Bills of exchange and negotiable promissory notes, are
distinguished from all other parol contracts by the circumstance
that they are
prima facie evidence of valuable
consideration, both between the original parties, and against third
persons.
Where a chose in action is assigned by the owner, he cannot
interfere to defeat the rights of the assignee in the prosecution
of a suit brought to enforce those rights.
It makes no difference, in this respect, whether the assignment
be good at law, or in equity.
A bill of exchange is an assignment to the payee of the debt due
from the drawee to the drawer.
But this doctrine only applies to cases where the entire chose
in action has been assigned, and not to a partial assignment.
This was an action of covenant brought by the plaintiff, James
Welch, for the use of Allen Prior, against the defendant
Mandeville, one of the firm of Mandeville & Jamesson, for the
breach of certain articles of agreement set forth in the
declaration. Several pleas were pleaded by the defendant; but as
the opinion of this Court turned altogether upon the fourth set of
pleadings, on which issue was joined, and at the trial a bill of
exceptions taken, it is unnecessary to state the other
pleadings.
The fourth plea alleged a release of the cause of action by the
plaintiff before the commencement of the present suit. The
plaintiff replied, in substance, that Welch being indebted to Allen
Prior, in a sum exceeding $8,707.09, and Mandeville
Page 18 U. S. 278
& Jamesson being indebted to Welch by virtue of the covenant
in the declaration mentioned, in the same sum of $8,707.09 cents,
Welch did, in the year 1799, appropriate, assign, and transfer to
Prior, by a good and sufficient assignment in equity, the same debt
due by reason of the same covenant, of which appropriation and
assignment to the use and benefit of Prior, Mandeville, afterwards,
in 1799, had notice; that the present suit was brought for the sole
use and benefit of Prior, and Mandeville, at its commencement, had
notice thereof, and knew the same suit was depending for the use
and benefit of Prior at the date of the pretended release; that the
release was obtained without the knowledge, consent, or approbation
of Prior, or of his attorney in court, and that Welch had no
authority from Prior or his attorney, to execute the release, which
was known to Mandeville at the time of the release, and that the
release was made with the intent to defraud Prior, and to deprive
him of the benefit of this suit. To this replication there was a
rejoinder and issue, upon which the parties went to trial.
At the trial, the plaintiff, to prove that Welch did transfer
and assign to Prior, by a good and sufficient assignment in equity,
the debt in the replication mentioned, gave in evidence to the jury
the articles of agreement in the declaration mentioned, and sundry
endorsements of payments thereon, and a memorandum also thereon,
dated 1 January, 1798, and signed by Welch, stating that there then
remained owing to him, on the articles payable at the times therein
mentioned, the sum of $8,707.09.
Page 18 U. S. 279
The plaintiff further offered three bills of exchange drawn by
Welch, in favor of Prior, upon Mandeville and Jamesson, dated on 7
September, 1799, each for $2,500, payable to Prior or his order:
one on 24 November, 1800, another on the same day and month, 1801,
and the third on the same day and month, 1803, being the respective
times at which certain installments for like sums would become due
on the articles of agreement stated in the declaration. Each of
these bills purported to be "for value received" of Prior, and were
directed to be charged "to account as advised." The plaintiff
further offered in evidence to the jury an account rendered to
Welch by Mandeville & Jamesson, dated 31 January, 1798, stating
the balance of $8,707.09, due to Welch, and payable by installments
in the manner mentioned in the articles of agreement, and proved
that this account had been delivered to Prior by Welch.
The defendant then gave in evidence the bill and proceedings in
a suit in chancery in Fairfax County, by Prior, against Welch &
Mandeville & Jamesson, (excepting the answers of the latter),
which suit was brought to recover the amount of the three bills of
exchange from Mandeville & Jamesson, as debtors of Welch, and
was discontinued by the plaintiff, Prior, after the answer of Welch
had come in, denying that Prior was owner of the bills, and
asserting that Prior held them merely as his agent, and for his
use. And the defendant further proved that Welch had never
authorized the present suit to
Page 18 U. S. 280
be brought unless the circumstances above stated would have
given Prior authority to institute the same.
The defendant then prayed the court to instruct the jury, that
if from the evidence so given, they should be of opinion, that the
sums for which the bills were drawn amounted to less than the sums
payable by Mandeville & Jamesson to Welch, under the covenant,
and were known to be less by Welch, then Prior is not such an
assignee of the covenant as would authorize him to sustain this
suit in the name of Welch. Which instruction the court gave; but
further instructed the jury that if they should be of opinion, from
the evidence, that the bills were drawn for the full and valuable
consideration expressed on the face of them, paid by Prior to
Welch, and if there was no other evidence than what is before
stated, they ought to infer from the evidence, that Prior was, and
is such an assignee of the right of action upon the covenant as
authorized him to sustain this action in the name of Welch's
administrator (Welch having died pending the proceedings, and his
administrator having been made party to the suit) for the whole
debt due by the covenant at the time of Welch's delivering the
account above stated to Prior, and further, that the bills were
prima facie evidence of such value having been paid by
Prion to Welsh. The jury found a verdict for the plaintiff under
this instruction; and the cause was brought before this Court by a
writ of error, to revise this among other supposed errors assigned
upon the record.
Page 18 U. S. 284
MR. JUSTICE STORY delivered the opinion of the Court.
Two questions arise upon the instruction to the jury:
1. Whether the bills were
prima facie evidence that
value had been paid for them by Prior to Welch?
2. Whether, under all the circumstances of the case, Prior was
an assignee in equity entitled to maintain the present action?
Upon the first point, we are of opinion that the law was
correctly laid down by the court below. The argument of the
defendant's counsel admits that where a bill imports on its face to
be for "value received," it is
prima facie evidence of
that fact between the original parties; but it is stated that it is
not evidence of the fact against third persons. We know of no such
distinction. In all cases where the bill can be used as evidence
either against the parties or against third persons, the same legal
presumption arises of its having been given for value received as
exists in relation to a deed expressed to be given for a valuable
consideration. In this respect, bills of exchange and negotiable
notes are
Page 18 U. S. 285
distinguished from all other parol contracts, by authorities
which are not now to be questioned.
The other question requires more consideration, though it does
not in our judgment present any intrinsic difficulty. It has been
long since settled, that where a chose in action is assigned by the
owner, he shall not be permitted fraudulently to interfere and
defeat the rights of the assignee in the prosecution of any suit to
enforce those rights. And it has not been deemed to make any
difference whether the assignment be good at law, or in equity
only. This doctrine was fully recognized by this Court when this
case was formerly before us. It was then applied to a case where
the whole chose in action was alleged to have been assigned, and it
was certainly then supposed that the doctrine in courts of law had
never been pressed to a greater extent. We are now called upon to
press it still further, so as to embrace cases of partial
assignments of choses in action.
It is contended on behalf of the plaintiff, in the first place,
that the facts of this case establish by legal inference, that the
articles of agreement were entirely assigned in equity to the
plaintiff. If this ground fails, it is in the next place contended,
that an assignment was made of the debt due by the articles to the
extent of $7,500, the amount of the bills drawn on Mandeville &
Jamesson, and that
Page 18 U. S. 286
this
per se authorizes Prior to sustain the present
action.
In support of the first position, it is argued that the bills
being
prima facie evidence of an equivalent advance made
by Prior, the possession by the latter of the articles of
agreement, and the delivery to him of the account signed by
Mandeville & Jamesson, afford a legal presumption that the
articles and account were delivered to him as security for the
payment of such advance, and thereby he acquired a lien on them
like that acquired by the delivery of title deeds as security for a
debt, which lien has always been deemed to be equivalent to an
equitable mortgage. It may be admitted, that according to the
course of the authorities in England, and as applicable to the
State of land titles there, a deposit of title deeds does, in the
cases alluded to, create a lien, which will be recognized as an
equitable mortgage, and will entitle the party to call for an
assignment of the property included in the title deeds. It may also
be admitted, that a deposit of a note not negotiable, as security
for a debt, will entitle the creditor, after notice to the maker,
to enforce in equity his lien against the depositor, and his
assignees in bankruptcy. Such was the case cited at the bar from
Atkyn's Reports. But in cases of this nature, the doctrine proceeds
upon the supposition that the deposit is clearly established to
have been made as security for the debt, and not upon the ground
that the mere fact of a deposit unexplained affords such proof.
In
Page 18 U. S. 287
the case at the bar, it was not proved that the articles were
delivered by Welch to Prior at all, much less that they were
delivered as security for the bills. The delivery of the account is
certainly an equivocal act, and might have been as a voucher of the
right of Welch to draw on Mandeville & Jamesson. There is this
further deficiency in the proof, that the bills do not appear ever
to have been presented to the drawees for acceptance, which not
only rebuts the presumption from the face of the bills that they
were received for value, since a
bona fide holder could
not be supposed guilty of such fatal laches; but draws after it the
auxiliary presumption, that they were in the hands of Prior as
agent, and therefore that he had not any assignment of the articles
as security. And it may be added that the suit commenced in
chancery by Prior, for this very debt, and afterwards discontinued,
does not assert any assigned title in himself, but proceeds against
Mandeville & Jamesson, as the mere debtors of Welch. Under such
circumstances, this Court cannot say that the instruction of the
circuit court was correct, that the jury ought to infer that Prior
was an assignee, entitled to sue for the whole debt due upon the
articles.
The ground, then, that there was a deposit of the articles as
collateral security, failing, we are next led to examine the
position of the defendant's counsel that there was a partial lien
or appropriation of the debt due from Mandeville & Jamesson,
under the articles to the extent of the sum due on the bills, which
is equivalent to an equitable assignment of so
Page 18 U. S. 288
much of the debt. It is said, that a bill of exchange is, in
theory, an assignment to the payee of a debt due from the drawee to
the drawer. This is undoubtedly true, where the bill has been
accepted, whether it be drawn on general funds, or a specific fund,
and whether the bill be in its own nature negotiable or not; for in
such a case the acceptor, by his assent, binds, and appropriated
the funds for the use of the payee. And to this effect are the
authorities cited at the bar. Yeates v. Groves,
1 Ves.Jr. 280;
Gibson v. Minet, per Eyer, C.J., 1 H.Bl. 596, 602;
Tatlock
v. Harris, 3 T.R. 174. In cases also where an order is drawn
for the whole of a particular fund, it amounts to an equitable
assignment of that fund, and after notice to the drawee it binds
the fund in his hand. But where the order is drawn either on a
general, or a particular fund, for a part only, it does not amount
to an assignment of that part, or give a lien as against the
drawee, unless he consent to the appropriation by an acceptance of
the draft; or an obligation to accept may be fairly implied from
the custom of trade, or the course of business between the parties
as a part of their contract. The reason of this principle is plain.
A creditor shall not be permitted to split up a single cause
creditor shall not be permitted to split up a single cause of
action into many actions without the assent of his debtor, since it
may subject him to many embarrassments and responsibilities not
contemplated in his original contract. The reason of this principle
is plain. A creditor shall not be permitted to split up a single
cause of action into many actions without the assent of his debtor,
since it may subject him to many embarrassments and
responsibilities not contemplated in his original contact. He has a
right to stand upon the singleness of his original contract, and to
decline any legal or equitable assignments by which it may be
broken
Page 18 U. S. 289
into fragments. When he undertakes to pay an integral sum to his
creditor, it is no part of his contract that he shall be obliged to
pay in fractions to any other persons. So that if the plaintiff
could show a partial assignment to the extent of the bills, it
would not avail him in support of the present suit. But in the
present case there is no proof of any presentment of the bills,
much less of any acceptance by the defendant to establish even a
partial assignment of the debt. And if there were, it would still
be necessary to show that there was an assignment of the articles
as an attendant security, before the plaintiff could found his
action upon them. Indeed, by the very terms of the pleadings, the
plaintiff undertakes to establish an assignment of the whole debt
due by the articles, and if he fails in this, there is an end to
his recovery. So that, in whatever view we contemplate the facts of
this case or the law applicable to it, the plaintiff has not shown
any sufficient title to sustain his replication to the fourth
plea.
Several other objections have been taken at the bar to the
plaintiff's right of recovery, which under other circumstances
would have deserved serious consideration; but as upon the merits
of the case as they are apparent upon the record, the judgment of
this Court is decidedly against the plaintiff, it is unnecessary to
give any opinion upon those objections.
Judgment reversed.
JUDGMENT. This cause came on to be heard on
Page 18 U. S. 290
the transcript of the record of the Circuit Court for the
District of Columbia in the County of Alexandria, and was argued by
counsel. On consideration whereof this Court is of opinion that the
said circuit court erred in instructing the jury
"That if they should be of opinion, from the evidence, that the
said bills were drawn for the full and valuable consideration
expressed on the face of them, paid by the said Prior to the said
Welch, and if there be no other evidence than what is hereinbefore
stated, they ought to infer from the said evidence, that the said
Prior was, and is such an assignee of the right of action upon the
covenant aforesaid, as authorizes him to sustain the action in the
name of the said Welch's administrator for the whole debt due by
the said covenant, at the time of the said Welch's delivering the
said account to the said Prior."
It is therefore ADJUDGED AND ORDERED that the judgment of the
said circuit court in this case be, and the same is hereby reversed
and annulled. And it is further ORDERED that the said cause be
remanded to the said circuit court, with directions to issue a
venire facias de novo.
