A bill of exchange was drawn in Alabama, by a citizen of that
state, in favor of another citizen of Alabama, on a person at
Mobile who was also a citizen of that state. It was, before
presentation, endorsed in blank by the payee, and became,
bona
fide, by delivery to him, the property of a citizen of North
Carolina, and by endorsement subsequently made upon it by the
attorney of the endorsee, the blank endorsement was converted into
a full endorsement by writing the words "pay to Sterling H. Gee,"
the plaintiff, over the endorser's
name. The bill was protested for nonacceptance, and a suit was
instituted on it before the day of payment against the endorser in
the District Court of the
United States for the District of Alabama. The district court
rejected evidence offered by the defendant to show that the bill
was given by him to the partner of the plaintiff, a resident in
Alabama for property owned by him and the plaintiff, they being
co-partners; that the endorsement, when given, was in blank, and
that the drawer and drawee of the bill are also citizens of
Alabama. The district court also rejected the evidence, instructing
the jury that the endorsement in blank, authorized the plaintiff to
fill it up as had been done, and that the plaintiff was, under the
law of Alabama, entitled to recover ten percent damages, the bill
not having been accepted.
Held that there was no error in
the instructions of the district court. Evidence to show that the
original parties to the bill of exchange were citizens of the same
state, if offered to affect the jurisdiction of the court, is
inadmissible under the general issue; a plea to the jurisdiction
should have been put in.
The rule was established by this Court in
Young v.
Bryan, 6 Wheat. 146, that the Circuit Court of the
United States has jurisdiction of a suit brought by the endorsee of
a promissory note, who was a citizen of one state, against the
endorser, who was a citizen of a different state, whether a suit
could be brought in that court by the endorsee against the maker,
or not.
The
bona fide holder of a bill of exchange has a right
to write over a blank endorsement directing to whom the bill shall
be paid, at any time before or after the institution of a suit.
This is the settled doctrine in the English and American courts,
and the holder, by writing such direction over a blank endorsement
ordering the money to be paid to a particular person, does not
become an endorser.
A suit may be brought against the drawer and endorser of a bill
of exchange, on its nonacceptance. The undertaking of the drawer
and endorser is that the drawee will accept and pay, and the
liability of the drawer only attaches when the drawee refuses to
accept or, having accepted, fails to pay. A refusal to accept is
then a breach of the contract, upon the happening of which a right
of action instantly accrues to the payee, to recover from the
drawee the value expressed in the bill, that being the
consideration the payee gave for it. Such also is the undertaking
of an endorser before the bill has been presented for acceptance,
he being in fact a new drawer of the same bill upon the terms
expressed on the face of it.
Page 36 U. S. 81
It was urged that the transcript of the record from the district
court showed that a general demurrer had been filed which had not
been disposed of, that a nonsuit had been taken by the defendant in
the district court, and that a motion to set it aside had been
overruled; that the case had been submitted to the jury without an
issue between the parties, and that the verdict had been returned
by eleven, instead of twelve jurors. On these alleged grounds it
was claimed that the judgment of the district court should be
reversed. By the court:
"Whatever might have been the original imperfections, if not
waived expressly, they were so by the defendant's going to trial
upon the merits, and thus they cannot constitute an objection to
the judgment on a writ of error."
The defendant in error, Sterling H. Gee, a citizen of the State
of North Carolina, instituted an action of assumpsit in the
district court against Thomas Evans, a citizen of the State of
Georgia. The action was founded on a bill of exchange, drawn by
Harris Smith in Wilcox County, in the State of Alabama, December
16, 1834, on George M. Rives, at twelve months after date, payable
to the order of Thomas Evans, and by him endorsed in blank. The
bill was regularly protested for nonacceptance, and the suit was
brought without waiting for the arrival of the day of payment. The
cause was tried at May term, 1836. The defendant excepted to the
opinion of the court, and a verdict and judgment having been given
for the plaintiff, the defendant prosecuted his writ of error.
The record showed that at May term, 1835, the defendant filed a
demurrer to the plaintiff's declaration, which was in the common
form, and that at the December term of the court following, "the
plaintiff takes nonsuit," upon which the court entered a judgment
of nonsuit and immediately after, on motion, the judgment of
nonsuit was set aside. At the following May term, no other
pleadings having been filed, the case was tried by a jury and a
verdict, under the instructions of the court, was given in favor of
the plaintiff for the whole amount claimed by him, on which the
court entered a judgment according to the verdict.
The bill of exceptions stated that the bill being relied on by
the plaintiff to sustain his action, together with proof of protest
for nonacceptance, and notice to the drawer and endorser of the
protest for nonacceptance, the defendant offered to prove by way of
defense against the said evidence that the said bill was given by
the said defendant to Charles J. Gee for property purchased by him;
that
Page 36 U. S. 82
the property belonged jointly to Charles J. Gee and Sterling H.
Gee, the plaintiff; that they then were, and continued to be,
general co-partners; that when the endorsement was made on the
bill, it was endorsed in blank, and that the said endorsement has
been filed up by the plaintiff's counsel since this suit was
commenced; that Charles J. Gee resided in this state and did when
the suit was brought, and was a citizen of the State of Alabama,
and that the defendant and H. S. Evans and George M. Rives were
also citizens of this state. This evidence the court rejected on
the ground that the endorsement having been made and given in
blank, the plaintiff was authorized to fill it up, as above shown,
and that the facts above set forth could constitute no defense, and
were not proper evidence. The court further instructed the jury
that the bill being drawn in this state, and on a person residing
in this state, and made payable in this state upon nonacceptance
and notice, the endorser was liable for ten percent damages on the
amount of the bill for want of acceptance therefor.
MR. JUSTICE WAYNE delivered the opinion of the Court.
This action is brought upon a bill of exchange of which the
following is a copy.
"$5,350 Wilcox County, Dec. 16, 1834"
"Twelve months after date of this my sole and only bill of same
tenor and date, pay to the order of Thomas Evans, five thousand
three hundred and fifty dollars, negotiable and payable at the
office of Discount and Deposit Branch Bank of the United States at
Mobile for value received this 16 December 1834."
"H. SMITH EVANS"
"TO GEORGE M. RIVES, Mobile"
The plaintiff in error, the payee of the bill, endorsed the same
in blank, and the defendant in error became the
bona fide
holder of it by delivery, though the endorsement in blank was, at
the time of the delivery to the holder, by himself, and
subsequently, by his attorney, converted into a full endorsement,
the words, "pay to Sterling H. Gee," having been written over the
endorser's name. Upon the trial of the cause in the court below,
the bill, with proof of protest for
Page 36 U. S. 83
nonacceptance, and notice to the drawer and endorser of the
protest, was given in evidence. To resist a recovery,
"the defendant offered to prove that the bill was given by him
to Charles Gee for property purchased by himself; that the property
belonged jointly to Charles J. Gee and Sterling H. Gee, the
plaintiff; that they then were and continue to be and now are
general co-partners; that when the endorsement was made, it was in
blank, and that the said endorsement has been filled up by the
plaintiff's counsel since the suit had been commenced; that Charles
J. Gee resides in this state and did when the suit was brought, and
is a citizen of the State of Alabama, and that H. Smith Evans and
George M. Rives, the drawer and drawee of the bill, are also and
were citizens of the state."
The court rejected this evidence, stating that the endorsement
having been made and given in blank, the plaintiff was authorized
to fill it up, as had been done, and that the facts set forth could
constitute no defense, and were not proper evidence; the court
further instructed the jury that the bill being drawn in this state
by a person residing in the state, and made payable in the state,
upon nonacceptance and notice, the endorser was liable for ten
percent damages on the amount of the bill for nonacceptance. We
consider the court was right in rejecting the evidence and in
instructing the jury as to the liability of the endorser for
damages.
If, by the evidence proposed, it was intended to deny the
jurisdiction of the court on account of the citizenship of the
parties to the action, that being averred on the record, a plea to
the jurisdiction should have been filed, and such evidence was
inadmissible under the general issue. If it was intended to apply
to the jurisdiction, on account of the original parties to the bill
having been citizens of the same state when the bill was drawn,
then the rule laid down by this Court in
Turner v.
Bank of North America, 4 Dall. 8, which was a suit
by the endorsee of a promissory note against the drawer, does not
apply to the parties in this case; but the rule established in
Young v.
Bryan, 6 Wheat. 146, does apply, which was that the
circuit court has jurisdiction of a suit brought by the endorsee of
a promissory note who was a citizen of one state against the
endorser who is a citizen of a different state, whether a suit
could be brought in that court by the endorsee against the maker or
not. This is a case of an endorsee of one state suing an endorser
of a different state. If the evidence was intended to resist a
recovery upon the merits on account of the interest which another
co-partner
Page 36 U. S. 84
or other person had in the consideration for which the bill was
endorsed, we observe, the plaintiff being the
bona fide
holder of it, such a fact could not be inquired into in an action
on the bill, as it would import a different bargain and agreement
from the tenor of the bill and endorsement when the bill was given
or transferred, and a co-partner's interest could only be inquired
into in a suit in equity between the co-partners for its
recovery.
As regards the right of a
bona fide holder of a bill to
write over a blank endorsement, to whom the bill shall be paid, at
any time before or after the institution of a suit against the
endorser, it has long been the settled doctrine in the English and
American courts, and the holder, by writing such direction over a
blank endorsement, ordering the money to be paid to particular
persons, does not become an endorser.
Edie v. East India
Company, 2 Burr. 1216; Com. 311; 1 Str. 557;
Vincent v.
Horlock, 1 Camp. 442;
Smith v. Clarke, Peake 225.
But it was urged in argument that this suit could not be
maintained, because it appears by the record that the action was
brought before the expiration of the time limited by the bill for
its payment. The law is otherwise upon reason and authority. The
undertaking of the drawer is not that he will pay the bill, but
that the drawee will accept and pay, and the liability of the
drawer only attaches when the drawee refuses to accept, or having
accepted, fails to pay. A refusal to accept is then a breach of the
contract, upon the happening of which a right of action instantly
accrues to the payee to recover from the drawer the value expressed
in the bill, that being the consideration which the payee gave for
it. Such is also the undertaking of an endorser before the bill has
been presented for acceptance, he being in fact a new drawer of the
same bill upon the terms expressed on the face of it. The case of
an endorser is not distinguishable from that of a drawer in regard
to such liability.
Ballingalls v. Gloster, 3 East 481;
Milford v. Mayor, 1 Doug. 55;
Mason v. Franklin,
3 Johns. 202.
As to the damages which the court ruled the endorser in this
case to be liable for, we need only say the statute of Alabama
gives them, and applies directly to the case. Aiken's Alabama
Digest 328, § 5.
"Every bill of exchange of the sum of twenty dollars and upwards
drawn in or dated at and from, any place in this territory and
payable at a certain number of days, weeks, or months after date or
sight thereof shall, in case of nonacceptance by the
Page 36 U. S. 85
drawee, when presented for acceptance, or if accepted in case of
nonpayment by the drawee when due and presented for payment, be
protested by a notary public in like manner as foreign bills of
exchange, and the damages on such bill shall be ten percent on the
sum drawn for, and shall in every other respect be regulated and
governed by the same laws, customs, and usages which regulate and
govern foreign bills of exchange, provided that such protest shall,
for want or in default of a notary public, be made by any justice
of the peace whose act in such case shall have the same effect as
if done by a notary-public."
The counsel for the plaintiff in error also contended for the
reversal of the judgment on the ground of sundry irregularities in
the progress of the cause in the court below, apparent on the
record. Such as that a general demurrer had been filed, and had not
been disposed of, that a nonsuit had been taken by the plaintiff in
error, and that a motion to set it aside had been overruled, that
the case had been submitted to a jury, without an issue between the
parties, and finally that the verdict, if an issue was made, had
been returned by eleven instead of twelve jurors. These
irregularities, whatever might have been their original
imperfections, if not waived, were in our opinion waived by the
defendant's going to trial upon the merits and cannot now
constitute any objection upon the present writ of error. For a writ
of error does not bring up for review any irregularities of this
sort.
Judgment affirmed, with six percent damages.
This cause came on to be heard, on the transcript of the record
from the District Court of the United States for the Southern
District of Alabama, and was argued by counsel. On consideration
whereof it is ordered and adjudged by this Court that the judgment
of the said district court in this cause be and the same is hereby
affirmed with costs and damages at the rate of six percentum per
annum.
