Douglass v. Wilkeson

6 Wend. 637 | N.Y. Sup. Ct. | 1831

Br the Court.

It is very certain that the plaintiffs cannot recover on the first or second counts in the declaration, unless they are vested with the character of endorsees. It becomes important then to ascertain what constitutes an endorsement, according to the commercial code. “Endorsement is a term known in law, which, by the custom of merchants, transfers the property of the bill or note to the endorsee, and is usually made on the back of the bill, and must be in writing.” Cunn. on Exchange Law, 43. No precise form of words is required to make a valid endorsement; the signature of the endorser alone is all that is required to transfer a note or bill of exchange, because such signature, with the delivery of the instrument, gives the person to whom it is delivered a right to it, and to recover in his own name the amount of it from the maker or acceptor. By receiving the negotiable paper in that situation, he is vested with a right to make a full endorsement over the endorser’s name. Endorsements may be made in blank, in full, conditional or restrictive. Chitty on Bills, 131. 1 Cowen, 538. The right of a person to sue in his own name oh a bill of exchange, who is not a party to it, depends upon the title which he has derived from the payee. This title is by assignment, which the common law did not recognize, but which has its force from the custom of merchants. The statute extends the custom to promissory notes. 1 R. L. 151. This same custom must be appealed to in all questions where the validity or the effect of an assignment is called in question. It directs, Ch. J. Eyre says, in Gibson v. Minet, 1 H. Black. 605, that the assignment should be made by a writing on the bill or note, appointing the contents thereof to be paid to some third person, and in respect of bills drawn, payable to bearer, that the assignment should be constituted by delivery only. The contract which the maker of a negotiable note enters into with the payee, is to pay him, or such person as he or his endorsee, or any endorser’s endorsee shall direct, and there is consequently as much privity between the last endorsee and the drawer, and between him and the precedent endorsers, as there is between the drawer and the payee. The endorsement is an incident, and a part of the original contract. The endorsee holds the note, if not with precisely the same privileges, rights and advantages as the original payee, with nearly the same, against the maker. It would seem to be obvious to reason, that if the payee transferred none of the rights with which he was invested as payee against the maker, to a third person, that person could not be an endorsee. It would seem to be of the essence of an endorsement that the endorsee should take some of the endorser’s rights. The creation of new rights between the endorser and endorsee, without the transference of any of those existing in the former, will not, I apprehend, make an endorsement ; when, therefore, the contract between the payee of a negotiable note and a third person is of such a character as to give the latter no rights against the maker, to create no privity of contract between them, that contract is not an endorsement of the note within the custom of merchants. If this position be correct, we have only to enquire in this case whether the defendant transferred to the plaintiffs any right as against Norton, the maker of the note declared on, to enable us to determine whether the plaintiffs are endorsees. Could the plaintiffs recover in an action against the drawer of the note 1 Since 1698, when the case of Hawkins v. Cardy was decided, the law has been settled that the assignment of a part of a demand, due on a promissory note, does not enable the assignee to maintain an action against the maker. 1 Ld. Raym. 360. Salk. 65. Carth. 466, 12 Mod. 213. The principle of this case has been sanctioned, I believe, by all courts in which questions have arisen calling for its application, and reiterated by the most approved elementary writers on the law relative to bills of exchange and promissory notes. Cunn. 44, 75. Bailey, 72. Chitty, 139, 140. Jacob’s Law Dict. tit. Bills of Exchange. 1 Comyn’s Dig. tit. Action on the Case, 295. 3 Kent’s Comm. 59. The reason assigned- for this;¡principie-is.. not.-astiiroadj .-it may he Said-, as t-he' application - now - proposed to he. made, of it;-- The- reason -is, tlrat-a. con tráctcannot-he divided. into parts só as t o "s ubj e c t- - - th epa vty • to- -saverg.1, actions. This obr jection-may bb thought to apply on ly, to- ih emaken ofthenote, and tiot to' 'the -remedy : which- - the--endorsee ■ ihas^aga-inst .the endorser. - ' The principle changes -the nature.of ithe, relation between-the-parties; - T-doeS riot-give to the transfer, -or wh%t is urged-to -he a transfer, the quality of an-endorsement; according to the custom of merchants.,1 nor to the-plaintiffs the character of endorsees.’-- The language of all the books is,¡that an endorsement transfers-the 'prope’rty-of the bill or nole to the endorsee;' what- dobs less-than that, isnot-in-strictness an •endorsement; -The -position of Miv Justice Bay ley, whose accuracy will npt, he questioned,-is, that “ an endorsement cannot- be'made, for the1 transfer of1 less than the full .sum appearing1 to'be due- upon-lhe' bill, -or -noted3 ,-Bayley on Bills, •l?2;“,’S'o the language1 tif -'Ghitty-pas -to -the- effect, of a ‘partial assignment, is of like import, - thóugh he follows it .with the reasons for the rule of law1, which ‘have particular--refer-ence to the^sit'uatión in which 'such an -assignment would iti“volve the acceptor." “Although an endofsémení,”- he says, "“ may bd made in" blank, in 'full or restrictive; yet it cannot, ‘after acceptance, be made for less than the full sum appearing to be dub upon the bill," &cl transferred,- beca-usé1 a- personal' contract Caftndt1 tie‘apportioned," and it1 would make i,lh,e"'áccéptor' liable to two' actions;” ■■ 'Chancellor-Kent also 'say's.:" “The bill Cannot‘he-endorsed1 "for «’part only, of -Us contents, tin less1‘the 'residue has -heeni - extinguished;”- 3 Kent's Comm. 59. 1 Hb'assigns the reasons on whichjhe rulé Is founded1. ‘Although he ‘does not1 'mention notes,--the principié is equally"áppli'eáble ' ló them; for they are bills’ of 'exchange,"the maker being both draxx/erand 'adcepton-mThe point tioxv’"ünder boháidéra'tióú had been diréctiy passed 'tip-on by * thé superior court Of SouthCaroliiiü. "That-court “ went much further than b/e 'di'e 'asked'to go; in this base; and probably further than we should' feel ourselves 'willing to go, ° ííi á casé like" that before them.'"They decided tiiht where the assignor had the entire foíerestiiú 'th^titiÉb tobén-hé hsSignéd it, he was not an endorser, and the person taking it was not an endorsee, and could not maintain an action as such against the assignor, because he did not get the whole note by a single act; a part being assigned at one time, and a part at another, though both assignments were made the same day. The court say the endorsement of a part of a note or bill is bad ; and if so, two vicious endorsements cannot make a good one. Hughes v. Kiddell, 2 Bay, 324. That action, as to the parties, was like the present-—endorsee against endorser. The cases in which it has been held that an acceptance for part of a bill is good, were referred to on the argument by the plaintiff’s counsel, as bearing on the question under consideration, but they do not apply, because there is no apportioning of a single demand : an entire contract cannot be split so as to give two actions against any party to it. The books recognize the distinction between the two cases. If the acceptor is sued, he is only responsible for the amount for which he has accepted ; if he pays a part of the bill, it is supposed to be out of the drawer’s funds, and the drawer is called on by the holder only for the residue. The acceptor has no claim on him, on the bill, for what he has paid on his acceptance. If be is an accommodation acceptor, he has his action for money paid to the drawer’s use. If we consider the relative rights of the parties to this action, viewing them as endorsee and endorser, the case is involved in a manifest absurdity. It is absurd that an endorsee cannot maintain.an action against the maker of -the note. It is not pretended that the plaintiffs in this suit can maintain an action against Norton. The responsibility of the defendant, if he is to be regarded as an endorser, is conditional; he is liable to the plaintiffs only in the event that the maker of the note fails to pay to the plaintiffs; yet they have no right of action—no claim against the maker. The plaintiffs, as endorsees, must shew, before they can recover against the defendant as endorser, a demand of payment on the maker, a refusal and notice of non-payment to the defendant. The situation of the parties renders all this an idle ceremony. Shall the plaintiffs make a' demand where they have no right? Shall they be required to give formal notice of a default, where there can be no default, because there was no duty. We are therefore of opinion that the plaintiffs are not the endorsees of the note, and consequently, as such, cannot recover the amount thereof, or the $750. Had it appeared that when the note was delivered by the defendant to the plaintiffs the balance due on it was only $750, the difficulty which lies in the way of a recovery in this suit would be removed ; 3 Wilson, 263; but that fact was not shewn, nor are we permitted to assume it, if we were correct that we should do so in any case, because the declaration avers that no part of the sum of money mentioned in the note was paid when the transfer to the plaintiffs was made. Every endorsement, it is said, is the same thing between the endorser and the endorsee as the making of a new note. If this should be taken as literally true, it would not aid the plaintiffs, because, according to the foregoing views, there is no endorsement.

We are next to inquire if the memorandum on the back of the note is a check or draft on which the plaintiffs can recover under the money counts. A check or draft on a banker is defined to be a written order or request addressed to persons carrying on the business of bankers, drawn on them by a party having money in their hands, requesting them to pay, on presentment to a person therein named or to bearer, a specified sum of money. Chitty on Bills, 332. It is said in Cruger v. Armstrong, 3 Johns. Cas. 7, 66 A check, although generally received as cash, when given in payment, is in form and reality a bill of exchange. It possesses all the requisites of a bill, and has been treated as such.” Lord Kenyon said, in the case of Bohem v. Sterling, 7 T. R. 430, that at the trial of that cause, he thought there was a distinction between a banker’s check and a bill of exchange,* but on further consideration, he did not think that distinction well founded. If a draft or check is required to have the requisites of a bill of exchange, and is to be treated as such, it will be at once perceived that the memorandum on the note in this case is not a draft or check. It does not specify any payee. To make a note within the statute, it must be payable to some person, body politic or corporate, his or their os'der;’ -or -unto beaveiy 1 R. D. 151, lolgí-and this.- «was- -Only, rd< ■ <3L,¡1'i1tgi'in'relation1;'to¡a ¡proillisso'py-nóte," What > the- -custom of merchants had established- as i -requisi fe- to make abalithbill. of-e^e^n8?e' ’'li’tiíére iá'Ér-bJank' for the ■ name'of "the páyee, abútiájide'iKMes -inay'fill dU-up"- with 'bis ewe; and «thén be-* co'm'és a''hegdtíáble:note;' Bayley on Bills, 23 or,1 iMfi-ap'-j p^ir'ñ'ohV'-W'hoin" the' consideration'-carde, -he may-'be pre-> sUmod :tb be'the payed intended ; bill nothing óf this kind is¡ sh'éxVn 'by1 the memorandum' oti,: ‘the ‘note1 iti' -question. Lord - (3lit Barbtt'‘,Eyi'ef6ay¿,1 in'the"-'Case''Df Gibson v. Minet, before referred”'toptl'If T 'put "itr Writing"these- wordy, H1 pro.rmse'to'' pay «£500,1 'oil' 'de'mánd1,'1 vklue Téfcei'Ved;!0 -wi th out saying! tor wíióng U'íAwaStfe ¡pa'^ér ;"if'I diiéca'aiidther'to'pay ’jfiSQO-'atsbine dtty after1 dht'e', fodvcuiie rebebed,'’■andn'orsn-y bo-whorny ibis'WUste'- paper:’’ ' lit is!,Supefecigsition ,to'%rtifyKvith!''au'-ii tbbiitieá’tlíe position'that1 an-'instrument,' without being'pUyay ble by its terms to some person or to the bearer‘thereof,'• can-1 nh’t'Bé'""Í3egbíiá'bI'e,'ffa,pelv‘*-The‘'position,‘¡as1 Bayley on Bills, 22. : ‘“-Wtiébé'a,'b¡ll lórlnote is-'pkyable- o'theiwise1 than ld‘ thé'bé'ttí-eiy itmúSt’ ’cantaí n thema m & of > fch e paye'e.,?l' Bayley on Bills, 22.

* It' inay ‘be- useful' to confeidei: one 'or--t\yo'c$tses- wherein =ef«= forts ¡h a Ve- beeir made' ’ter con vert'1 memorandums- into* negotia-1 ble i'ristrumc'tits. The' supreme' cburt-'of'Masáacbusétls- have-decided 'that'- a'pérson ' posáesSed ■dfváh''order ‘for> the payment > of‘'rñí)ne'y to!lNo.1 ’IO'O or bearer,'addressed to «0-particulars person ias d'ralvee, could not- maintain an action- against the • person' subscribing -it •‘without shewing- he ¡came fairly-by tit-fora-valuable consideration-. - An-action wa's--brótight by the - pbdsessbr'bri' a'mbmtiraiidúm--ir) •tMése'words'y “¡Boston, 15th! May,1 1810,'T'good'-foT one hundred-;and .twenty-six dollars1 on 'de'm'a’tid1;” Signed, Gilman'& Hoyt1;- ahd-'thé-¡coUrt' held! if not susta’itiábíe. *”Parker,';C'h. J7• said -:: “=It-is not-a-nego-h tiable promissory note? y it is not:1payable to-beared; it!-is’ a':eohf fadwhich''is1 -'expropio " vigore, constitutes a¡promise- towhoniSOevei1 skal'i''produce-itd’ “i( It--rm ports ■na-promise-to! the hdrdei'-ivitboutrmv'idehcemtwas-actudlly given'-lodim/’13"ass." R.' 1-58: .--In'this -case- there -is no~ evidence? tha6 >ther manÓTáhduirr-xyas’given- to the¡plaiptifís;-land ooqsequentiy-W promise .to,pay them cannot be infenedifrom the bare posses?. sion.,,1 Butif that difficulty, was removed,, the .onewe.are .coirsidering.,would, remain- , Facts ¡might, be. .sbeym,; (which,, in. connection with the .memorandum, would-, make.out a prom-, ise by- the-,defendant,,to theplaintiff ; yet the,,memorandum; won Id, still want the effect and.character of, a,negotiable in-.. strument, according to the, custom of merchants; and ,wanfe„ ing that character,. ;i.t.cannot, be ,receiv,ed as, proof, sufficient, to,. warrant a recovery under the moqe,ycoun,t,s. in .the declaration,; in.this case., Leonard v. Mason, 522, was cited...op,, the argument as a case in which,,the court,bad substituted, a,, payee, w.he.re. none, had been indicated by, the drawer ,of a bill... .Whether,.there, was, a payee,.pf, nob WBP PPt-distinctlyF raised in. that case-.for.the .consideration,of the,, court.;,but, if it had been, we, should pot prpbebty hqyejiad any.diffi-, ciffty ins coming to the. conclusion, ,that..th,e, payee Nvas.sufficipnlly. .indicated. , A.,.JLeonard ,,was,,the, payee of a, ,note drawn, by hi. .¡Leopard. , I'J.. .Leonard,, wrote .an order or draft, under,,the ,note,, in .ihe following, .words;,.., “.Ley; .Mas,op,, Esq. please, pay. the, above. np.te,,and,,hold.it .agaipst m.ejn opr settlement^’, . Signed,, if, Leonard. There,was a parol acceptance, and.a promise ,fq pqy ,by„the, defendant, made to,A., Leonard,the payee qfj tire note., .This was held, to be a,hill of .exchange.,. Theve. cpuld be no mistake,.as to fhe payee;,the,draft .was topay¡ th.e potp, pud the payee,of the, the draft must consequently he the person ,\yb.o was entitled tfl receive payment of the, note; and .a payment to any other person, .would- not have been. a payment of the draft,. . If wp apply,the principle,of that cgse. to this, it. will pot, help the, plaintiffs., ¡ft has-beeq.clearly established, we think;, that they, ate. not.the real endorsees pf, the,pote;, p,nd,if .they, aye npt, it rernains the prqpprty .oLWilkeson ;„pnd he,, and,.not they, would seqm to be .the payee ipdipated by, the memorandum. Mr,, Ojlcott cpuld qeyer have justified .the paynjent of the sum. mentioned ip, the meinoraqdum to; p,ny; other person than,the ovvnerpf the pote, and -the note itself sbqjvejl, if,.the previous reasoning be correct, that it had not been negotiated by ,the payee,... If Mr. .Qlcott could have justified the payment to the possessor of the the note, it must have been on the ground that the payment was in fact to Wilkeson. The memorandum mjg[3t have been construed as an authority to an agent to receive, and the possession of the order may have beeen regarded as designating the person who was made the agent. But the possession of the note and memorandum would not authorize the holder to make himself the payee by inserting his name in the order, or the court to regard him as such, no more than the possessor of the memorandum mentioned by Lord Ch. Baron Eyre, “I promise to pay £500 on demand, value received,” could make it better to himself than waste paper, by adding any thing to it.

An instrument that is not a bill of exchange, or a negotiable promissory note, cannot be given in evidence, under the common money counts. 10 Johns. R. 418. This obstacle to a recovery by the plaintiffs in this action would remain, even if the acknowledgment of value received in the note could be transferred to the memorandum. If “ value received” were inserted in it, still it would not be a negotiable note or draft, and consequently could not be proof under the money counts; and the declaration contains no special count on the draff. But whose acknowledgment of value received is required 1 That of the defendant. How strange would be the attempt to convert the acknowledgment of Norton, made in the note, into an implied one of Wilkeson in the memorandum. But if it should be granted that the memorandum was a valid check or draft, there would still be a fatal objection to the right of the plaintiffs to recover. If it is a check or draft, it is as a bill of exchange; and what is required in relation to the one to sustain an action on it, is required as to the other. The parties to it are the defendant as drawer, the plaintiffs as payees, and Mr. Olcott as drawee ; the ■payee cannot resort to the drawer without having given notice of the non-payment by the drawee on presentation, or at least, without shewing that there were not funds in the hands of the drawee. Now in this case there is no notice of nonpayment to the defendant, or proof that the drawer had no funds.

Judgment for defendant.