4 Rawle 384 | Pa. | 1834
The opinion of the court was delivered by
In the month of September, 1825, Earps Sp M‘Main, merchants, of the city of Philadelphia, sold to Motley, Irvine Sp Co. of Perldnsville, Virginia, and to Irvine, Montagu Sp Motley of Lawrenceville, Virginia, goods and merchandise, for which, when they rendered their accounts, the twentieth of June, 1826, there was a balance against the former house of four hundred and ten dollars and ninety-five cents, and against the latter of three hundred and fifty-two dollars and fifty-three cents. The accounts not being paid, Earps Sp MMain, with a view to obtain payment, drew bills on the respective firms, dated the fifth of October, 1826, and payable ten days after sight, with this direction on the bills: “To be presented to H. B. Montagu, Richmond, Virginia, for acceptance. If he is not there, have it forwarded to Irvine, Montagu Sp Motley, Lawrenceville.” The bills being made payable to their own order, were endorsed by Earps Sp M‘Main, and were also endorsed by T. Fitch, cashier of the Mechanics Bank, to pay to the order of W. Dandridge, esquire, the cashier of the Bank of Virginia. The notes were deposited in the Mechanics Bank, to be transmitted to fbeir correspondent in Virginia for collection. The cashier of the bank, the day after they were received, enclosed them in a letter directed to ff. Dandridge, cashier of the Bank of Virginia, in which he states, the bills are enclosed for our account. The bills, when received, were entered, as is usual, in short, in the bank book of Earps Sp MMain. On the twenty-eighth of October, when a sufficient time had elapsed, according to the common usage of banks, the note clerk extended the bills on the books of the bank, to the credit of the depositors. Afterwards, perhaps on
The first question to which our attention was directed, is, what duty did the Mechanics Bank undertake to perform, in relation to these bills? And about this we have no difficulty. The undertaking clearly was, to transmit the bills, with the directions upon them, to their correspondent in Virginia; and on advice of payment, to credit the depositors with, the proceeds, or pay over to them the amount. That this was the intention of both parties, is necessarily to be inferred from the nature of the transaction. The defendants did not undertake to collect the bills, but were used as the medium of communication between the depositors, and the collecting bank in Virginia. And this was so held in Lawrence v. The Stonington Bank, 6 Con. R. 528. The Eagle Bank, who in that case stood in the same situation as the Mechanics Bank do here, was considered merely as the instrument of transmission ; and in the Bank of Washington v. Tripplett & Neal, 1 Peters’s S. C. Rep. 25, (which so far as regards this point, cannot be distinguished from the present.) “ The bill,” says the Chief Justice, “ was not delivered to the Mechanics Bank of Alexandria for collection, but for transmission to the bank in Washington to be collected. That bank would of course become the agent of the holder. By transmitting the bill as directed, the Mechanics Bank performed its duly, and the whole responsibility of collection, devolved on the bank which received the bill for that purpose. The Mechanics Bank was the mere channel through which Tripplett Sp JVeaI(whoin this case were the depositors) transmitted the bill to the Bank of Washington.” Jackson v. The Union Bank, 6 Harris & John. R. 148, goes on the same principles. In addition to the authorities, which are decided on the common and uniform usage of all banks, we are bound in this case to consider the defendants as an agent for transmission merely. The District Court placed the cause
But, it is said, that the cashier having put his name.on the bills, the legal relation of the parties has been changed: That by the en-' dorsement, it became a foreign bill of exchange, and, as such, subject to the strict and arbitrary rules applied to such commercial paper. This is viewing the transaction through the medium of form, without attending to its essence. The office and undertaking of the bank, as has been before observed, are to transmit the bills, with the directions upon them, to their correspondent; and, on advice of payment, to pay over the proceeds. Thomas Earp, who was a director, was aware of the nature of the undertaking, and (hat in performing for its customers this office, it did not become surety for their correspondent abroad; and that in endorsing the bill, they did not intend, as between the depositors and themselves, to assume any new liability, or impose upon themselves any other duly than to transmit the bills to their correspondent in Virginia, and to credit them with the proceeds when received : That this w'as the form in which such business is usually transacted, adopted with a view to effect the object which both had in view, and that the reason they were endorsed by the cashier was, to enable their correspondents to credit them with the amount, when received.
The deposit of a bill in one bank, to be transmitted to another, is a common usage, of great public convenience to the commercial world. The mode pursued here, is believed to be common to all. If therefore an endorsement has the effect contended for, it is a matter of great public concern, that it should be distinctly understood. The consequence will be, either that the practice of transmitting bills will cease, to the great injury of commercial dealers, or that banks will charge for their services, in proportion to the increased risk to which they are exposed. That the law has not been so understood, must, I think, be admitted; nor can 1 believe, that either the bank or Messrs. Earps M‘Main, supposed for one moment, that these bills were to be governed by the strict rules of the commercial law, as to foreign bills of exchange. To enable the plaintiff to avail himself of the form, without the substance, would be to give the transaction an effect, not within the contemplation of either party. It is certainly true, as is stated by Lord Ellektboeough in Leadbeater v. Farran, 5 M. & S. 349, that if an agent sign only his own name, whether as drawer, endorser, or acceptor, he will (unless in the case of a government agent, contracting in its behalf,) be considered as the principal, and be personally liable as such, unless he add some restriction or qualifying words, as “ sans recours,” or “ without recourse to me,” or “ drawn or endorsed to transfer the interest only, and not to incur any personal liability ;” for it is an universal rule, that a man who puts his name to a bill, thereby makes himself liable, unless he states
The court looks beyond the face of the bill. We regard substance, not form. In the case at the bar, as presented to us on the record, the only duty of the bank was to transmit the bill. It was neither accepted nor paid; and if any negligence has occurred, it is not to be imputed to the defendants, but to their correspondent, for whom they are not responsible.
It is urged, as a reason to prevent the reversal of the judgment, that there have been seven settlements between the parties, and it is true, that the bank book of Earps M‘Main has been settled seven times. But this is not such a settlement as can alter the rights of either party. The accounts are still open to examination and correction. There is no pretence to say, that either intended any such effect.
It has been contended, the bank should have tendered the bills to Earps Sp M'Main ; but,'for what purpose, I do not understand. The debt, as between the original parties, remains unchanged. It would be no defence for them that these drafts were outstanding. As nothing was paid for it, it was neither an equitable nor legal assignment of the debt. The bank neither did, nor did intend; to become purchasers of the drafts. It remains now tonotice an objection which has been pressed upon the attention of the court by the counsel for the defendant in error.
The eleventh article of the act of the twenty-fifth of March, 1820, provides, that no stockholder indebted to the bank for a debt actually due and unpaid, shall be authorized to make a transfer or receive a dividend, until such debt be discharged, or security to the satisfaction of the directors be given for the same. The objections are three. 1st. That the bank had no right to refuse a transfer of the stock of one of the firm for a debt due from the partnership. 2nd. That they had an ample security, arising from the deposits of the firm, for their debt, — and, 3rd. That the firm was not in debt to the bank, because the amount deposited to their credit was greater than the sum now in controversy. As to the first objection, we think, that as the separate property is liable for the debts of the firm, the act was intended to give the bank a lien not only on the joint stock, but also on the stock held by each member of the partnership. The directors had a right to choose between them. Of this Mr. Earp has no reason to complain. Nor do we think there is anything in the second objection. The bank had no lien on the deposits. It was for Mr. Earp to offer reasonable security. If reasonable security had been offered and refused, of which the jury would doubtless be the
The third objection is grounded on the assumption of a fact denied by the other party, viz., that they had a balance in bank more than sufficient to pay the amount of these bills. If there was a doubt about the fact, it should have been submitted to the jury, with' a direction from the court on the point of law. , But as this case must go to another jury, the parties have a right to the opinion of this court, on the supposition that the fact is as stated by the counsel for the defendant in error. The question is, were Earps ¿p M'Main at the time the bank refused to permit the transfer, indebted to the bank for a debt actually due and unpaid, within the meaning of the act of the twenty-fifth of March, 1824? The case supposes, that on a settlement of accounts, there was a balance in favour of the firm, allowing the bank credit on account of the bills : That instead of Earps Sp M‘Main’s being indebted to the bank, the bank was indebted to them: That the proper course was, not to refuse permission to transfer, but to withhold payment of so much of the deposits of the firm as was required to pay the amount of the bills improperly credited in account. If the bank had dishonoured the plaintiff’s check, it would have been a much harsher proceeding than the course pursued. Still, the plaintiff may stand on his legal right. The point is not without difficulty, but I have come to the conclusion, that the bank were justifiable, under the circumstances of the case, in refusing to permit the transfer. If the firm had been indebted on a note discounted by the bank, they would have a lien on the stock, without regard to the amount of their deposits. It would be open to them to adopt one of two courses — either to have charged the amount of the note, or to have relied for their security on the lien which the act gives them. The extension on the books of the bank was equivalent to payment. These funds have been used as other deposits. It then becomes a debt, within the meaning of the act.
It cannot but be observed, that the basis of the opinion of the court, is, that the Mechanics Bank was an agent for the transmission of the bills: That their only duty was to forward the bills and credit the proceeds when received. If, however, on another trial, the jury should believe, under the direction of the court, that the parties entered into a special contract, different from the general usage, to collect the bills: That the Bank of Virginia was not alone their correspondent, but agent for that purpose, then a different case will be presented. In such an inquiry, the proof of the fact of such an engagement will lie on the plaintiff, and it will be material for him to show, that the bank received compensation for their services in collecting the bills. I say compensation for their services in collecting the bills, for a charge of one half or three quarters per cent, to cover expenses and difference of exchange, will not affect the question. If the undertaking of the bank was to collect, and not merely to trans
Judgment reversed, and a venire de novo awarded.