Brown v. . Craig

Sep 5, 1796

Reporters:
Before:: Haywood, Williams

Lead Opinion

Upon the trial the plaintiffs proved their case sufficiently. On the part of the defendants it was proven that they delivered to Brown some bonds and accounts due to them, the defendants, from persons (379) resident in South Carolina, where Brown lived; ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍and he gave them a writing purporting that these debts, when collected, should be рassed to their credit. Some of the accounts were returned, but one account and some of the bonds had been suеd upon in South Carolina, and judgments obtained, and nulla bona returned to the executions. One of them had been sued upon, and the record proved it to have been proceeded upon for some time, and up to the time when by another record it was рroven that the defendant had been attainted of a capital offense and hanged; but none of these suits had been instituted till after the expiration of a year from the receipt of the papers by Brown. None of these bonds or accounts were endorsed. (after argument by Duffy for the plaintiffs, and Henderson for the defendants):

Where a creditor receives рapers that are evidences of debts due to the debtor, to be passed to the credit of the debtor when the monеy due upon them shall be received, the creditor is bound to use ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍all the same diligence to procure payment, and in giving notice to his debtor of nonpayment, as if the papers received were actually negotiable in their nature, and еndorsed. This is proved by Chamberlyn v. Delarive, cited at the bar from 2 Wils., 353. And as it has been determined in our courts that a year shall be the longest time allowed for the giving of this noticе, in a case decided at Morganton, there is great reason why a person who receives instruments not negotiable should be bound to give notice in reasonable time, and return the papers, since until the notice given, and the papers returned, the person who passed them has it not in his power to institute suits for the recovery of the moneys due upon them; and for wаnt of such notice and return of papers he may lose his debt entirely.

Addendum

I do not like to give my opinion in this cause, having been concerned in it whilst at the bar; but I cannot agree with WILLIAMS, J., respecting the law of this case. The rules respecting negotiable instruments are the creatures of commerce. ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍They depend entirely on the custom of merchants, which has applied thеm for the convenience of commerce to certain commercial instruments only. None but such instruments as are the subject of this custom are liable to these rules. (380) With respect to bills of exchange or the like, the holder of the papеr must give notice in reasonable time of nonpayment to the endorser, or he must prove on the trial that the endorser or drawer had suffered no loss for want of notice; because when a man takes a negotiable paper by endorsement, the custom raises a contract on his part to give reasonable notice of nonpayment; but if the paper he takes is not negotiable, the custom, being not made to govern such transactions, raises no contract at all concerning it, and there it is regulated by the principles of common justice only. The papers may be returned to the passеr of them at any time. The receiving of them by the creditor is not any discharge of the debtor. Salk., 286. But if he has been so negligent after receiving the papers as that thereby a loss has happened, which by using common and ordinary diligence he might have prevented, and which must fall either upon himself or the passer of the paper, then the passer of the paper by рroving that circumstance shall throw the loss upon the receiver of them, justice requiring that he by whose negligence the loss hаs happened, shall bear it; but in this case the defendants have not proved that the debtors in these papers were solvent at the time of the reception of them, and for some time after, and are now insolvent, nor any other circumstanсe to exempt them from taking back the papers. They have not proven any loss in consequence of any neglеct in the holder, without which, or the proof of some equivalent circumstance, I am of opinion they cannot compel Brown to take them in payment. (Vide Salk., 131; 6 Mo., 81.)

The jury found for the plaintiffs, ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍and assessed damages to £ 900.

Henderson, for the defendants, moved for a new trial on account of the misdirection of HAYWOOD, J., and had a rule to show cause.

And upon the argument for the new trial he сited 1 Term Rep., 405, 714; 4 Term Rep., 713, where it is laid down that in case of bills of exchange the payee must give notice of nonacceptance to the drawer in reasonable time, or must prove that no loss could happen to the drawer fоr want of notice, by proving there were no effects of his in the hands of the drawee. These authorities were cited to overturn that part of the ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍charge to the jury which stated that the defendants were bound to take back the papers, unless he could prove a loss to have happened by the negligence of Brown, the holder, and were intended to establish thе reverse of that proposition, namely, that Brown must keep the papers as payment, unless he could prove the insolvency of the debtors at the time of their reception, or before he could possibly recover of them.

Counsel for the defendants argued that though the papers (381) in question were not endorsed nor negotiable, yet, having been received by Brown for the purpose of collecting the moneys due upon them, which were when collected to be applied to his own use, and credited to the defendants, that they were in all respects subject to the same rules of law as if they аctually were bills of exchange and negotiable by endorsement. And of this opinion was WILLIAMS, J., clearly; and he was for granting a new triаl. HAYWOOD, J., continued to be still of his former opinion, but declined opposing the new trial, having been formerly concerned as counsel for the plaintiffs. A new trial was granted accordingly; and at the next term, in March, 1797, the plaintiff‘s witness being not in court when the cause was called, he suffered a nonsuit.

See the next case, Alston v. Taylor.