ROBERTSON v. VOGLE, 1 U.S. 252 (1788)

U.S. Supreme Court

ROBERTSON v. VOGLE, 1 U.S. 252 (1788)  1 U.S. 252 (Dall.)

Robertson et al.
v.
Vogle

Court of Common Pleas, Philadelphia County

March Term, 1788

In this action the Plaintiffs declared, as Indorsees, upon a promissory note, against the Defendant as Indorsor, both the parties residing in the city of Philadelphia. It appeared, on the trial, that the note was drawn on the 10th April, 1786, and that it was protested for non payment on the 12th June, 1786; but on the 5th of July and on the 23rd of August following, the Plaintiffs received several partial payments from the drawer, without attempting to give notice of the protest to the indorsor, till after the last of those payments, when the drawer had become greatly embarrassed in his circumstances. Nor was there, indeed, any other evidence of notice, previously to the commencement of the action, to March term 1787, than that the Plaintiff's clerk had frequently called at the Defendant's store, but was not certain that he had ever seen him, or left a note of his business.

Ingersol moved for a non-suit on two grounds; 1st, Because the receipt of a part of the money from the drawer, is a discharge of the indorsor for the whole; and 2ndly, Because the Plaintiff's did not give reasonable notice of the protest to the Defendant. [252-Continued.]

1St. On the first point he contended, that the indorsor of a promissory note, is only a warrantor that he will pay the money, it the drawer does not; and that if the indorsee receives a part, he takes upon himself to give credit to the drawer, and discharges the indorsor. 1 Wills. 46, Hall v. Pitfield. 2 Stra. 745. Kellock v. Robinson. S.P.

2nd. With respect to the second point he cited Term Rep.167. Easter. 27.Geo. 3.Tindal et al. v. Brown, where it is said, that when a note is not discharged by the drawer, the holder must give reasonable notice to the indorsor; that this means something more than making it known; for it is not enough that he says the drawer has not paid, but he must declare that he does not mean to give credit; and, therefore, when the circumstances are ascertained, what is reasonable notice is a question of law and not of fact. As to the giving time, the holder does it at his peril, for it has never been determined that the indorsor is liable, where the holder has given credit to the drawer; so that the want of notice is tantamount to payment. Id. 712.

Sergeant and Earton, for the Plaintiff, argued, 1st, That the acceptance of a part shall not prejudice the holder of a bill or note. Marus 6. 8. 9. 86. 87; and, as upon the authority of this book, the Court had determined a former question,* they said it could not be shaken, in the present instance, by Wils. 46, which was not a decision in the principal case, but an obiler dictum, referring to a preceding determination for an argument a sortiori; nor by 2 Stra. 745, which was a short Nisi Prius note. Besides, these reports give no reason for their decisions, but Marius assigns a very satisfactory one for his doctrine; to wit, that it is beneficial to the indorsor that the

Page 1 U.S. 252, 253

holder should receive as much of the money as he can from the drawer, since thereby so much is saved to him. There is a material difference, however, between the principles and usage in London and Amsterdam, and the custom of Philadelphia upon this, as well as the point of notice; for long indulgence and the course of business, have not yet brought us to the precise and strict practice of those capitals.

2ndly. With respect to the second objection, they said, that the Plaintiff's clerk went repeatedly in pursuit of the Defendant; and proof of making enquiry after him is sufficient to excuse giving notice, unless he shows that he might have been found. L. N. P. 273. 274. But, at all events, they insisted that what was reasonable notice was a matter of fact, and not of law; 1 Stra. 508. 2 Stra. 829. 1175. 1 Black Rep. 1. For, though it is true, that there are many facts upon which, if the Jury proceed contrary to the opinion of the Court, a rehearing will be granted; yet they must, at last, be determined by a verdict: In Trover, for instance, the Conversion can only be found by a Jury, it cannot be found by the Court. That reasonable notice is a fact of the same kind, was conceded by very eminent council,* in opposition to the interest of his client. Doug 496. 7. The propriety of the rule is abundantly more striking here than in England; and as a Jury alone can decide upon the circumstances of the country, and the relative situation of the parties, it ought to be left to them to ascertain the reasonableness of the notice.

Ingersol, in reply, said, that the case was of great importance to the mercantile interest; and that the mischief would be fatally extensive, if the adverse arguments prevailed. He contended, however, that in whatever form the Plaintiffs choose to proceed, they must fail in their action. For, if they bring their suit at common-law, then it cannot be maintained at all; since, at common-law, a chose in action is not assignable; nor is an assignor responsible unless he expresly warrants; and, if they bring it upon the custom of Merchants, then, in order to recover, they must show that they have, on their part, complied with the custom, which required that reasonable notice of the non-payment, should have been given to the Defendant. But, as the common-law is not applicable, and the Act of Assembly does not meddle with the case of Indorsors and Indorsees, the declaration must undoubtedly be founded upon the statute of Anne and the custom of merchants; and if the Plaintiffs are allowed to take advantage of these to maintain his action (waving the question whether the statute extends to this country) the Defendant cannot be precluded from taking advantage of them, likewise, to support his defence. Upon this ground the usage must be universal: For, the statute of Anne places promissory notes on the same footing with inland bills of exchange, and inland bills of exchange, in the preceding reign of W. 3. had been placed on the same footing, with foreign bills so that any distinction, between the cities of American and London, and

Page 1 U.S. 252, 254

the city of Philadelphia, cannot be maintained; the usage is every where the same; and the construction of the statute will not be different, merely from a difference in the place. It is settled, by the common law, as well as under the statute, that he who gives a new credit is bound; this is not contradicted by the doctrine laid down in Marius; and the case in Lord Raym. is corroborative. In Marius the money is presumed to be received at the time the note becomes due, the protest is made at the same instant, and notice of the dishonoring is given as soon as possible so that there, undoubtedly, the indorsor is benefitted by the indorsee's taking a part of the money, and runs no risque for the want of information respecting the fate of the bill, or note; but in the present case, the money was received, at least, three months before any attempt to give notice, and in the meantime the drawer became insolvent. The Court argue in Wilson as from a fixed principle, that the indorsees receipt of a part from the drawer is a discharge of the indorsor for the whole; and Strange, though a nisi prius report, is in point in all its circumstances. He contended, that the case cited in Bull. L. N. P was in favor of the Defendant on the second point; for he had shown that he might easily have been found; and where the parties reside in the same town, not a moment should elapse between the protest and the notice T. Rep. 167. The Supreme Court, in Steinmetz versus Currie1 said, that in all universal questions of a mercantile nature, the Term Reports were to be received as authority; this was resolved, in opposition to cases for 100 years back, showing a different practice with respect to notice; and in Donaldson v. Cooper,2 the Judges refused to hear the evidence of merchants as to usage, because the point had already been determined. As, therefore, it has been settled, that reasonable notice is a question of law, and not of fact, the Plaintiff cannot now bring it into doubt and controversy.

Shippen, President, delivered the opinion of the Court to the following effect. This is a motion for a nonsuit upon two grounds; first that the Plaintiff by an acceptance of part of the money from the drawer of the note in question, has discharged the indorsor; and, secondly, that he is also discharged, because due notice of the non-payment of the note was not given to him. It is to be observed, that with regard to discharging the parties to bills of exchange, the law makes a material difference; for, some of them can only be discharged by an express, but others may be discharged by an implied exoneration. Thus, the acceptor of the bill cannot be discharged by any construction in law; and though the holder proceeds against the indorsor, and receives part of the money from him, this will not prevent his afterwards resorting to the acceptor for payment of the balance. Dougl. 235. In the instance of a promissory note the drawer stands in the place of an acceptor. 2 Wils. 263. But an indorsor is only a security that

Page 1 U.S. 252, 255

the acceptor of the bill, or the drawer of the note, shall pay the money; and, therefore, if the holder is guilty of any neglect in endeavouring to recover it, that will certainly be an implied discharge of the indorsor. If, for instance, the holder takes upon himself to give further time for payment, or, receives a part of the money, and gives time for the rest, the nature of the transaction is essentially changed, and the indorsor is no longer responsible. The same principle applies to the second point; for, if the holder of a note, without giving notice to the indorsor of its being dishonored, retains it so long in his hands, after the day of payment, as to create a presumption that he means to take upon himself to give a new credit to the drawer, the want of notice in this case, will likewise operate as a discharge. This, however, cannot be determined in the same manner here, that it is in England. In that country, regular posts are established, the correspondence between the great commercial towns punctually maintained; and the communication, throughout the kingdom, is commodious, certain, and uninterrupted. These circumstances, therefore, render it easy to make a general rule; of which the case cited for the Defendant from Term Reports, expressly speaks. But in Pennsylvania there are some roads which the posts never travels, and some seasons in which the communication, between the different parts of the State, is exceedingly difficult and precarious: How then can a general rule be made, so as to ascertain every where, and at all times, the reasonable time of the notice? The attempt, if not totally impracticable, would, in its consequences, be dangerous and inconvenient. But, with regard to the particular case before us, there can be no doubt, that the right of Indorsees to call upon the Indorsors, must be founded upon the Custom of Merchants: for, the indorsement, considered at common law, amounts only to an assignment of all the property in the bill, or note, without making the assignor responsible in the event of a non- payment. How far, however, promissory notes are in this State upon the same footing with bills of exchange, is a question sub judice in the Supreme Court; and, therefore, it would be going out of our duty to give a decision upon it at this time.* Yet, it must be observed, that the statute of Anne has, in some respects been extended to this country. For, the uniform practice has been to bring actions upon promissory notes, as such; and not actions of Indebitatus assumpsit, which was the proper action, according to the opinion of Holt, Chief Justice, before the passing of that statute. The Legislature, likewise, when regulating the assignment of bonds and notes, though they did not expressly put them on the same footing with bills of exchange, must, from the terms of the act, have taken it for granted, that an action might be brought upon a promissory note, considered as an instrument. 'Till, therefore, a contrary decision is pronounced, we must proceed as in the case of a bill of exchange, under the statute of Anne; and there it appears, that a very trifling negligence, on the part of the holder,

Page 1 U.S. 252, 256

will operate as a discharge of the indorsor. This rule, we admit, is just and proper, when the course of trade is regular, and the communication by post is uniform and free. For, as it is usual among merchants to lend their names to one another, all faith and credit would be at an end, if the holder of a note, instead of attempting to procure the payment from the person who ought really to pay it, might, tacitly, keep it in his possession, 'till the insolvency of the drawer, had deprived the indorsor of his only remedy. If, therefore, he retains it two or three months, or any other unreasonable period, he ought certainly to bear the loss; and, accordingly, the law deems this the giving of a new credit to the drawer, and discharges the indorsor.

Upon the whole, the facts in the present case, are strong in favor of the Defendant; but still we should be sorry to take it from the determination of the Jury, upon a question respecting the reasonableness of the notice: For, as it has been already said, it is impossible to establish a general rule, alike applicable to all the parts of the State; and until such a rule can be established, every case, upon its own circumstances, must be left to the Jury, as a question of fact, and not of law.

The Jury afterwards gave a verdict for the Defendant.

Footnotes [Footnote *] See Ant.

[Footnote *] Dunning.

Footnote 1 See post.

Footnote 2 See also Chapman versus sie in a six post.

[Footnote *] In the case of McCollough vs. Houston.