it was, that he 
received it in payment from a man dressed in such a way, of whom he knew nothing, 
though bank-notes of so large a value (£500) were not usually circulated in that 
foreign country. This was held to be sufficient evidence to be left to a jury of the 
holder's privity to the original fraud. Lord Kenyan said, that when the plaintiffs were 
informed of the circumstances, they refused to give any satisfactory account of it. 
" Under such circumstances, it is impossible to say that there was not some suspicion 
thrown upon them of their being privy to the fraud, and that was all that I told the 
jury." Ashhurst, J. said : " On this evidence of suspicion, the plaintiff ought to have 
given ever}' possible account how his correspondents came by it, in order to clear tl em 
from the imputation of fraud ; and this was not done ; the suspicion, therefore, remains 
as it did before." We must suppose, therefore, to make this case support the modem 
rule, that the holder need not have given any definite explanation of his possession ; but 


The present English form of pleading in actions by the holder 
of bills which are affected witli loss, theft, or fraud, against the 
promisor, appears to be as follows. Tiie defendant pleads to the 
suit, that the bill was obtained by fraud, &c., and also that it 
was indorsed to the plaintiff without consideration. But tliougb 
the allegation would be bad if this latter branch was left out, the 
defendant needs only to prove the former. For the proof of 
loss, theft, or fraud, throws the otius of proving consideration 
upon the plaintiff, who replies, if this be pleaded, de injuria. 
And this is true whether the bill be founded in felony or fraud, 
or has since been the subject of loss or fraud. (A:) 

In most American courts, the simple plea of fraud, &c. would 
not be held bad. In Scotland, a holder is presumed to have 
acquired the note or bill onerously (or for value), and bona fide ; 
and this presumption cannot in general be redargued, except by 
his writ or oath. And even in case the bill or note be charged 
with fraud, parol proof is not always allowed ; and the modern 
rule in bank-bills, namely, that proof of fraud, loss, or theft in 
general, is not sufficient to compel the holder to account for his 
possession, is said, though it seems doubtful, to have been ex- 
tended in Scotland to all negotiable paper. (/) 

The ground of these indulgences to the bona fide holder for 
value of mercantile securities, is the fundamental policy of giving 
the widest credit and currency to negotiable paper. Accord- 
ingly, when a thief or finder pays bank-bills to an innocent party 

having given one, it was left to the jury. Lord Ellenhorough, in King v. Milsom, 2 Camp. 
5, said that holders of negotiable instruments in general should not, without strong evi- 
dence of fraud, be compelled by any prior holder to disclose the manner in which they 
received them. But that suit was on a bank-note, and so fur at least sustains the modern 
law. In the later case of I)e La Chaumette v. Bank of Kngland, 9 B & C. 208, it was 
held that, where it was proved by the defendants that a bank-note had been stolen, it 
was incumbent on the plaintiff to show that he had given full value for it. The same 
doctrine was held in the same year (1829) with regard to a bank post-note, which had 
been stolen, and for his possession of which, accordingly, the holder was compelled to 
account. Fulton Bank ». Phoenix Bank, 1 Hall, .'562. 

(k) Harvey v. Towers, 6 E.\ch. 6.56 ; Bailey v. Bidwcll, 13 M. & W. 73 ; Smith v. 
Braine, 16 Q. B. 244; Bingham v. Stanley, 2 Q. B. 117 ; Mather v. Maidstone, 1 C. 
n., N. 9. 27.3. 

[I) Thomson, Bills, 94, 95. 317, 2.5.'j. "In Scotland, it is not necessary for the 
holder of a bill which has been lost, stolen, or fraudulently acquired, to prove that ho 
gave value for it, and the want of value can only be proved by his writ or oath." 
Crawfurd v. Royal Bank, Ross's Lead. Cas. on Bills, 229, head note. But this was a 
case of a lost bank-bill. 


for value, that is, for a new value or consideration of any kind, 
the receiver holds them precisely as he would money. Indeed, 
we should look upon bank-bills as the exact equivalent of money, 
both as to the rule, and as to all exceptions to the rule. Thus, if 
the bills were given only to secure a pre-existing debt, we should 
say the owner could generally reclaim them, and so he could if 
we suppose money, that is, coin, so given, and with an ear-mark, 
so as to be capable of identification by the true owner. If they 
were given in payment of a pre-existing debt, it would be more 
doubtful. But we should be disposed to state as the rule of law, 
that if the bills were given to secure a preceding debt, and per- 
haps if given in payment of it, the original owner could reclaim 
them, provided the party receiving them and giving them up 
would be placed in as favorable circumstances as if the debt had 
not been so secured or paid, and not otherwise. 

We have been considering the case of notes and bills transfer- 
able by mere delivery. But when mercantile paper is negotiable 
by indorsement only, the rights of the bona fide purchaser are 
more restricted. No title passes with a forged indorsement. 
Consequently, possession of a note bearing such an indorsement 
conveys no more interest to the transferee, even though he give 
value, and is ignorant of the fraud, than the forger had, wliich 
is none at all. From this it results, first, that the loser of a note 
with a forged indorsement, may recover it from any hands ; and, 
secondly, tliat a maker, acceptor, or other promisor who has 
already paid such a bill, is liable again for the amount to its 
proper Owner, (w/) 

Tliis latter liability is sometimes enforced, though there be con- 
siderable delay by the loser in notifying the promisor of the acci- 
dent, («) though, as we have said before, the loser ought most 
obviously to give immediate notice to all parties liable, that they 
may not suffer detriment, and that the forger, in case of forgery, 
may be the more easily apprehended. (o) 

(m) Canal Bank v. Bank of Albany, 1 Hill, 287; Goddaid v. Merchants Bank, 2 
Sandf. 247. 

(/() Johnson v. Windle, 3 Binp;. N. C. 225. In this case, the delav was six weeks, 
and in the mean time the defendant had paid the bill to an indorsee under a forjjery. 
Plaintiff recovered But see the cases upon the effect of delay in crivinpf such notico, 
eommented on, and some of them disapproved, (especially Cocks w Masternian, 9 B. 
& C 902,) in Canal Bank ;;. Bank of Albany, I Hill. 287. 

(o) Ante, p. 255. 


Bankers must always pay tlieir acceptance on a forged draft, 
because they are bound to know the handwriting of their cus- 
tomers, and hence must bear the loss, when the signature of the 
drawer is forged and they have accepted. (^j)) When both par- 
ties are innocent, and the loss must fall upon one, it should 
be upon the one who, in law, most essentially facilitated the 
fraud. (17) 

Paying to a forged order is held to raise a sort of presumption 
of negligence on the part of the banker. Under this rule con- 
cerning the party aiding the fraud, it is held that the drawer's 
negligence, by assisting the forgery, may shift to himself the ac- 
ceptor's liability. (?■) And other circumstances may have the 
same effect. 

But^as an offset to the acceptor's double liability, in case of 
paying a forged draft, he may always show that the note or bill 
was tortiously indorsed, and may demand proof of its genuine- 
ness before paying the bill. And if a bank pay a bill to a bona 
fide holder under a forged indorsement, it can recover the 
amount paid from the holder, for it is not required to know the 
signature. (5) 

By the late English statute, 16 and 17 Vict. c. 59, § 19, a 
banker is relieved from much of the responsibility of ascertain- 
ing the genuineness of an indorsement, in bills and notes pay- 
able to order on demand. 

The loser of a note or bill may have his action for its amount 
against the parties to the paper. It is the general rule that 
when a drawee, maker, or other party liable on a bill or note, is 
sued thereon, he may insist on the production of the instru- 
ment ; (/) and its absence, unaccounted for, will fiinii^li ai? 

(p) Leach v. Buchanan, 4 Esp. 226; Forster v. Clements, 2 Camp. 17; I'lice r. 
Neal, 3 Burr. 1.3.5-t; Wilkinson v. Johnson, 3 B. & C. 428 ; Esflailc v. La Nauze, 1 
Younf^c &. C. Exch. 394 ; Hall v. Fuller, 5 B. & C. T.'iO ; U. S. Bank v. Bank of 
Georgia, 10 Wheat. 333, ante. 

(7) Smith 1;. Shcppard, a manuscript case cited in Chitty, Bills, 9th cfl. 26L 

(r) Yonii^r V. Grote, 4 Bine. 2.53; Morrison v. Buchanan, 6 Car. & P. 18. 

(s) Ante, chapter on Transfer by Indorsement. 

(/) An acceptor who has paid the amount of his bill to the holder, on the refusal of 
jhc latter vo f,nve it up, will be allowed to recover his money, though it be alleged that 
ihe note has been lost. Alexander v. Strong, 9 M. & W. 7.33. " The reasons why 
presentment should be made to the drawee are, first, that he may judge of the genu- 
ineness of the bill ; secondly, of the right of the holder to receive the contents ; and, 
thirdly, that he may obtain immediate possession of the bill upon paying the amount. 


adequate defence to the suit.(?^) For the defendant is entitled to 
the note on payment tliereof, as his voucher of discharge, as 
he only covenanted to pay the value of the note on its present- 
ment. (»;) If an action be brought for the price of promissory 
notes which were sold to the defendant, and afterwards lost, their 
production is not required of either party, but the existence and 
sale of them may be proved by parol evidence. (z^) The general 
rule that an action on a note cannot be sustained without profert 
of the note, prevents owners of negotiable paper, wliere the par- 

.... And the acceptor, 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 ilie drawer." 
Musson V. Lake, 4 How. 262. See also Freeman v. Boynton, 7 Mass. 483 ; Wood- 
bridge V. Brigham, 13 id. .556 

(;/) Pooler. Smith, Holt, N. P. 144; Crowe r. Clay, 9 Exch. 604 ; Hansard ». Robin- 
son, 7 B. & C. 90, 9 Dow. & R. 860 ; Shearm v. Burnard, 10 A. & E. 593 ; Atkins v. Owen, 
2 id. 35; Davis v. Dodd, 4 Taunt. 602; Burns v. Tallon, Armst. M. & Ogle, 299; 
Fr^'cr V. Brown, Ryan & M. 14.5 ; Angel r. Felton, 8 Jolms. 149 ; Morgan v. Reint- 
zel, 7 Cranch, 273; John v. John, Wright, 584 ; Sehree v. Dorr, 9 Wheat. 558 ; Bow- 
man V. Smith, 1 Strob. 246 ; Brandt v Foster, 5 Iowa, 287. Poole y. Smith was an 
action by the indorsee of a bill, indorsed in blank, against the acceptor. The bill had 
been drawn six years, was lost after action brought and notice of trial to the defendant, 
and the Statute of Limitation could be pleaded to any future action upon it. Yet the 
rigorous rule requiring production of the bill was maintained, and the plaintiff non- 
suited. But this was an undefended cause, and a similar one would probably be de- 
cided otherwise in this country. In Brandt v. Foster, it was held, that, in an action on a 
promissory note, no final judgment can be rendered for the plaintiff, if the note is not pro- 
duced in court, nor its absence accounted for So, upon the general proposition that, 
when the contents of an instrument are sought after, it must be produced, or its absence 
excused, sec Phillips on Evid., Cowen & Hill's note 860 to p. 452. In Sebree v. Dorr, 
9 Wheat. 558, secondary evidence was not admitted upon a promissory note, when the 
original was within the control or custody of the party. But the English practice does 
not require production of the bill when the plea in defence is on a different issue. Lane 
t;. MuUins, 2 Q. B. 254 ; Chaplin v. Levy, 9 Exch. 531 ; Davis i^. Barker, 4 Dowl. & L. 
468. See further. Vain v. Whittington, Car. & M. 484; Hunt v. Alewyn, 3 Car. & 
P. 284. But production may be necessary to the recovery of interest. Hutton v. Ward, 
15 Q. B. 26. Sec injfra, p. 310, note v. 

(v) Hansard v. Robinson, 7 B. & C. 90 ; Wilder v. Seelye, 8 Barb. 408. In Bur- 
ridge r. Geauga Bank, Wright, 688, the rule adopted was, that a party cannot recover 
the amount of negotiable paper without producing or identifying it, so that the maker 
may know if he has already paid it, or protect hitnself against future payments. 

(«-•) The production of the note " could only be held necessary by not attending to the 
distinction between proving the existence and the contents of a note, and the sale of a note. 
Of the former, the note is the better evidence ; but of the latter, the note furnishes no 
evidence." Lamb v. Moberly, 3 T. B. Mon. 179. And wherever the notes or bills are 
collateral to the suit, a witness may testify to their existence, although they are not 
produced, nor their absence accounted for. Snodgrass v. Branch Bank at Decatur, 
25 Ala. 161. 


ties liable are in doubt concerning the execution, or amount, or 
some other particulars of the bills, from having any inducement 
to destroy them, in hope of recovering more advantageously 
under secondary evidence of their contents. (.r) 

An acknowledgment of the debt, or even a promise of pay- 
ment, will not dispense with profert of the note, nor release the 
plaintiff from the necessity of accounting for its absence ; (y) 
because the payor may not only ask to see the note in possession 
of the party claiming payment, as evidence of his ownership, 
but may also demand possession of the note on his payment, as 
his best security against further demand. (2) Indeed, an express 
promise to pay the contents of a lost note, if given without new 
consideration, is void. (a) 

Originally, at common law, no action could be maintained on 
a lost specialty, because a profert thereof was strictly necessary ; 
whereas, in actions on simple contracts it was not so. (6) Courts 
of equity, however, admitted actions without profert on special- 
ties, and for a long time courts of law have also sustained them, 
upon sufficient explanation of the want of profert. (c) 

Accordingly, if an instrument in suit can be shown to have 
been lost, stolen, or destroyed, or if any other proper reason can 
be suggested for its absence, a remedy thereon exists. (d!) But 

(ar) " To permit a party intentionally to destroy his bond or note, or other security, 
and then come into court in any form of action and recover the debt or demand, of 
which the destroyed instrument was the best and proper evidence, would open a door 
to frauds without number. There may be memorandums, indorsements, attesting wit- 
nesses, or matters apparent on the face of the instrument, very important to the rights 
of the other party ; and to get rid of which may be the motive for carelessness or de- 
struction." HoruLhwer, C. J. in Vanauken ». Ilornbeck, 2 Green, N. J. 178. 

(y) Powell V. Roach, 6 Ksp. 76 ; Vanauken v. Hombeck, 2 Green, N. J. 178. See 
Hansard v. Robinson, 7 B. & C. 90. 

(z) Chambers v. Hunt, 2 N. J. 552. 

(a) Davis v. Dodd, 4 Taunt. 602, Wils. Exch. 110 ; Vanauken v. Hornbeck, 2 Green, 
N. J. 178. An averment that the defendant was indebted on a bill of exchange, and 
that the plaintiff, having lost the bill, had, at his request, given him a bond acknowledg- 
ing payment., and conditioned to indemnify him against the bill, states a good consid- 
eration for a promise by the defendant to pay the contents of the bill. Williamson 
V. Clements, 1 Taunt. 523. 

(b) Bank of U. R. V. Sill, 5 Conn. 106. 

(c) Read v. Brookman, .3 T. R. 151 ; Toulmin v. Price, 5 Ves. .Jr. 2.'?5 ; Ex parte 
Greenway, 6 id. 812; Walmsley r. Child, 1 Ves. Sr. .341, and notes; Whitfield ». 
Fauesset, id. .387, Glynn v. Bank of England, 2 id. 38; Hinsdale v. Miles, 5 Conn. 
331 ; 1 Fonbl. Eq. 15, note. 

id) " If ttie instrument declared on — whether it be a bill, a bond, or a deed — be 


concerning the form of this remedy, whether it shall be at law 
or in equity, there has been much conflict of authority. And 
upon this question distinctions are drawn between negotiable 
and non-negotiable notes, between notes destroyed and notes 
merely lost or mislaid, and the like, which distinctions we must 
proceed to consider. 

If tlie action be upon a note negotiable by mere delivery, 
which is lost or stolen before maturity, the unquestionable 
riglits of any bona fide assignee of the finder or tliief, will 
affect the question of remedy. For if the defendants in a suit 
by the loser should be ordered to pay the note, they would obvi- 
ously be liable to pay the same note twice, since the note or 
bill may ho. found, and may have been purchased in good faith 
before maturity, and the promisor cannot escape payment on the 
demand of such a purchaser. This would work a manifest in- 
justice, especially as tlie only negligence imputable to the parties 
is that of the payee in losing the note.(e) 

The just decision of tlie question, therefore, must be, that the 
defendant sliall pay the money to the plaintiff, to whom it right- 
fully belongs ; and then the plaintiff shall indemnify him by 
adequate security against any liability to a future applicant. 

Then, if a holder of the note should appear, who was entitled 
to recover it, the loss would fall ultimately upon him who lost 
the note ; and the reasonableness and justice of this are apparent, 
not only where he lost it by his own fault, but even where he 
was fully innocent : for the loss must fall somewhere, and as 
others were at least equally innocent, he whose loss of the note 
caused the mischief should be the one to suffer from it. 

This conclusion is thought to apply with especial force where 
the defendant is not the maker of the note or acceptor of the 
bill, but its indorser or drawer. {/) 

lost, the loss beinjj duly proved and so the absence of the instrnment properly ac- 
counted for, secondary evidence may be given of its contents." Jervis, C. J. in Charn- 
ley V. Grundy, 14 C. B. 608, 614. See Selden v. Pringle, 17 Barb. 4.58 ; Hinsdale » 
Miles, 5 Conn. 331 ; Fremont's case, 4 Court of Claims, 2.52. 

(e) The owner of a note is bound, of course, to take care not to lose it. And though 
his good faith be undoubted, the question will arise at the trial, whose fault is it that 
the note is not in the plaintiff's possession. See Beawes, Bills, 178 ; Grant v. Vaughan, 
3 Burr. 1516, 1526. 

(/) Wilder v. Seelye, 8 Barb. 408, stijn-a, p. 286, note v; Story on Bills, §449; 
Story on Notes, § 448. 


But courts of law have been thought to possess, in general, no 
machinery by which they can ascertain the adequacy of the in- 
demnity, or indeed impose any terms of this kind upon a plain- 
tiff; and courts of equity can do this perfectly well. In Eng- 
land, therefore, courts of law would formerly give no relief 
whatever in any such action, but would turn the parties over to 
equity. We have already mentioned an additional reason why 
coTirts of law refuse this relief, namely, that the payor of a note 
is entitled to possession of the note, as his only perfect protection 
against the payee. (/a) But we think this reason to be somewhat 
technical, and not altogether satisfactory ; for a full receipt 
may be kept and is as good a defence as the note itself against 
the payee ; and equity can no more compel delivery of a lost note 
than law can ; and a judgment on the note, at law, satisfied on 
record, is as effectual a bar to any further claim as a decree in 

The difficulty which most courts of law have found in adjust- 
ing indemnities is a more substantial ground for the resort to 
equity, and is often of great force. 

However, this reason, like the other, can only apply to notes 
and bills which are transferable by mere delivery, and are liable 
to such transfer. 

There seems, therefore, to be no reason why a note which is 
not negotiable, or which, if negotiable, has had its negotiability 
restrained by an indorsement in full, or a special indorsement, 
should not be the subject of a suit at law.(i) 

It is true, that it does not stand in precisely the same position 
as a deed of lands, or a bond or will, or other written instru- 
ment. For if their contents are proved by secondary evidence, 
no objection to substituting these contents for the instrument itself 
could arise out of the fact that the instrument by a wrongful 
transfer may put a transferee to loss and difficulty, from its pur- 
porting to admit of such transfer. It is true that a negotiable 

(h) Supra, p. 286, note v. 

(t) Bills or notes, not ori<^inally negotiable in England, as well as in tliis country, 
can be sued at common law. Wain v. Bailey, 10 A. & E. 61 G, 2 Per. & I). ."JOT , 
Leif^h's N. P. 571; Clay ». Crowe, 8 Exch. 29.5, 18 Eng. L. & Eq. .514; Price r. 
Price, 16 M. & W. 232, 24.3; Charnley v. Grundy, 14 C. B. 608, 25 Enf,'. L. & Eq 
318; Koltr. Watson, 4 Bing. 273, 12 J. B. Moore, 510; Mossop ». Eadon, 16 Vcs. 
Jr. 430. 

Vol. II.— T 25 


note, liowRver indorsed, admits of transfer by further indorse- 
ments, and this indorsement may be forged. But as the trans- 
feree by a forgery could acquire no legal rights, (7) the possibility 
does not seem to be a sufficient reason for denying all right and 
remedy at law to the owner, when the original is lost. 

In all such cases, the note being in express terms payable only 
to the plaintiff or his order, a defendant runs no risk of future 
demand. For such demand must be brought in the payee's 
name, and to that the judgment in the present suit could be 
pleaded. Accordingly, there being no risk run, no indemnity 
will be required, and the action at law is maintainable. (A;) 

The legal action on such a note is permitted for a double 
reason, if the note be destroyed also.(/) But proof of loss is suf- 
ficient to support the action at law, on non-negotiable notes, 
without proof of destruction. And in such case the plaintiff 
may recover on a count for money had and received. (w) In 
some courts in this country, lost notes will not be presumed to 
be negotiable, and their negotiability must be affirmatively proved ; 
and if their existence, terms, and loss are well established, 
and they are not proved to be negotiable, nothing more is re- 
quired to sustain the remedy at law.(») 

{j) Ante, Vol. I, p 277. 

(k) Pintard v. Tackington, 10 Johns. 104; Cliamberlain v. Gorham, 20 id. 144; 
Rowley v. Ball, 3 Cowen, 30.3 ; McNair v. Gilbert, 3 Wend. 344 ; Hongh v. Barton, 
20 Vt 45.') ; Whitesides c. Wallace, 2 Speers, 193 ; Smith v. Walker, 1 Smcdes & M. 
Ch. 432 ; Cleveland f. Worrell, 13 Ind. 54.5; Anderson Bridge Co. ». Applegate, id. 
339; Blades. Noland, 12 Wend. 173; Lazell o. Lazell, 12 Vt. 443; Moore v. Fall, 
42 Maine, 450 ; Price v. Dunlap, 5 Calif. 483. 

Mr. Justice Story sanctions this rule allowing actions at law on non-negotiable notes, 
" although," he adds, "it is not without some inconvenience." Story on Notes, ^ 451. 
The same author says, that, since "the proofs of the payment may disappear by lapse 
of time, or by accident, or by the death of witnesses, .... there would be no hardship 
in a rule of law which should require, even when the note is not negotiable, that it 
should either be given up, or a formal written receipt given of its being paid, or security 
given as an indemnity against a second payment to be required from the maker. Such, 
however, is not understood to be the positive requirement of our law." Story on Notes, 
§ 106. See infra, p. 309, note t. 

(?) Moore v. Fall, 42 Maine, 450. 

(m) Hough ;;. Barton, 20 Vt. 455; McNair v. Gilbert, 3 Wend. 344 ; Edgell r Stan- 
ford, 6 Vt. 551. 

{n) Pintard v. Tackington, 10 Johns. 104 ; McNair v. Gilbert, 3 Wend. 344; Blade 
r. Noland, 12 Wend. 173; Depew r. Wheelan, 6 Blackf. 485 ; Dean r. Speakman, 7 
id. 317 ; Chaudron v. Hunt, 3 Stew. 31 ; Lazell v. Laiell, 12 Vt. 443 ; H"ugh t. Bar- 
ton, 20 id. 455. 


Indeed, even tliough the lost note were indorsed in blank, 
this fact alone does not prove the note to be negotiable, for 
notes not strictly negotiable are often indorsed that way.(o) 
But it would seem as if notes indorsed in blank ought to be 
taken prima facie to be considered negotiable, so as, if not 
rebutted, to bar tlie remedy at law, in courts where their ne- 
gotiability would create this bar. 

The reason which pei'mits notes never negotiable to be sued 
under the expeditious forms of common law, in preference to 
the more tedious and expensive ones of chancery, applies equal- 
ly well to all notes wliich, being negotiable, have not been ne- 
gotiated, or wliich, being negotiated, have been specially indorsed 
to a party to whom alone they are payable. (77) 

But this extension of the principle is only allowed in tliis 
country, though formerly it was so held in England. (^) In 
England the courts have confined the legal remedy to notes 
not originally negotiable, (r) Hence, if a plaintiff who sues on 

(o) Hough V. Barton, 20 Vt. 4.'j.5. 

(/)) Piniard •;. Tackingtoii, 10 Johns. 104 ; Rowley v. Ball, 3 Cowen, .303 ; Whitosidcs 
». Wallace, 2 Specrs, 193; Lazell v. Lazell, 12 Vt. 443 ; Hough v. Barton, 20 id. 455 ; 
Aborn v. Bosworth, 1 R. I. 401 ; Chaudion v. Hunt, 3 Stew. 31 ; Branch Bank at 
Mobile V. Tillman, 12 Ala. 214; Depcw e. Wheelan, 6 Blackf. 485; Bean v. Keen, 7 
id. 152 ; Dean v. Speakman, id. 317 ; Teniplin v. lii-ahn, 3 Ind. 373 ; Moore v. Fall, 
42 Maine, 450 ; Torrey v. Foss, 40 id. 74 ; Patton i'. State Bank, 2 Nott &. MeC. 404 ; 
White V. Brown, 19 Conn. 577; Fitch v. Bogue, id. 285; Latnson v. Pfafi', 1 Handy, 

(y) Roll V. Watson, 4 Bing. 273, 12 J. B. Moore, 510; Long v. Bailie, 2 Camp. 
214, note; Flight r. Brown, 2 Tyrw. 312. In Rolt v. Watson, the defendant had ac- 
cepted a bill payaijle at three monihs to his order, for the amount of goods he had 
purchased. The seller lost the bill, not having indorsed it, and became i)ankrupt. 
Best, C. J. said : " The question for us, therefore, is, whether the l)ill which the defend- 
ant in this cause has accepted be an instrument which can ever rise in judgment against 
him. Now the jury have found expressly that the bill was unindorsed, and, though 
payable three months after date, it has not been heard of from 1825 to 1827. There is 
no decision in which the party has been held to be responsible in respect of an out- 
standing bill unindorsed. In all the cases in which a defendant has been iiolden to be 
discharged, in respect of a supposed liability on a bill, the bill has been in such a state 
as to be likely to be used against him." Park-,\Durrou(/li, and Gasdee, JJ. concurred, 
and the action was sustained. This case has been overruled in England, but not in 
America. We know of no sufficient reason why an action at law should not be al- 
lowed in all cases where the defendant will not be liable to any future holder into 
whose liands the note may come. 

,V) Ramu/, d. Crowe, 1 Exch. 167 ; Crowe v. Clay, 9 Exch. 604; Price v. Price, 16 
M. & W. 232, 243. The plaintiff in Ramuz v. Crowe was the drawer of a bill of ex- 
change, payable to his own order, and accepted by the defendant. The latter pleaded 


a \oii negotiable bill should prove that it had never been in- 
dorsed, and that it was not transferable except by indorsement, 
nor capable of being sued against the defendant by any other 
person than the plaintiff, the English court at law would, for- 
merly at least, if not at present, give judgment for the defendant. 
On similar grounds, if an action is brought upon a note 
transferable by mere delivery, and the plaintiff proves that he 
has lost it in some way, and then he traces it into the pos- 
session of the defendant, there seems to be no reason why he 
may not now — and even without notifying the defendant to 
produce \t{s) — substitute a copy, on proof of its contents, for 
the note itself, and sue it at law.(^) For it can never be ue- 

that the plaintiff was not the holder or possessor of the bill, and that it was lost. The 
plaintiif replied with the loss ; that the bill had never been indorsed by him, nor was 
it transferable by delivery, or capable of being put in suit against the defendant by 
any other person than the plaintiff; that until the loss he was always the holder, and 
was now alone entitled to be the holder thereof, and to receive its amount ; and that 
the defendant, before the suit, had due notice of the premises. This replication, on 
deniuiTer, was held to be insufficient, and the plaintiff did not recover. The strict rule 
requiring production of an unnegotiated bill sued on was reaflBrmed, on the obiter rea- 
soning of Hansard v. Kobinson, 7 B. & C. 90, and Rolt v. Watson, 4 Bing. 273, was 
overruled. In Clay v. Crowe, 8 Exch. 295, the more liberal rule was adopted ; but this 
decision was reversed in Crowe v. Clay, 9 Exch. 604 (1854), and Ramuz v. Crowe 
reaffirmed. See also Powell v. Roach, 6 Esp. 76. The Scotch law on this point is 
more allied to the American, and to the overniled cases of Long v. Bailie, 2 Camp. 
214, note, and Rolt v. Watson. Forbes, Bills, 28 ; Thomson, Bills, 320. 

{s) In general, where a note or bill is traced to the wrongful possession of the de- 
fendant, and the owner may bring trover for its recovery, no notice to produce the note 
seems to be required, but secondary evidence may be introduced of its contents at 
once. Hammond v. Plank, Peake's Add. Cas. 90 ; How v. Hall, 14 East, 274 ; Bucher 
V. Jarratt, 3 B. & P. 143 ; Read v. Gamble, 10 A. & E. 597, note a, 5 Nev. & M. 433 ; 
Burton v. Payne, 2 Car & P. 520; U. S. v. Britton, 2 Mason, 464 ; John v. John, 
Wright, 584 ; Gray v. Kernahan, 4 Const. R. 65 ; M'Clcan v. Hertzog, 6 S. 
& R. 154; Garlock v. Geortner, 7 Wend. 198; Hammond v. Hopping, 13 id. 505; 
People V. Holbrook, 13 Johns. 90; Robinson v. Curry, 6 Ala. 842. See also the cases 
in note m, infra. The ground is. that the form of action itself gives the defendant 
notice that the papers must be produced, in order to falsify the plaintifTs claim. Hence 
in actions where the pleadings do not give such substantive notice, the general rule 
requiring notice would seem to apply. Paterson v. Hardacre, 4 Taunt. 114 ; M'Clean 
V Hertzog, supra ; Rhodes v. Moseley, 6 Fla. 12. On notice to produce, as affecting 
secondary evidence of a missing bill, see Goodered v. Armour, 3 Q. B. 956, 3 Gale & 
D. 206 ; Marfield v. Davidson, 8 Gill & J. 209. 

{<) A note in defendant's possession cannot be sued in equity, because tLcre is a 
perfect remedy at law. And if the note is alleged in a bill in equity to be " lost or 
mislaid," and turns out to be in the defendant's possession, who claims it as a gift 
or otherwise, the allegation, in England, is bad in form Cooke v. Darwin, i8 Bear. 
60. See also Anderson Bridge Co. v. Applegate, 13 Ind. 339. 


gotiated as against the defendant, but by his own act or con- 
currence. So, wherever an acceptor or other party has wrong- 
fully got possession of a bill of exchange or note, an action 
may be had against him, as such party to the paper, at common 

So, too, even in an action on a negotiable note, if the plain- 
tiff can prove that the note is destroyed, the same conclusion 
as in the three preceding exceptions would seem to be irre- 
sistible. For that which has no existence certainly camiot be 
negotiated. As a question of fact, it may be true that it will 
generally be difficult to prove with certainty the absolute destruc- 
tion of the note ; but that proof is sufficient which is strong 
enough to satisfy a jury. 

If it be shown that the plaintiff destroyed the note himself, 
either by carelessness, mistake, or accident, the case will become 
liable to exti'eme suspicion, and his honesty would need to be 
established, if possible, by tlie clearest proof. If the plaintiff 
have deliberately or voluntarily destroyed the note, it is said that 
secondary evidence is inadmissible, and he cannot recover. (6*) 
But we should say he ought to be permitted to recover in sucli 
case, if he is able to prove clearly that it was only through 
mistake or ignorance that he destroyed the paper, (t^) 

In America, a recovery is allowed at common law wherever 
the note is proved to be destroyed. (x) And so it was formerly 

(tt) Bull. N. P. 33 b, notes ; Smith v. M'Clure, 5 East, 476 ; Miller ». Race, 1 Burr. 
452 ; Knight v. Lef:h, 4 Biiig. 589 ; Blcaden v. Charles, 7 id. 246 ; Fancourt i'. Bull, 1 
Bing. N. C. 681; Crunch v. White, 1 id. 414; Paterson v. Hardacre, 4 Taunt. 114; 
Haynes v. Foster, 4 Tyrw 65; Goggerley v. Cuthbc-rt, 5 Bos. & P. 170; Atkins v. 
Wheeler, id. 205 ; De la Chaumette v. Bank of England, 9 B. & C. 208, 2 B. & 
Ad. 385; Symonds v. Atkin.son, I II. & N. 146, 37 Eng. L. &. Eq. 585; Gray v. 
Kernahan, 4 Const. R. 65; Garlock v. Geortncr, 7 Wend. 198; Murray v. Jiurling, 10 
Johns. 172; Buck v. Kent, 3 Vt. 99; Decker v. Mathews, 2 Kern. 313; Lamb (•. Mo- 
berly, 3 T. B. Mon. 179. 

(») Angel V. Feltoii, 8 Johns. 149; Vanaukeii v. Ilornbeck, 2 Green, N. J. 178; 
Fisher v. Mershon, 3 Bibb, 527. 

(w) Clarke v. Quince, 3 Dowl. 26, where tiic defendant tore his own note signed by 
him, a copy sworn to was admitted to be good evidence to prove it. Anonymous, 1 
Ld. Ruym. 731. See otlier cases cited infra, p. 314, note o. 

(x) Hinsdale v. Bank of Orange, 6 Wend. 378 ; Blade v. Noland, 12 id. 173 ; Row- 
ley V. Ball, 3 Cowen, 303 ; Piiitard i;. Tackington, 10 Johns. 104 ; Chaudron v. Hunt, 
3 Stew. 31 ; McNair v. Gilbert, 3 Wend. 344; Whitesides v. Wallace, 2 Speers, 193; 
Angel V. Felton, 8 Johns. 149; Bank of U. S. v. Sill, 5 Conn. 106; Hough v. Barton, 
20 Vt 455 i Walton );. Adams, 4 Calif. 37 ; Price r. Dunlap, 5 id. 483 ; Swift 


in England. (^) More recent cases in that country sent the 
plaintitf to equity, even thougli he could satisfy a jury of the 
destruction of his bill, unless it be originally non-negotiable. 

The ground on which this rule rests seems to be threefold. 
First, tliat he who pays a bill is entitled to receive it on payment, 
as his voucher of discharge. Secondly, that the proof of destruc- 
tion cannot be absolute, and the bill may subsequently be found 

V. Stevens, 8 Conn 431 ; Viles v. Mouhon, 11 Vt. 470; Moore y. Fall, 42 Maine, 450; 
Ross V. Bank of Burlington, 1 Aikens, 43 ; Wright v. Jacobs, id. 304 ; Patton v. State 
Bank, 2 Nott & McC. 464 ; Aborn v. Boswortli, 1 R. I. 401 ; Dean v. Speakman, 
7 Blackf. 317; Branch Bank at Mobile v. Tillman, 12 Ala. 214; Anderson Bridge 
Co. i; Applegate, 13 Ind. 339; Littler v. Franklin, 9 id. 216; Bradley ». Long, 2 
Strob. 160; Palmer v. Logan, 3 Scam. 56; Rogers v. Miller, 4 id. 333; Wade 
V. Wade, 12 111. 89 ; l)cs Arts v. Lcggett, 5 Duer, 156, 16 N. Y 582 ; Thayer v. King, 
15 Ohio, 242. In Fisher v. Mcrshon, 3 Bibb, 527, a bill in equity lay to recover the 
amount of a note destroyed without fault of tlie holder. On destroyed bank-notes the 
bank must pay the amount, since the destruction does not alter its obligation. Wade 
V. N. O. Canal, &c. Co., 8 Rob. La. 140 ; Dcs Arts v. Lcggett, supra; Bank of Louis- 
ville );. Summers, 14 B. Mon. 306 The sworn copy of a destroyed protest may be 
read in evidence. McGarr c. Lloyd, 3 Barr, 474 The destruction or loss of a " single 
bill " does not change its nature from a specialty to a parol contract, Myers v. Scaly, 
5 Rich. Law, 473. 

((/) Pierson v. Hutchinson, 2 Camp 211 ; Mayor v. Johnson, 3 id 324; Champioa 
V. Terry, 3 Brod. & B. 295, 7 J. B. Moore, 130; Dangerfield v. Wilby, 4 Esp. 159. 
So see a somewhat analogous case, Pearce v. Creswick, 2 Hare, 286. In Hansard v 
lioliinson, 7 B. & C. 90, in 1827, Lord Tenterdtn endeavored to establish the rule that 
proof of the destruction of a bill was not sufficient ground for the remedy at law. la 
that case, there was no allegation or evidence of destruction, and hence a part of the 
opinion may be considered obiler. It has been adopted, however, quite extensively in 
some quarters. Mr. Justice Story, quoting the passage just cited in his Prom. Notes, 
§ 107, adds : " These considerations, although put in a mere interrogatory form, pre- 
sent the full stress of the argument agaiast any right of the holder to require payment, 
or any duty on the part of the maker to make payment of such a negotiable note, al- 
leged to be lost or destroyed, which may pass title by mere delivery." Ibid. ^ 108. 
Afterwards, repeating the point, he says : " A distinction has sometimes been taken 
between the case of a note's being lost, and the case of its being destroyed, and non- 
existent in reruin natura. In the latter case it has been thought that an action may be 
maintainable at law, since the destruction of the note takes away the possibility of its 
getting into the possession of any subsequent bona Jide holder. But theie is this re 
maiuing difficulty, that evidence which is merely presumptive may be offered of the 
destruction of the note, and then it may expose tlie maker to all the inconvenie'nces of 
a subsequent second payment, if the note should subsequently reappear. And there 
is no more hardship in sending the holder into equity for redress in the case of the de- 
struction of the note, than there is in the case of the loss of the note." Tbi(l. ^ 449. 
He adds, that " the reasoning of Lord Teuterden in Hansard i;. Robi.ison Applies 
equally as strongly to cases of the destruction of a note, as it does to tlie loss of a note." 
Ibid, note 1- But it seems to be firmly established, both in England vmd America, 
that a destroyed note imiv be sued at hiw. See notes ic and u. 


and presented, though supposed to be destroyed. Thirdly, that 
the paper, if negotiable, may have been negotiated before its 
destruction, so that when destroyed it was the property of some 
one other than the plaintiff. But the old rule, which has always 
been the prevailing, if not the universal, law in America, that 
destroyed notes are suable at common law, is re-established. 
And it has been doubted whether equity has even a concurrent 
jurisdiction over such notes and bills. (a) In Scotland, destroyed 
notes can be sued without tender of indemnity. (6) 

A fifth exception was formerly taken in England with respect 
to a bill indorsed in blank, and lost after it has become due. As 
the finder could not in that case give an effectual right of action 
even to an indorsee for value, and without notice, it would 
seem that the payor could not insist on indemnit}' against a future 
claim, and that accordingly the owner would have his remedy 
at law.(c) But this distinction was set aside, on tlie ground that 
the indorsee even of a note overdue would make out a prima 
facie case for recovery by proving the acceptance and indorse- 
ment, and that it would be hard to expose the acceptor, after 
payment of the bill without any indemnity, to the hazard of his 
inability to show by legal evidence that the bill had been lost 
after it became due.(^) 

Accordingly, in England, whether the negotiable note be lost 
before or after it falls due, or even after presentment and 
demand, or after an express promise of the maker to pay, it is 
not suable at law. But some American courts adopt the distinc- 
tion putthig the case on the same ground with non-negotial)le 
and destroyed notes, namely, that the maker is not liable again 
on the same note.(e) 

(a) Woodford v. Whiteley, Moody & M. 517 (1830) ; Blackie v Pidding, 6 C. B. 
196; Wrifjht r. Maidstone, 1 Kay & J. 701. In this last case, the liill of excliaiige 
sued on was destroyed, and the argument was on a demurrer to the bill in equity, on 
the ground that there was a complete and adequate remedy at law. The demurrer was 
sustained. The Vice-ChanccUor took occasion to pronounce the decision in Hansard 
V. Roliinson, 7 B. & C. 90, a mere dictum, so far as the case of a destroyed bill was 
alluded to, and a dictum opposed to law. 

(6) Thomson, Bills, 320. 

{c) Glover v. Thompson, l{yan & M. 40'! ; Long v. Bailie, 2 Camp. 214, note. 

{d) Hansard v. Robinson, 7 B. & C. 90 ; Champion v. Terry, 7 J. B. Moore, 130, 
3 Brod & B. 29.5; Woodford v. Wliiteley, Moody & M. 517 ; Crowe v. Clay, 9 Exeh. 
604, overruling Clay v. Crowe, 8 Exeh. 295. See Price v. Price, 16 M. & W. 2.32. 

(e) Thayer v. King, 15 Ohio, 242 ; Smith v. Walker, 1 Smedcs & M. Ch. 432, 435 ; 
Chaudron v. Hunt, 3 Stew. 31. But see llowicy v. Ball, 3 Cowen, 303, 312. 


It has also been stated, that, if a negotiable n )te put into cir- 
culation is lost before coming due, it must be shown that it was 
not indorsed ; but this is not necessary in a note lost after falling 
due, since the equities would bar all future attempts to recover 
on it.(/) Finally, where the debt will be barred by the Statute 
of Limitations from any future claim, an action on the lost note 
may be had at law.(o) 

Concerning the appropriate remedy on a note or bill nego- 
tiable by delivery, which is mislaid or lost, and not proved to be 
destroyed, there has been much conflict of opinion. But iu 
England it is clearly settled — and, indeed, thisre were never 
any authoritative cases at law to the contrary (//.) — that a lost 
bill or note payable to bearer cannot be sued at law.(t) And 
this is now equally true, whether the note be payable to bearer 
or order, and even though the loss occurred after it fell due, 

(/) Sloo V. Roberts, 7 Ind. 128. 

(g) Torrey v. Foss, 40 Maine, 74 ; Moore v. Fall, 42 id. 450. The action at Lhw is 
permitted in Maine whenever the defendant " is not exposed to danger from the claim 
of an actual holder, other than the plaintiff." Ibid. 

(h) The cases relied on by counsel in Hansard v. Robinson, 7 B. & C. 90, in oppo- 
sition to the rule, were Hart v. King, 12 Mod. 310; Glover v. Thompson, Ryan & M. 
403 ; Brown v. Messiter, 3 Maule & S. 281. But of these, as it was proved, the first 
does not show that the bill was negotiable ; the second was undefended ; see id. 404, 
note ; and in the third, the rule was made absolute by a single judge. But there was 
no relief formerly at equity on lost notes, on the ground that the loser had a com- 
plete remedy at law. Walmsley v. Child, 1 Ves. Sr. 341 ; Mossop v Eadon, 16 Ves. 
Jr. 430 : Glynn v. Bank of England, 2 Ves. Sr. 38. In this last case, Lord Hard- 
wicke said : " A man is not entitled to bring a bill in equity, in general, for a .satisfac- 
tion upon a note lost For, if lost, he may recover at law thereon. There may be 

circumstances, indeed, in which he may be entitled to come into equity in a case of 
this kind ; but this is, in general, barely on the loss of a note." But this opinion has 
been overruled. See note i. 

((■) Hansard v. Robinson, 7 B & C. 90, 9 Dowl. & R. 860; Pierson v. Hutchinson, 2 
Camp. 211, 6 Esp. 126 ; Powell c. Roach, id. 76 ; Poole t-. Smith, Holt, N.P. 144 ; Dan- 
gerfield v. Wilby, 4 Esp. 159 ; Mayor v. Johnson, 3 Camp. 324 ; Ex parte Greenway, 
6 Ves. Jr. 812 ; Davis i;. Dodd, 4 Taunt. 602, Wils. Exeh. 1 10 ; Champion ;;. Terry, 3 
Brod. & B. 295, 7 J. B. Moore, 130; Wain v. Bailey, 10 A. & E. 616, 2 Per. & D. 507 ; 
Leigh's N. P, 471 ; Clay v Crowe, 8 PZxch. 294 ; Crowe v. Clay, 9 id. 604 ; Ramuz v. 
Crowe, 1 id. 167 ; Price v. Price, 16 M. & W. 232 ; Rolt v. Watson, 12 J. B. Moore, 510, 
4 Bing. 273 ; Long v. Bailie, 2 Camp. 214 ; Woodford v. Whiteley, Moody & M. 517 ; 
Blackie ». Bidding, 6 C B. 196; Wright v. Maidstone, 1 Kay & J. 701 ; Macartney 
V. Graham, 2 Sim. 285. In Scotland, the amount need not be paid, unless the loss be 
established before a judge, and indemnity secured. But a lost bill is recoverable "jn 
such terms in Scotland, and the stricter English rule is not followed. Glen, Bills. 171 ; 
ForbeS: 156, 


and even though indemnity be offered at law. The ground is, 
that the party defendant can rightfully insist upon profert of 
the bill or note in suit ; and that the party suing should be 
the actual holder ; and furthermore, that "while in equity the 
plaintiff could be required to furnish suitable indemnity to the 
defendant against being called upon to pay the lost note to any 
future bona fide holder for value, — a provision of vital impor- 
tance to conducting the suit, — the common law had no such 
power of compulsion. (y) And equity is everywhere admitted to 
have jurisdiction of lost instruments, even in those States where 
a concurrent power is invested in law. (/J) 

In this country, courts of equity alone, can furnish relief upon 
negotiable notes and bills lost before maturity, in most of the 
States in which law and equity are accurately distinguished, and 
where a court exists having full equity powers. (/) But other 

{j) Ex parte Grcenway, 6 Ves. Jr. 812. The bill of exchange sued on had been 
lost after indorsement. Lord Eldon said : " To enable you to prove in respect of this 

bill, there must be a most extensive indemnity, a complete indemnity, going to 

all the consequences, against the holder, if the bill has not been paid, and that may 

be made by future possible holders if it should have been paid But I never 

could understand by what authority courts of law compelled parties to take the 

(^•) Ex parte Greenway, 6 Ves. Jr. 812 ; Walmsley v. Child, I Ves. Sr. .341 ; G'ynn v. 
Bank of England, 2 id. 38 ; Mossop v. Eadon, 16 Ves. 4.3.3 ; Coekell v. Bridgeman, 4 
Beav. 499; Davis v. Dodd, 4 Taunt. 602, 4 Price, 176, Wils. Exch. 110; Tercese v. 
Geray, Finch, 301 ; West v. Patton, Litt. Sel. Gas. 405 ; Smith v. Walker, 1 Smedes 
& M. Ch. 432 ; Smitherraan v. Kidd, I Ired. Eq. 86 ; Fisher v. Carroll, 6 id. 485, 
1 Jones, 27; Irwin v. Planters' Bank, 1 Humph. 145; Fisher v- Mershon, 3 Bibb, 
527 ; Chewning v. Singleton, 2 Hill, Cii. 371 ; Crawford v. Summers, 3 J.J. Marsh. 
300 ; Stout V. Ashton, 5 T. B. Mon. 251 ; Jackson v. Jackson, 6 Dana, 257 ; Allen v. 
State Bank of N. C, 1 Dev. & B. Eq. 3 ; Dumas v. Powell, 2 id. 122 ; Farmers' Bank 
of Va. V. Reynolds, 4 Rand. 186 ; Bank of Va. v. Ward, 6 Munf. 166 ; Wardlaw v. 
Gray, Dudley, Eq. 85. In Davis v. Dodd it was held, that the indorsee of a lost i)ill of 
exchange may compel payment of the acceptor in equity ; altliough he might have re- 
covered at law. And it is no answer to the suit that the bill of exchange was merely 
an accommodation bill ; that the plaintiff might have applied before ; or that the 
drawer has since become insolvent. And the plaintiff is not bound to institute the suit 
'd equity within any particular period. See also Pearce v. Creswick, 2 Hare, 286. 
Green v. Stone, Walk. Ch. 109 ; Story, Eq. Jur. §§ 82, 83 ; 2 Rob. Prac. 40; Jeremy, 
Ch. Jur. 362. To give the Court of Chancery jurisdiction, it is not necessary that 
the note shall have been lost i)cfore maturity. Green v. Stone, Walk. Ch. 109 ; Chew- 
ning V. Singleton, 2 Hill, Ch. 371. 

(/) Rowley v. Ball, 3 Cowen, 303 ; Kirby v. Sisson, 2 Wend. 550 ; Hin.sdalc n. Bank 
of Orange, 6 id. 378 ; Thayer v. King, 15 Ohio, 242 ; Cotton v. Beasly, 2 Murph. 259; 
Swift V. Stevens, 8 Conn. 431 ; Fitch v. Br)^'ue, 19 id. 285 ; Branch Bank at Mobile t>. 
Tillman, 12 Ala. 214 ; Chaudron '■. Hunt, 3 Stew. 31 ; I'osey v. Decatur Bank, 12 A.'o. 


States give relief at law, and find no difficulty in requiring the 
defendant to tender suitable indemnity in such a suit.(m) 

Undoubtedly in England, and in such States as strictly adhere 
to the English distinctions of remedies, indemnity cannot be 
offered at law. But it may be questioned whether it is advisable 
for those States in this country to refuse the remedy at law on 
lost negotiable notes, in which the exclusive powers of equity are 
not so precisely insisted upon as in England. One of the rea- 
sons for refusing the remedy at law, to wit, the necessity of pro- 
fert, and of the plaintiff's being the actual holder, is, as we liave 
already said, merely technical and unimportant, when a good 
excuse for the want can be furnished. As to tbe second 
reason, the matter of indemnity, although one distinguished 

802; Edwards v. M'Kee, 1 Misso. 123; Smith v. Rockwell, 2 Hill, 482; Abom w. 
Bosworth, 1 11. I. 401 ; and the American cases cited in note k, supra. In North Car- 
olina, it seems that an action at law will be allowed, if the plaintiff can prove a loss 
by evidence of tliird parties. But if he rely on his own oath or affidavit, he must go 
to equity, as the indemnity which equity can give and law cannot is thought to bal- 
ance the insecurity of allowing a plaintiff to prove his own case. Fisher v. Carroll, 
6 Ired. Eq. 485, 1 Jones, 27 ; McRae v. Morrison, 13 Ired. 46 ; Allen v. State Bank, 
1 Dcv. &'B. Eq. 3 ; Dumas v. Powell, 2 id. 122 ; Chaney v. Baldwin, 1 Jones, 78 ; 
Grant v. Reid, id. 512. 

(m) Mencndcz v. Syndics of Larionda, 3 Mart. La 236 ; Nagel v. Mignot, 7 id. 657 ; 
Id., 8 id. 488 ; Latapie v. Gravier, id 316 ; Brent r. Ervin, 15 id. 303 ; Lewis v. Petay- 
vin, 16 id. 4 ; Wade v. N. O. Canal, &c. Co., 8 Rob. La. 140 ; Northern Bank of Ky. 
V. Leverich, id. 207 ; Miller v. Webb, 8 La 516 ; Lewis ?>. Splane, 2 La. Ann. 754; 
Peace v. Head, 12 id 582 ; Bean v. Keen, 7 Blackf 152 ; Dormady v. State Bank of 
111., 2 Scam 236 ; Welton v. Adams, 4 Calif 37 ; Piice v. Dunlap, 5 id. 483 ; Meeker 
V. Jackson, 3 Yeates, 442 ; Bell v. Young, 1 Grant's Cas. 175 ; Waters v. Bank of 
State of Georgia, &c., R. M. Charlt. 193 ; Robinson v. Bank of Darien, 18 Ga. 65, 
111 ; Bowman v. Smith, 1 Strob. 246; Commercial Bank v. Benedict, 18 B Mon. 
S07 ; Union Bank v. Warren, 4 Sneed, 167 ; Anderson v. Robson, 1 Brev. 263 ; Pea- 
body ». Denton, 2 Gallis 351 ; Freeman v. Boynton, 7 Mass. 483; Jones v. Fales, 5 
id. 101 ; Welsh v. Barrett, 15 id. 380, 384 ; Donelson v. Taylor, 8 Pick. 390 ; Page v. 
Page, 15 id. 368; Fales v. Russell, 16 id. 315 ; Foster ». Mackay, 7 Met- 531 ; Almy 
V. Reed, 10 Cush. 421 ; Willis v. Crcsey, 17 Maine, 9 ; Vanauken v. Hornbeck, 2 Green, 
N. J. 178 ; Bank of U. S. v. Sill, 5 Conn. 106; Hinsdale v. Miles, id. 331 ; Murray v. 
Carret, 3 Call. 373 ; Fulton Bank v. Phoenix Bank, 1 Hall, 562 ; Viles v Moulton, 11 
Vt. 470 ; Reynolds v. French, 8 id. 85 ; Leavitt v. Cowles, 2 McLean, 491 ; Reuner v. 
Bank of Columbia, 9 Wheat. 581 ; Bi.'ibing v. Graham. 14 Penn. State, 14; Page v. 
Page, 15 Pick. 368; Jackson v. Frier, 16 Jolms. 193 ; Chamberlain v Gorham, 20 id. 
144; Church v. Flowers, 2 Root, 144; Hinsdale ». Bank of Orange, 6 Wend. 378; 
Bullet II. Bank of Penn., 2 Wash. C. C 172 ; Martin v. Bank of U. S , 4 id. 2.53. " It 
has been rei)eat6dly held in this court, that the act of 1828, giving the courts of com- 
mon law jurisdiction of lost notes, is merely an affirmance of the common law." Bell 
r. Moore, 9 Ala. 823 ; Chaudron v. Hunt, 3 Stew. 31 ; Porter v. Nash, 1 Ala *5a ; 


authority has said, " "Whether an indemnity be sufficient or in- 
sufficient, is a question of which a court of law cannot judge " ; (») 
and another, " I never could understand by what authority courts 
of law compelled parties to take the indemnity "; (o) we have 
seen that some American courts have found no difficulty in ad- 
justing the indemnity satisfactorily in suits at law.(;?) 

A furtlier consideration, which may have some weight, is, that 
if courts of law refuse the remedy, the owner of a lost note will 
very often get none at all. For some courts of chancery refuse 
to take jurisdiction of civil actions in which the sum recov- 
erable does not exceed a specific amount, — a frequent mini- 
mum standard, where such a rule exists in America, being 
fifty dollars. It is obvious that a great number of lost notes 
are of much smaller value than this sum, and accordingly the 
owner of such a bill, if refused his remedy at law, would get 
n'one at -aW-lq) 

A fourth remark is, that in England and most of those 
States in which the courts supported the exclusive remedy in 

Robinson v. Curry, 6 id. 842; Snodgrass v. Branch Bank, 25 id. 161. To these may 
be added the cases at law of notes lost after beinp; once given in evidence, infra, p. 309, 
note p. But some of these cases, it is thought, may have been decided on the ground 
that " the loss was by the officers of the court, while the document was in the custody 
of the law " 2 Greenl. Ev. § 156, note. 

(n) Lord Ellenhoroiujh, in Picrson v. Hutchinson, 2 Camp. 211. 

(o) Lord Ekion, in Ex parte Greenway, 6 Ves. Jr. 812. 

(/}) Supra, note m- In Fales v. Russell, 16 Pick. 315, a negotiable note, indorsed in 
blank, was stolen from the holder before it was due. There was no evidence of de- 
struction whatever. The court held, first, that the owner might, nevertheless, recover 
the amount from the maker, at common law, on indemnity ; secondly, that " this court, 
as a court of law, has authority, in such case, to prescribe a reasonable security foi 
the defendant's indemnification." In Union Bank v. Warren, 4 Sneed, 167, 171, the 
court said : " We likewise assent to the proposition maintained in Fales v. Russell, 
that, in the case of a lost bill or note, it is ]3roperly within the power of a court of law, 
on rendering judgment for the plaintiff, to annex the condition that, before availing 
himself of it, he shall execute to defendant a sufficient bond of indemnity. Such is the 
requirement of the act of 1819. But the authority of a statute is not necessary to the 

exercise of this power by a court of law But the jurisdiction at law cannot be 

eeriously questioned." 

{q) Tiius, in Chancy i;. Baldwin, 1 Jones, N. Car. 78, the plaintiff lost a note for 
S 47.00, and offered to prove the loss by his own oath, and to swear he had no other 
means of proving it. He admittiid that the teclmical remedy was in equity, hut pleaded 
thf rule of the latter court not to give relief on an amount of less than $ 50.00. But 
the court said, " It Is a new idea, that courts of law take jurisdiction, because the plain- 
tift is 'without remedy, save in this honorable court,"" — and the plaintiff got no 
remedy from either court. See also Union Bank v. Wancn, 4 Sneed, 167. 


equity, a complete remedy at law is established by statute on 
lost negotiable bills and notes, and the law courts are found able 
to judge whether the indemnity is sufficient. This statute rem- 
edy is, in England, the 17 & 18 Vict. c. 125, § 87, which pro- 
vides that " in case of any action founded upon a bill of exchange 
or other negotiable instrnment, it shall be lawful for the court or 
a judge to order that the loss of such instrument shall not be 
set up, provided an indemnity is given to the satisfaction of the 
court, or judge, or a master, against the claims of any other 
person upon such negotiable instrument." It is only upon the 
application of a plaintiff, to prevent a defendant from setting 
up tlie loss of the bill, that a judge has any jurisdiction under 
the 87th section of this statute. (r) 

Similar provisions have been enacted in New York,(.s) and in 

(r) Arangurcn v. Scholfield, I H. & N. 494, 38 Eng. L. & Eq. 424. Hence, where 
the defendant alleges the loss, and undertakes to pay the debt and costs, on indemnity, 
the judge has no power to order at once a stay of proceedings till it be given ; for that 
would be preventing the plaintiff from trying the question of loss. Id. 

(s) The New York statute is : " In any suit founded upon any negotiable promis- 
eory note or bill of exchange, or in which such note, if produced, might be allowed as 
a set-off in the defence of any suit, if it appear on the trial that sucii note or bill was 
lost while it belonged to the party claiming the amount due thereon, parol or other 
evidence of the contents thereof maj' be given on such trial, and, notwithstanding such 
note or bill was negotiable, such party shall be entitled to recover the amount due 
thereon, as if such note or bill had been produced. But to entitle a party to such 
recovery, he shall execute a bond to the adverse party, in a penalty at least double the 
amount of such note or bill, with two sureties, to be approved by the court in which 
the trial shall be had, conditioned to indemnify the adverse party, his heirs, and per- 
sonal representatives, against all claims by any other person on account of such note 
or bill, and against all costs and expenses by reason of such claim " 2 R. S., Part III. 
Ch. VII. tit. 3, art. 8, §§ 94, 95, 96, 3d ed. This statute applies only to the remedy, 
and in no way affects the rights or liabilities of the parties arising out of the proceed- 
ings to charge the drawer or indorser. Any defences on this latter ground are still as 
available under the statute remedy as under the former equitable remedy. Edwards, 
Bills, 296 ; Smith v. Rockwell, 2 Hill, 482. A check is a bill