Railroad Co. v. National Bank

Nаtional Railroad Bank. be those All required make .ques- therefor. compensation determina- tions before court below for corpe properly will tion on and the case down. law facts when-the goes

Decree affirmed. Company National Bank. brought by paper an the holder of 1. The in action indorsers, against subsequent against bar to action is not a his maker, pendency the first action. was not notified of the of who upon' parties by judgment equally all the estoppel 2. An conclusive may repudiated privies,, not invoked or at the1 action anti their require. pleasure of them as his interest of one transfer, negotiable paper by to a of before creditor The indorsement debt, although maturity, it is merely for an antecedent without indulgence, improper paper, express agreement an use '6f such his as its of commercial business transfer and is as much in the usual course bona ease is the affected the debt. In neither holder of fide prior which he had no notice. of or defences between State, controlled.by decisions of are nut 4. The courts the United States of (16 general Tyson 1) questions law. Pet. courts on commercial Swift y. (100 289) Oates Bank Ú. S. National reaffirmed. to the Circuit Court of United States Error York. New Southern District National Bank of was an- action The This Repub- The Newtown City New York Brooklyn lic Ráilroad Company. — facts, is this: case, as made an statement The agreed the laws under of- The corporation organized company, State, 9, 1873, York, executed, New at Brooklyn, May $5,000, four months note for the sum of its payable promissory treasurer, LeCount, its date the -order of after William Y. It indorsed at the Atlantic State Bank Brooklyn. Co., blank, him, a firm com- & first and then'by-Palmer S., Palmer, for- Palmer, Jr., and Anson Thomas posed the financial and the latter agent mer being president the larger portion together owning company, of raising money It made for the stock. Only purpose n & nor Palmer thereon for thе Neither LeCount’ company. Oct. Oo. 1880.] received consideration for tbeir indorsements. respective' was, others, The note thus indorsed with the com- placed by the hands of & a firm note- Hutchinson pany Ingersoll, Street, brokers Wall and sale. for negotiation Prior to the execution of the note Hutchinson. & Ingersoll had bank. borrowed from the how- frequently money They, ever, account, it, other, had;no.transactions no and with kept than those to made. reference will now be which .October, 1872,

In month of made them'a bank first interest, $25,000, call loan at cent of on collaterals. seven per 1873, them on made to other call loans col- Subsequently, laterals, interest, 11, at the same rate of as March follows: $15,000; $10,000; 11, 15, $10,000; 16, March April May $10,000; 20, $20,000; 4, 23,'$10,000; $15,000; June May May 6, $12,000; $10,000; 12, 19, $36,000; June June June and $10,000. 11, one, of' Each these loans was July separate and distinct lot of collaterals. Hutchinson upon particular were in & the habit of Ingersoll vari- borrowing money or ous banks and from firms lots of upon specific .individuals collaterals^ $36,000 June, 1873, on

The loan of 19th was several upon as collateral kers, 8, 1873, had no until or Aug. information knowledge of the Palmel-s with of the connection the railroad company, or of the the or attending circumstances indorse- making suit, the note in or of the thereof, ment purpose or of any relations, or communication between Hutchinson dealings, & and the the note .that parties-to (except Ingersoll, knew they be' & Hutchinson or that the Ingersoll note note-brokers), else than business was ordinary anything paper, there or.that the as to of said right Hutchinson & any Inger- it. Nor did or the soll to railroad negotiate pledge company- the firm had with parted know suspect ied hypothe 15, note until Aug. said reason certain made to by use,. advances company,

The & became indebted'to latter, Hutchinson the Ingersoll, on 1873, $600. in the sum of On the the 8th fifteenth August, 1873, it tendered that sum the ¡firm,and August, .to de- day-of $¿,000 note. a-return the manded same During month bank, the tender to a like demanded the it made note. (cid:127) $36,000 loan was full out of the collaterals paid -The given matured, without secure its payment, respectively fie suit, $4,580 to the note in the first resorting being Oct. Co. v. National 1880.]-. 4, 22, 1878, 1874, last and the leav- April

J-uly payment’.being $5,000 the note in'the bank’s possession. ing . insolvent. collaterals Hutchinson' & are col- Ingersoll The. $2,408.61. $86,000 lected exceeded the loan by 11, 1873, was a $10,000 loan of there On balance July bank, 21, 1876, $5,136.68 after due the Nov. exhausting had in its been collaterals possession specially pledged amount, loan, with interest to secure and crediting collected, of á be now referred to. certain to- judgment 1874, Co., sued &

In Palmer indorsers upon the.bank suit, in New note in Court of York. The cáse Supreme referee, was sent to who rendered favor of the $601, for which seems be the amount due bank’ railroad to Hutchinson & That company Ingersoll. judgment, costs, was satisfied’. with ’ railroad, The action the bank present com- $5,^00 to recover the amount of-the note executed "the pany on 1873, latter the 9th of in the hands of May, placed & for sale Hutchinson benefit of the Ingersoll company. that, It liable to the bank -agreed company upon note, 1876, $5,136.68. amount would be as of Nov. -bank, court below The and the gave judgment com- out sued this writ. pany William,Dorsheimer for the Mr'. plaintiff error. matter is

The res for there judicata, determination, was a York, of New Court -the’same Supreme subject-mat^ ter in a between the same or their controversy privies. It is true there were defendants not the makers of note. makers and indorsers have Although independ- interests, instance, ent this yet they, The note privies. never had valid The -inception. making indorsing Avithout Averealike consideration. Neither the maker nor the. could incur note, on the indorsers such liability except from the arise unauthorized action of Hutchinson & might (cid:127) n Ingersoll in it to the bank. pledging “ term not The confined to privies-”’is persons interested Tomlin, 218; real estate Law Dict. 2 Bouv. nor is it (3 382), same, nomine, true eo only parties, bound aby Clark, v. 497; Green 5 Den. s. c. 13 judgment. (N. Barb. Y.) in: 2 vol. v. [Sup

18 278; Co., 22 id. 57; Kent v. River Hudson Y.) (N. ” “ The N. Y. 664. expression parties v. 48 Taylor Spader, It inсludes all those to the record. not confined-to the parties suit. a direct interest in the who have subject-matter ; 7 Barb. Stanton, Ehle v. (N. Duer 87 Bates Y.), Bingham, v. Y.) 494. (N. as res judicata, be not construed

Even if judgment further sense, proceeding the strict estopped bank tribunal,- abided its own selected with this action. It it, after rendered, satisfaction of and entered .there to be- the the court determined which the money accepting The claim was the note. extinguished due amount upon whole v. and*satisfaction. Woodworth that acceptance Spofford, 51; Williams, Hoare, id. v. McLean, 168; King Sedam 9; Hibbard, 3 N. H. Farrell W. 44 & 13 Mees. similar and the same tried pleadings,

This case was upoh that, the single exception facts1as with paper state 22, 1873, not have varied result which would signed’July here. It was the case there, signed no strengthens way made, was without considera both had been loans after long it. The bank was taken agree no action tion, upon did. loan, it-in. It nor did it refrain from calling extend York, that, under the New be conceded adjudications must to recover more than not in that case entitled the bank awarded, all the it had lien securities siim unless was termed decision 'a & Ingersoll, Hutchinson “ them were not those of lien.” Its relations with banker’s not, therefore, customer, could and such lien banker or dealers with the were not plaintiff, They depositors attach. In the cases where no account there. and kept arisen, was a banker lien has asserting-it such a the party had been from whom the acquired. person quoad them, under circum claimed special some of lien was In arise, unless stances, no lien can on a banker's pledge, customer exists. The banker relation of banker and Even of the customer. is the financial England general agent this, would not case like though there the lien apply of-banker relation parties did occupy actually legal Barnett, Bowsher, Brandas v. 5 T. customer. Davis R. 19 Oct. .Railroad 1880.] , 787; 1 430 12.Cl. & Fin. John. Jones v. Bolland Peppercorn, Bank, Bank 271; Agra 1 M. re v. & In Bygrave, Ry. European Claim, Law 8 Ch. 41. Rep. of a lien Outside of as to the asserted specified the’question ”

“ Scott, v. banker recover. Ocean Bank cannot plaintiff 118; Lawrence, 293; 23 id. McBride v. N. Y. v. 36 Clarke 657; 450; Barb. Van Bank, Farmers’ 26 c. 25 s. id. (N. Y.) 312; v. Exchange Namee v. Bank id. West American Tray, 8 Bank, Corlies, 175; 46 id. 44 v. id. American Bank Exchange 19; 559; Bank, Bank v. id. Franklin 24 Farrington Neponset Leland, 259; v. 5 sect. Story, Agency, Metc. (Mass.) Bank, 337; CommercialBank v. Marine Bay Keyes (N. Y.), 5 Johns. Ch. Coddington, s. c. Johns. Y.) (N. (N. Y.) doctrine, These decisions' all affirm be now this and it may lajv considered as the settled the State of New York. The relied plaintiff 16 Pet. 1. upon Tyson, Swift

1. An examination of that case will show that the acceptance was, another, sued with upon transferred in &promis- payment of note, which was when were sory given received. All that .up is, was there decided that an innocent third party acquire a title to a note if he debt, takes it in pre-existing as well as if he makes an immediate advance it. upon

2. But for conceding, purposes argument, a note as party additional to ah receiving existing claim takes it free between antecedent parties, this is such not a case. The note was as such given loan, which has been since The cannot paid. right recovery extend to a subsequent loan made differ- independent ent collaterals.

3. The cases in the relied books .below English were upc-n those of loans or words, balancés. In continuing done, notes had party or omitted holding do, some act on the faith thereof.

Here there was no to extend agreement the second loan. An examination of shows that the Tyson point Swift “ taken on the argument bill of ex- acceptánce been, defendant change York, in New having given contract was to be tbe laws'of regulated that State.” The Co. v. National Bank.

reporter’ “This says: before the question brought court the certificate of 'division.”

In the case at bar the Inas- clearly presented. much York, as these are both residents of New and the parties there, contract was made and the her tri- resorted to plaintiff bunals for the assertion of its and'obtained a rights, judg- ment satisfaction, ‍‌‌​‌​​​‌​​​‌​​​​‌‌​‌​‌‌​​‌​​​‌‌‌‌​​‌​​​‌‌​​​‌‌​​‍it received and payment, gave contractus; the case should be determined loci and lex by court, submitted, this it is should the decisions' of the accept courts of that this case. State governing Rodman,

Mr. Thomas H. contra. The doctrine v. Pet. (16 Tyson explicit 1) in Swift decisive in favor of the It was and en reaffirmed .plaintiff. forced v. Roots How. and has been McCarty (21 432), Quinn Hard, courts. v. State adopted applied ; 273; Brooks, 43 Vt. Russell id. Atkinson v. v. 47 375 Splater, 569; ; Fisher, id. v. 26 Fisher 98 Mass. 303 Stoddard v. Kim ball, 469; 205; Hall, 6 Cush. Roberts v. Conn. 37 Bank (Mass.) 515; Little, I. v. 5 R. Williams v. 11 Carrington, Republic ; ; Millison, McClure, Ill. v. N. H. 66 Bowmanv. 36 Manning ; 260; 36 id. 490 v. 8 Cal. Giovanovich v. Payne Bensley, Isaacs, Bank, 15; 454; id. Citizens’ 26 La. Ann. Smith v. Allaire Hartshorne, ; McMichael, v. 92; v. 21 N. J. L. 665 Armour 36 id. Baltimore, 540; Maitland v. Citizens’ National Bank 40 Md. Iowa, Genesi, Lair, 9; Bonaud v. 42 Ga. 639. Robins v. (cid:127) 19, 1873, made, had of June not been If pledge businéss as a national organized doing plaintiff, banking association, would had the to hold the note in have suit right loan. Hutchinson on the second & Tngersoll deficiency of the on habit of money were col- borrowing plaintiff has a lien for a balance banker re general (In laterals. A Claim, Bank, Bank Law 8 Ch. Agra Rep. 41), European contract, unless the latter be it is not excluded special therewith. inconsistent is not tenable. The defence of former recovery

The judg- .a between the same rendered in a suit parties, not ment was maker and indorser to which between is no there privity 75. A Estoppel, of estoppel applies. Bigelow, judgment doctrine note does not of a maker. discharge indorser against Co. Oct.,1880.] ^National.Bank. 21- 162; 5 Han Y.), (N. Russell Erwin Carpenter, Manuf. & Hitchcock, 6 Man. & G. Pritchard claim was not satisfied The plaintiff’s Part of the debt. the indorsers for a part judgment against of, the indorser does discharge and release payment by, Notes, note Commercial sect. maker! Promissory Story, 24 Pick. Bank Cunningham, (Mass.) Harlan, facts, delivered the after Mr. Justice stating of the court. opinion has in error is'that there

The first proposition plaintiff determination a court been a final competent jurisdiction, the same between the same their subject-' privies, upon here in contention rests upon matter as that This controversy. York, action of.New Court Supreme the. Co., as the indorsers instituted bank Palmer & suit, of the note in bar to court constitutes no

The the State clearly judgment bind Personal parties the action. judgments only present n was not a to the railroad their company party privies. The Co., nor did it notice action Palmer & receive against separate was, therefore, It the the of from latter of that'suit. pendency Had manner affected the in no judgment. the'company time, would, due it received such notice in perhaps, although record, have been to the estopped;, not technically party indorsers, fróm accommodation least it and its say- as between the latter were bound judgment, pay the ing however, an entire fraud or collusion. obtained without Being, record, or in that had no to the it right, opportunity stranger bank, of control the the claim the to'Controvert .to proceeding, witnesses-,or to defence, to introduce or cross-examine prosecute error to the a writ of judgment. Co., had Palmer & the bank

If, the obtained action against and, note, for full amount the unable the being of judgment it, the railroad the latter would not had sued collect company, action, the in that to which been have judgment precluded of the of it had not been not a which was pendency it party,.and notified, defence it from have asserting any might against so, it results that the cannot This note. being comparv plead as State court a bar this action. judgment An estoppel, a court of arising'out judgment competent the' jurisdiction, conclusive all upon equally action and their It not be invoked or privies. repudiated of one as his .at interest pleasure parties, may happen to require.

The the maker and indorsers was not liability joint, several, and, therefore, an action against indorsers, indorsement, the contract of could not bar aсtion maker, the bank separate not. against certainly —: where maker was notice without from the indorsers of the of the action them. pendency against next The com- proposition right involves railroad show, bank, as to. that the pany note was executed delivered to Hutchinson & for the land Ingersoll only purpose for raising that, conse- money upon company, had no it as.collateral secu- quently, they authority pledge pwn for their indebtedness to the bank. It rity will have been observed, facts, statement of the note in suit those among the bank as call pledged security $36,000,'.made Howes, loan June & Hyatt, Cm, had whose notes been for the call loan pledged $10,000, 19, 1873, insolvent, made June become having '22,-1873, Hutchinson & at the Ingersoll, July request bank, 19,1873, the' executed dated June writing, whereby they securities, bonds, stocks, action, or other- pledged things bank, theretofore with the whether property deposited specifi- not, for the cally any every and. indebtedness, held liability, bank, engagement were, become, or should liable. Al- way therefore, $36,Q00 the call .loan though, extinguished, suit, without note, note that resorting in. under the 22, 1873, made stood agreement July as pledged collateral call, also, $10,000 for the loan of security, July bank, seen, note, The have we received the before its matu- blank, indorsed in without rity, any express to agreement give time, but without notice that it was other than busi- ordinary ness that there was "thereto, defence and in paper, any- igno- rance for which it had been purposed executed and Co; '23 Oct. 1880.] v. National bank, under Did to & Hutchinson Ingersoll. delivered value, and as such circumstances; holder become a for these of commercial entitled, to principles recognized according or defences law, the equities to be against protected to have the other parties railroad may company (cid:127) note? it .considered, though, perhaps, This question carefully determined, in to be Tyson, not necessary absolutely Swift law instru- that the Pet. 1. After respecting negotiable stating but of the com- law of a ments was not the single country only, said.; court, Mr. world, the mercial speaking by Story, Justice “ debt we no hesitation in that a And have saying pre-existing of the a valuable in the. sense does constitute consideration gen- rule, stated as to instruments. eral negotiable already applicable however, be well admit true it Assuming may (which, holder doubt from the some generality language) of a instrument is unaffected with negotiable equities notice, no between o'f he has antecedent .which parties, only he it in the course of trade business where receives usual due, it we are consideration, becomes a-/valuable before for óf or as it security payment prepared say receiving known usual course debt according pre-existing for of continued trade and business. And upon principle,” -why; “ court, such a should not a debt be deemed pre-existing consideration ? the benefit and It is for convenience valuable commercial world as.wide an extent practicable give the credit and circulation of negotiable paper, may' advances, made for new purchases only pass thereof, secu- but also transfer as. payment debts. The creditor is enabled to thereby pre-existing rity debt, his thus or to give realize safely pro- secure credit, to enforce or forbear from steps taking legal longed debtor, also, has the his The advantage his making rights. But value to cash. establish equivalent securities conclusion-, be cannot applied negotiable paper the opposite debts, of or as without pre-existing between the and- antecedent letting original and circulation of such securities must the value parties, diminished, and the debtor driven the embarrass- essentially Bank. National n mentof thereof, discount, a -sale often at ruinous to making some third person, then the proceeds by circuity apply to the What, indeed, of his debts. such a payment doc- upon trine would become ofThat new notes class cases where large or, the same given other of renewal parties, way banks, in lieu of securities them security old discounted by arrived, which have one-half ? more than 'maturity Probably of all bank transactions our as well as those country, countries, are of this strike a fatal nature. The doctrine would blow at all discounts of securities negotiable for'pre-existing debts.” After a cases, the court review English proceeded “ establish, holder, They that a Iona directly taking fide note in

negotiable for a payment security pre-exist- debt, consideration, ing a- holder- for a valuable entitled protection. between the antecedent equities parties.”

The in that Case has been the opinion of criticism in subject courts, some because it seemed to go precise point beyond decided, to be when the bona necessary declaring fide note, holder of a negotiable taken collateral an security debt, antecedent between protected against .equities existing or antecedent original The brief dissent Mr. parties. Justice Catron was which renders it solely upon ground, certain that quite whole court was aware of the extent which the carried the opinion doctrines of the commercial law .the upon subject instruments transferred or deliv- negotiable ered as for antecedent In the security indebtedness. court, of this as then constituted Justice alone Catron (Mr. instrument, the holder of excepted), received before thereto, and without maturity, notice defence unaffected or defences of antecfedent parties, whether the equally note is taken as collateral for or security of previous indebtedness. we And understand the case of v. Roots McCarty 432). How. affirm (21 Swift Tyson, now under consideration. It was there point said: does “Nor the fact hills were assigned as collateral for a debt plaintiff pre-existing impair “ to recover.” The plaintiff’s right p. delivery ' Óut. 1880.] (cid:127) for a

bills as collateral plaintiff pre-existing debt, under the decision of p. legal.” Tyson, Swift hold- in this that the courts It remarked connection ' to a an opinion different rule have referred ing uniformly Ch. (N. Y.) Chancellor Kent in v. Johns. Bay Coddington (5 (N. reaffirmed in 54), Y.) v. Johns. Coddington Bay, however, the views-of is, to that There some reason believe In the that were modified. .later jurist eminent subsequently 81, his note editions of Commentaries iii. 5), prepared p. (vol. himself, reference is v. Hill made to Stalker McDonald (6 v. asserted in Cod in- (N. Y.), 93), principles Bay in an were re-examined maintained elaborate opin dington Walworth, ion to who took occasion Chancellor say in in v. was not correct declaring Tyson opinion Swift was, itself, circum a and without other debt pre-existing holder, stances,-a to entitle the Iona sufficient consideration fide note, not, notice, when it as to recover on the might without But Chancellor Kent be valid. original parties, between adds; “ Notes, 1, on note Mr. Justice Promissory p. Story, and am decision I Tyson, repeats sustains Swift and better concur in decision as inclined to plainer the. it his attention that the Of course did not doctrine.!’ escape declared the court Tyson prior parties Swift as be as the -note was' col shut out well when pledged merely debt, for as when a transferred lateral pre-existing security debt. or' such extinguishment payment concurrence author- general judicial According very elsewhere, it be as well as as regarded in this country ity — no being in commercial jurisprudence statutory settled there — is negotiable paper to the contrary regulations where debt; or where it is of' an antecedent received for transferred, indorsement, a debt as collateral security transfer; made, or at the time created, aor purchase debt, due, an under ex- agreement is secure transfer circumstances, thаt from the be or to implied the. press clearly is be debt delayed collection principal postponed matured; where time is be agreed the collateral until n overdue, in considera- a debt given upon actually given collateral as transfer paper security tion of the .of National Bank. therefor; or where note takes the of other place the transferred papér debt, collateral previously pledged for either at the time such debt due, was contracted or before became. —-in each of these cases the holder who takes the transferred before paper, notice, without or other- maturity, actua-l wise,,of thereto, defence to have received it in due held business, course and, law, the sense of the commercial value, becomes a holder entitled to enforce with- payment, out regard or defence which exists between any equity prior to such paper. these

Upon there seems this no day to propositions substantial conflict of But there is such conflict authority. where the note is transferred collateral merely, circumstances, without other created. debt previously ofOne courts which some grounds upon high authority refuse, cases, in such the rule announced in apply Swift is, that of in that kind the usual Tyson transactions and course But of commercial this ordinary' dealings. objec- tion is not the’ sustained the of commer- by usages recognized world, nor, think, cial .The as we sound reason. transfer by of debts constitutes negotiable for antecedent paper of material and an the of the commerce increasing portion in Such common transactions have become country. very financial circles. of the necessities of have out They grown, business, and, in these of commercial days activity, great debt- contribute both of to the benefit and convenience largely Parsons,.in and on the Law ors creditors. Mr. his treatise the Notes and Bills of discusses Promissory Exchange, gen- eral under 'three transfer of negotiable paper — one, where the is received as collateral secu- aspects, paper author, “'that, for We debts. concur with the rity antecedent established, when the the merchant' have of' law principles moré their control and their firmly unreservedly protec- merchant, tion over the instruments the of these trans- fers affected be to will held (not circumstances) by peculiar Parsons, and to rest consideration.” 1 regular, valid upon ,and- bank, at time before any discounted by maturity, the credit of Hutchinson either & placed Ingersoll, proceeds tanto, of to the discharge, one of of applied pro any directly them, made it would not loan's be doubted call previously the bank would equities protected against prior discount, its formal Instead Hutchinson procuring parties. secure the used it to ultimate of their payment & Ingersoll At the time the written debt to the bank. own agreement 'executed, 1873, note, this 22, others, was with by July 28 Co. v. National Bank. for debt then pledged or thereafter held security them,- the bank had the $10,000 to call in the right is,

loan, that immediate The require securities payment. become, which that loan worthless, rested had upon part, and it is evident that but’ for additional collat- deposit loan, eral securities bank would have 'in the called resorted to its remedies for the enforcement rightful legal was, circumstances, It payment. under duty- such debtors make toor .secure the debt. -It'was payment, them, and was in the usual important of commercial course transactions, to furnish such the bank If deceived security. toas the real as to ownership paper, purposes its execution and to Hutchinson & it was delivery Ingersollj thoge because the railroad intrusted it-to in a company form which indicated that the latter were holders rightful owners, with absolute of it for power dispose any pur- saw pose they proper. conclusion, therefore,

Our transfer, is that the before matu- rity'-, an antecedent negotiable paper, debt circumstances, without other if the be so merely, indorsed paper instrument, the holder becomes to the party although the transfer is without the creditor .for express agreement by is not an use of such is as indulgence, improper paper, mucli in the usual course of commercial business as its trans- case, fer in of such debt. In either bona fide holder unaffected or defences between equities prior par- ties, of which he had no notice. This- conclusion is abundantly sustained different A determination this by authority. court would, we both apprehend, surprise greatly legal profession ¿ind the commercial world. Notes, See Bills and Bigelow’s Daniel, 502 25, ; Inst. c. sects. 820—833 etseq.; Neg. (2d ed.) Notes, 186, sects. Story, ed.), Promissory (7th by-Thorn- Parsons, 4, Notes and Bills sect. dyke; c. (2d ed.)* and Redfield & Bills of Bigelow’s Cases Ex- Leading Notes, change where the authorities are Promissory cited the authors. is, however, that, It insisted the course of deci- judicial York, sion in New transferred as collat- negotiable paper merely eral debt, an antecedent subject Oct. 1880.] Co. National Bank. transfer.; at the time of that the bank existing

of prior parties York, New and the other citi- located in parties being (cid:127)being State, the contract the same been there having zens is bound to and follow the decision made, this court accept ' court, it meets whether our or not. This approval State of the statute which de- rests contention provision “ States, the several the laws of where that except clares treaties, statutes of the other- Constitution, or United States shall be rules of decision wise or regarded require provide, law, States, in in the courts of the at common United trials where cases apply.” they true should that we to this case

It is undoubtedly apply announced court of the State highest principles York, a different conclusion would have been reached New announced. That learned court has held that already collat- the holder of transferred negotiable'paper merely debt, more, not a for an antecedent is eral nothing within, value, rules commercial law which holder those prior such paper against parties. protect here is concluded our former deci- The presented sions. outset, remark, tbe the section of the statute of at

We same as the States quoted already thirty- United Act. section original Judiciary fourth the contention was that this court In Tyson (supra), Swift the decisions of the courts in all to follow State was obliged “ But this court said: order In where apply. cases they e'ssential, therefore, to hold maintain argument, ’ ‘ in this section includes within the of its word laws scope, of the local tribunals. In the the decisions ordinary meaning it will contended that deci- hardly use language are, most, laws. evi- of courts constitute sions They only are, and are not of themselves the laws laws. dence of what re-examined, reversed, and are often qualified by the They tliemsélves, found to be either whenever are defec- courts ill-founded, tive, or otherwise incorrect. The laws of State understood to mean rules and enactments more usually thereof, authority long-estab- legislative promulgated all the vari- the force In local customs laws. having lished (cid:127) Ot. ous cases which have hitherto come before us decisión this court have true uniformly supposed interpretation section limited its to thirty-fourth State laws application local; that is to to strictly statutes of say, positive the' State, and' the construction thereof the local tri- adopted by bunals, and to and titles to rights a things having permanent estate, such as the and locality, titles to rights real and other matters and immovable intra-territorial their nature and It has character. never been us that the section supposed by did or was to apply, to a designed of more apply, questions nature, not at all general or dependent local statutes local upon of as, a fixed and : to usages permanent operation example, of construction contracts or other written instru- ordinary ments, and law, of especially questions general commercial where the State are called tribunals the like upon perform ourselves; is, functions as to 'ascertain upon rea- general and what is the true soning legal analogies exposition instrument, contract or or what is the rule furnished just law to commercial the. principles case.. And govern we have not now the slightest this difficulty sec- .holding tion, construction, its true intendment and upon lim- strictly ited to local statutes and local of the character usages before n stated, doeá not extend to contracts and other instruments nature, a commerial true interpretation effect whereof not in are be the decisions of the local sought, tribu- but in the and doctrines general of commercial principles nals^ decisions of the local jurisprudence. Undoubtedly, the. tribu- nals ‍‌‌​‌​​​‌​​​‌​​​​‌‌​‌​‌‌​​‌​​​‌‌‌‌​​‌​​​‌‌​​​‌‌​​‍such are entitled' to and upon will receive the subjects court; deliberate attention and mqst respect this but they rules, cannot furnish or conclusive positive authority,' by own áre to be bound our judgments up governed.” v. In The Providence Insurance Carpenter Washington Co. Pet. decided same term 495); with (16 Tyson, Swift determine certain the law questions of insur- necessary “ said: The The court under' questions ance. our considera- law, are tion commercial questions general depend upon’ construction a contract of insurance which is no character, means local local regulated by any policy Whatever customs. the decisions of State re'kpect,,therefore, 3Í Oct. 1880.] on such a tribunals have subject, they certainly may cannot conclude entitled to respect, great bound this we are of this court. interpret On contrary, our of its true intent аnd own instrument opinion according from all which can be obtained aided lights objects, whatsoever; result to which we and if external sources the. courts, differs from these learned State we have arrived ' to alter our it, but it cannot be permitted judgment.” regret had we before In National Bank U. S. (100 239), Oates under consideration. That was now an us precise question bank, Alabama, citizen located action national State, note there executed and nego promissory It was contended the decision tiated. Supreme should as the law of Alabama accepted Court governing — We, however, held to some referring parties. rights — that the’ Federal -courts were not decisions our previous “ decisions of the courts of questions the State upon bound by law. ... seen that commercial have We already general of the of under com Alabama placed protection statutes in subject no should as importance far ás of decision practicable, world. uniformity throughout

Bills of and notes are exchange commercial promissory sense, in the strictest and paper as such must ever be regarded their, instruments, favored as as well Of on account affairs; as their universal quality, convenience in mercantile the rule is that Everywhere be transferred in- they may by dorsement, or when indorsed or made blank payable bearer are transferable mere International by delivery. n their use regulations encourage safe and convenient me- dium for the settlement of balances mercantile among men Go. Oct. 1880.] decision nations, course

of different judicial and unembarrassed their full calculated to restrain or impede would trade or domestic for the circulation purposes .foreign Goodman be to the soundest policy. principles public contrary Simonds, 343, 364. v 20 How. n to show that plaintiff Sufficient corporation appears declaration, and in the became' the holder of the notе de -ribed refused, action that,, it instituted.the present being recover, made, been the amount. Service having assumpsit defences, which are set the defendant several- up appeared ' in its filed in the case. exhibited answer Certain pro- fully notice, followed, -the it not ceedings necessary submitted the cause consent waived a jury parties by of facts. Court an Hearing the Circuit statement agreed had, in favor of and the rendered was- Circuit Court - suit, and costs for the amount of the note plaintiff out the writ of error'.' and the sued defendant present it not but will errors necessary assigned, Eight n examination, as the the several assignments separate give than three involve more .do questions presented properly the cause of action is barred 1. That material by propositions in an action a former by plaintiff against recovery it inasmuch as of the note. That indorsers plaintiff, debt, for a note as collateral holds the pre-existing within the holder same meaning is not a bona fide be- rule which shuts out the commercial proof to the instrument. That the antecedent tween in view of the facts exhibited the State the law of plaintiff, statement, to the benefit of that is not entitled agreed the law of the furnishes rule, and that State regard the rule of decision Federal courts. such a case Court, from which- were made the Circuit findings Special note, maker defendant it appears treasurer, it it’s whom it was to. the order of payable blank, also indorsed and that was indorsed of Palmer & consisting president firm Company, defendant. corporation financial agent n made and to show that the note was Ego ugh appears the use of indorsed for sole of raising purpose money VOL. XII. Railroad National Bank. defendant, -been to either of nothing having paid

indorsers for 'their indorsement. When executed and duly blank, indorsed in the defendant the note placed with dthers in the hands of a firm of note-brokers for sale to raise money for its use. Prior to that, .the same note-brokers had fre- n plaintiff; borrowed quently from the money corporation did not bank, account with the they keep and had no transactions, with the same than those set forth in the of the court. findings were,

Twelve call-loans at seven cent interest made per different times to the note-brokers ..plaintiff on collat- erals, enumerated, and described in the specifically findings, each of which was other, and had no separate reference to any and 'it lpt that each was made appears upon separate wit, collaterals. Two of $36,000, those loans, to one for one, and the last $10,000, which is for will be the subject special .comment case. disposing Before the brokers $36,000, for the loan of applied appears had all their loans obtained from they paid previous and that plaintiff, .collaterals, the loan procured $36,000 which was note among described the find- Other brokers, banks made loans ings. do capitalists tnese collaterals as and the taking three weeks security, plaintiff later $10,000 more, loaned them the four taking notes mentioned in the findings. at that time held Adequate collaterals were the plaintiff

n foreach loans, those but it appears promisors one loan, collaterals for the last within eleven given advanced, after the failed in business and days money became and that of that fact notoriously bankrupt, knowledge that, reached the it was known that the plaintiff. Prior brokers insolvent, who the loans were -and the' negotiated show that at the ex- findings they, request plaintiff, ecuted and delivered to-it the instrument exhibited in the tran- bonds, securities, stocks, script, they agreed or other them with property deposited by plaintiff might it, be held be deemed for all their indebtedness as more set forth plaintiff, fully findings. the;d.efend- Certain were made brokers to advances by.the Co.-v. Oct. 1880.] indebted to them

ant, the latter became reason of which §600,“ the sum and it of defendant appears the and sum both to the tenderеd that brokers plaintiff, of .the return note in suit. demanded the the note obtained in full of '-was by large

Payment it for .with out of the'collaterals originally deposited plaintiff collected from it the purpose, appears'that moneys the sum the that loan those collaterals exceeded amount by on §2,403.61, the due so that entire balance 'remaining §5,906.99. loan was the last the was first sued out

Process against, enforce'.payment indorsers, recovered and in that action the plaintiff judgment §600, sum, suit, the was sum o’f with costs duly the due, col- ; and it that the balance the deducting appears pa-id the in- from the collaterals and the lections against judgment with, costs, dorsers, which, §5,136.68, is interest and entered Circuit .the judgment Cpurt. rendered in courts jurisdiction

Judgments competent until same-are conclusive between parties privies or in manner set aside and annfilled. reversed some has once tried and decided court When fact been by n it .contested between jurisdiction, again cannot competent court, their -the same or same or parties privies -it that the same involved matter appear directly and that were the merits cause decided in.' pleadings' first case. bound, in such case are Parties' estoppel, privies by n (cid:127) or the holder of a bill exchange promissory indorsers well as note his pursue may remedy, against as stated the immediate Consequently, by promissory party. or indorsee a bill of Mr. an exchange Bigelow, promissory successively note sue all prior concurrently he is election, condition that at his entitled subject .the' 55; to but one satisfaction. Bigelow, Estoppel (2d ed.), Webb, 478; 2 v. Barn. & 4 T. R. Britten v. Haywood, Bishop ; ; Wither, v. 483 v. 515 Mer Burgess Cress. Stra. Windham 468; Hilliard, ; rill, 318 v. 4 Taunt. N. H. Porter Farwell v. 10 Mass. Ingraham, a case is

Authorities to show that the holder in such Railroad- Co. National sue maker because he has recovered estopped the indorser are numerous and decisive. Russell & Erwin 162; 5 Hun Y.), (N. Story, Carpenter, Manuf. Hitchcock, and that the loaned the full amount plaintiff of the note to the of the defendant and the note agents took indorsed in blank as collateral for the loan before maturity. are None these matters and it is disputed, and un- equally true that the whole the loaned went deniably into money defendant, the hands of the in of the pursuance arrangement it made with its own agents.

Neither nor fraud mistake is or even in alleged suggested matters, to of tjiese one from respect follows, which it any as a conclusion, that the .necessary legal plaintiff the actual became ’ holder of in the note faith before good maturity by delivery defendant, the of the and that it as such agents assumed .the to demand of the maker when responsibility payment the due, and, fell to note if not the notice paid, give of non- required to the indorsers. payment show that

Beyond, question, findings plaintiff faith became a note described in the good party declara- tion before and that as such it holder was bound to maturity, indorsers, measures to fix the adopt proper liability that if it had maker, failed to demand or to payment give indorsers, notice to the required it would have become liable from whom it received noté for party what- ever loss ensued from such Such a holder of a neglect. foreign bill of if not must see that it is exchange, paid maturity, and for the same duly protested; reason holder of an inland Co. v. Oct. 1880.] note must see to it that

bill or negotiable proper promissory taken, case of or are acceptor non-payment steps to the instrument maker, who to fix the liability be would otherwise discharged. character of a may transferred'by

Securities negotiable delivered, or if indorsed at the time indorsement made they bearer, be transferred or made blank payable either new indorsement. In without mere delivery case, holder, full title acquires equal, t"he things being that who- correct commercial rule instrument, being a valid becomes holder of faith ever lawfully good оr note before bill of exchange promissory maturity, indorsed in blank or when direct indorsement by delivery bearer, assumes or made responsibility, payable due, or demand when it falls entering protest making paid the case notice of and. non-payment may require; giving holder, such a transfer the he that in all cases of whether paid transferrer, made new for the note or advances or cash surrendered, in substitution of collaterals it prior accepted it in sold or of antecedent in- received property debtedness, as collateral or- debt pre-existing ,in for the is a holder for value liability pledgor, any pecuniary of business within the the usual course com- meaning law, is unaffected mercial between an- by any equities he took it faith and without tecedent parties, provided .good the title of the from' impeach anything person notice received. whom was at the

Authorities time that a agree everywhere present for holder of instrument a valuable bona con negotiable fide sideration, without notice of its anything impeaches an if he takes it under indorsement made before validity, the title holds unaffected between- maturity, by any even antecedent between them it parties, though 1, v. be without 16 Pet. legal validity. 15. Tyson, Swift the' kind are Instruments of commercial in the strict- paper sense, must ever be regai-ded securities, est favored on universal of their convenience in account mercantile transac- rule is that settled tions and the transferees of the same hold clothed instrument with it was presumption nego- 38 '(cid:127)Railroad value, business,

tiated in the usual course of at the time of execution, and without notice of between the any equities Gilbert, antecedent to the instrument. Collins v. 94 U. S. Possession of such an instrument before if indorsed maturity, bearer, in blank or is evidence that payable prima facie n holder the owner and lawful same; possessor is. short- of had that he nothing at the proof time he knowledge, it, took .of the facts which as between impeaсh title antecedent not even parties, unattended1 gross negligence, with mala is sufficient to overcome the effect fides, of that evidence, or to(cid:127) invalidate of the holder supported the.title v. 870; Goodman presumption. 4 Ad. & E. Harvey, 343, Simonds, 365; Goodman 20 How. Bank v. Leighton, v. 61; Guild, Exch. Wheeler v. Rep. (Mass.) Pick. v. N. 34 Y. Badger, 545, 550; Magee in- rule action (cid:127)Apply transferee an.

maker, of a note blank, indorsed in or payable bearer, and it-is clear that he has do in the nothing'to opening case his to"the except prove signatures instrument introduce the same in evidence, as the instrument goes clbtiled with the the-jury presumption that'the plaintiff became the holder of same for value its'date in the usual course lousiness, without notice of his anything impeach title. 502; Pfout, Pettee v. v. Way Richardson, Gray (Mass.), id. 412.

Clothed as the 'instrument with the described presump tion, the not bound evidence to show plaintiff give any' that he value the same until the other gave has party clearly consideration was proved that the instru illegal, ment was fraudulent in1its or that it had inception, been lost or stolen before it came of the holder. possession Fitch Jones, 238; v. Braine, 5 & Bl. El. Smith 16 Ad. & E. n. s. Featherstone, 3 & Hall H. N. 282.

Cases arise where the or the supposed-defect infirmity j on the face of the instrument title‘appears where that is so, whether who question took it notice party had .the construction; not -is in and must be de general termined the court Pond, as matter law'. Andrews (cid:127) 89 Oct. 1880.] v. Davis, 318; v. 65; 14 Brown v. id. Fowler Brantley, 13 Pet. T. R. 3 that proposi- of.the highest support cases authority

Decided it is different matter when but it tion, proposed very, of the holder facts title by proof the circum- impeach itself, he is then to be of the instrument outside stances affected, all, has occurred between other parties. if wrhat at but he well claim he is his own acts For plainly responsible, acts from any consequences flowing exemption others, that he had be first shown knowledge it unless clearly he at the time became and circumstances such facts of such'facts and Actual holder of the instrument. knowledge holder; title must to defeat circumstances be'proved he or not is a whether had such and the knowledge question and, like other scien- of fact questions jury, ter, to their determination. must submitted securities

Indorsers protection1 enjoyed, successful was made to that rule for before any attempt ages con annex to it unless it qualification, appeared any sideration that the instrument was fraudulént was illegal,-.or or that it had been lost or stolen before it came inception, Case, 235; 2 the holder. Hinton's Show. possession r 452; 126; Race, 1 Salk. Mille Burr. v. 1 Anonymous, 1516; Rhodes, id. 2 Peacock v. Grant Vaughan, Doug. Weston, Lawson Esp. - the whole covered those decisions it Throughout period understood that title bona was holder universally fide unaffected between the antecedent parties; was decided but it of' the indorser subsequently samé, no valid title to the had that such facts instrument indorsee, known to and circumstances were at time of transfer, as have caused a would person ordinary pru had no dence to indorser to transfer the right suspect benefit, the same for own instrument or to use his then the maker, holder, as is not entitled acceptor to. Cubitt, 3 Barn. & Cress. 466. recover. Gill followed, that rule- was For brief but it was never period end of twelve years ..satisfactory, distinctly the tribunal- where was first overruled promulgated. Railroad Co. National Bank. 870; v. Anderson, Goodman 4 Ad. & E. Harvey, Arbouin v. & n. 1 Ad. E. s. 498. hold, cited, Denman, must ease

We said Lord in the last that the owner of a bill of entitled to is recover exchange it if he has come and that that1 fact is honestly, implied that, to meet inference so possession, prima facie raised, fraud, be some such matter must proved. felony, Abundant case authority support proposition which for a has relaxed rule been overruled for period more than half a is in found cases reported century already law, cited, and Mr. the old rule of that the Chitty says holder of a transferable can delivery title, a he himself does not to a give possess, person value, same bona those decisions taking again fide in re-established its fullest extent. Bills Chitty, (13th ed.), ; Bank, Worcester v. 257 Bank Dorchester Milton County & Cush. to that Conclusive conclusion is (Mass.) support found decisions not .cited and in the text-writers previously Neal, of Bank 22 How. highest authority. Pittsburgh of 96; Lardner, 2 Wall. 110. Murray fraud, even short not Mr. Nothing gross negligence, says with Justice unattended on the Story, part mala.fides instrument, taker will invalidate his title so-as to prevent him the amount. from recoveiing he would not sonal title to the instru property, acquire good ment, if it that existed between the equities antecedent appeared that and would have enabled the taker parties, vigilant inquiry to have ascertained the true character of those but equities; tribunal of the ‍‌‌​‌​​​‌​​​‌​​​​‌‌​‌​‌‌​​‌​​​‌‌‌‌​​‌​​​‌‌​​​‌‌​​‍.the State has her appellate exploded legal securities, as and has esy applied negotiable respect the true rule as administered commercial adopted courts Hall. v. of Westminster 5 Sandf. Pringle Phillips, Y.) (N. 143, ; v. N. Y. Sage, 157 Welch 47 Cubitt,

Prior decision the case-of Gill v. the rule short the facts nothing proof and knowledge circumstances between the constituting equities antecedent holder; enable would the maker defend the suit of the court in that case decided that the transferee could- not recover if the circumstances under which the transfer took were such as would have excited the naturally place suspicion man. careful State court decisions prudent many followed that erroneous but the cases case itself has theory; been overrüled tribunal it where had its authoritatively £he as and the old rule re-established the later origin, adjudica tions has been in instances this court and repeated adopted by courts of the where the State highest present controversy ; v. Ad. arose. Goodman 4 & E. 870 Goodman v. Si Harvey, ; monds, Bank, 20 How. v. 364 National Seybel Currency 288, 295; Y.N. Dutchess Insurance Co.v. id. 226. Hachfield, Much it be seen will from the observa- рrogress, preceding tions,, has been made within the last in-securing thirty years to mercantile controversies of decision in. respect

uniformity courts, tbe courts of this and State Federal, tbe between from which most those of the parent country, country derived; commercial rules and our usages Howry v. 34 Mich. 29. Eppinger, the defendant that that, and still it is insisted

Concede for a note a collateral security took the merely plaintiff debt, consideration at without present any, pre-existing transfer, tabes a of the and that’ a who time party such regarded acquir under circumstances cannot i¿ business, course of in the usual consequently ing decisions- it he takes Many subject prior equities. if there is a considera concur that" tjie present State courts transfer, at the time of the previous independent.of tion bill of indebtedness, a a' negotiable exchange party acquiring note as a collateral for before maturity promissory facts debt, which without knowledge pre-existing:, the antecedent the title as between parties, thereby impeach business, that his course of a holder in usual becomes it not be affected so that will by any prior title complete,, the extent óf the at least to between parties, Bank, 3 Sandf. it'-is so held. debt White Springfield Smith, 4 Duer New York Marbled Works Y.) (N. Iron Y.), (N. owner

When pledged by apparent paper commercial advances, the as collateral security pledgee matures before of hold it for the amount snch faith is ifi good entitled-to. the it turns out afterwards that advances', though making papty owner, and a for the true the mere agent pledge of breach duty principal. transaction ,a Belmont Beckwith, 65; 35 Y. v v. Murray Bank Hoge, Branch N. Ill. 43. 81 is the transfer is

Where paid pledgee, full-value without notice 'of before any prior made maturity, of title the holder of the antecedent parties, between defeated, he not' by proof is that might security subject of notice the exercise active obtained such vigilance. have of or will con- or the sale other advances goods property Cash the'transfer; nor is such a a for consideration pay- stitute good n 43 Oct. 1880.] Eailroad n ment settled that or it is well the- sale indispensable,'as equally debt, of of or the surrender actual a prior discharge precedent collaterals, or a time for binding agreement give pay due, of effect. v. ment a debt then will have the same Elting Burn, 237; Johns. Morton v. & E. 4 7 Ad. Vanderlyn, (N. Y.) 168; 19; Walker, v. Jennison Cush. Baker v. Stafford, 1 (Mass.) 465; Mascall, 452; Mee. id. & W. Walton Wheeler Pick. 5 T. Kearslake Slocum, Morgan, R. (Mass.) 513. Mr. Justice show that the receiv-

Examples given by Story debt, a note as a or forbearance sue ing present debt, securities,. claim or or of or an exchange becoming or other act at the or for the benefit surety, doing any request indorser, or maker a sufficient considera- will constitute for. tion a note as as the well or the money, payment making advances, credit, of- or a present giving' -discharge debt, or the of work or labor at the performance request National Bank. is

conclusion will follow where the trans negotiable security ferred ar collateral without other consideration security, any than incident to the transaction and the delay and creditor in what flows from the relation debtor- respect debt 'the transferee which the obligation existing assumes of the instrument before reception courts are referred Standard decisions State maturity. the defendant it is held that the title where Bay Codding holder under such circumstances not v. good. ton, 59; 54, 5 Johns. Johns. Bay, Ch. Y.) Coddington (N. McDonald, 93, 644; Stalker v. 6 Hill (N. Y.) Y.) (N. rule have since the commercial adopted Sixty elapsed years was first that series decisions promul- .by enforced it does not never has commanded gated, yet court countenance Westminster sitting slightest any differences of existed Hall. Earnest opinion country extent of respect among judicial-men protection the. afforded a Iona holder of a the commercial law fide between the negotiable security antecedent but there no authentic evidence substantial parties, arose in- courts ever thé opinion country diversity under consideration. touching -in available in business want of engaged being Partners means, his to a to enable note bank the senior gave member account, and the member firm to their junior overdraw for half amount. to the maker note his note first gave thé transactions the last the course of payee In subsequent for a indorsed it his creditors collateral note pre refused, the note the holders debt. being existing Payment maker, who made defence that the were sued the plaintiffs holders; otherwise, rendered but the court bona held fide in favor of the opinions being plaintiffs, separate Watson, the court. Heywood given by justices.of 1 M. P.& s. c. Bing. case of Percival for the note in the

Consideration given C., the court unanimously & R. 180), M. (2 Brampton held, that, as a collateral if the note had been transferred merely debt, the for a might properly previous plaintiffs ¿escribed holders valuable consideration. Oct. Railroad Co.-w. National Bank. 1880.]

Holders of a transferred before negotiable security maturity as a collateral for a débt become security pre-existing parties the instrument such an extent that assume the re demand and the notice making sponsibility giving required indorser; the of the is to fix it held that where a liability creditor received such a from the debtor and failed to security make seasonable demand of that his laches be payment, tween himself and his debtor were to the equivalent Purcell, of the collateral. v. B. Peacock C. n. s. Williams, 11 Metc. Taylor (Mass.) Proof fraud defeat the of the in such a right holder ease, but is where there no such the settled rule proof in is that a England instrument as party taking negotiable collateral takes it for a sufficient consideration and security is Morris, entitled recover. Poirier v. 22 Law J. n. s. Rep. ; Q. B. c. 2 & 313 El. s. Bl.

Securities of the kind were the defendant with deposited by debt, the as collaterals for a plaintiffs pre-existing among which was in the check and it that the controversy, appeared defendants failed to the debt the having pay plaintiffs brought check, an action on the the defence the want of consid- being value; eration that the were not for holders but plaintiffs otherwise, ruled the Court and rendered Exchequer favor of the which the defendant plaintiffs, appealed Chamber. Both the were heard Exchequer fully tribunal, and court the the decided that the title of a appellate to a creditor transferred him on negotiable account security debt, if of a received Iona without notice of pre-existing fide, debtor, indefeasible, in the title of the whether any infirmity the instrument at a future time on payable demand. Misa, Law 10 Ex. 153. Currie Rep. kinds, seems,

Questions of various were discussed court; but statement subordinate who justice gave is, that court tribunal appellate opinion almost was addressed whether argument entirely question debt formed itself a sufficient an consideration existing demand, on so as to constitute the payable creditor to whom'it value; was a holder court, paid Lush 'Justice decided that giving opinion, n Rank. for the Efis reasons conclusion affirmative." cogent he remarked the course opinión satisfactory, “ be, nor could it it was not on disputed argument, had bill or note, check been a instead of a payable date,.however short, would at a title plaintiffs’ subsequent ”(cid:127) added, have to.which he also been unimpeachable; authorities, both-in had been' established by proposition many and in courts. the American country Ntf was- made to controvert that ap- proposition attempt there was it could be that delay. implied any agreement notj that decided that the in the court (cid:127)Suffice it to that say regard “ no foundation either or had principle supposed distinction that it does not' remark proceeded authority,” absent, is consideration follow that entirely thejegal element is where the sеcurity immediately. payable a the is doubtless consideration trans-: Forbearance good á, instrument; in the but valuable consideration fer of such an case, law, in that con- as court remarked sense the the may interest, benefit .to. sist some .profit, accruing either in.- right, detriment, of time of some extension .'the one payment, party, suffered, or undertaken the- loss, or by responsibility given, other. demand, and, as on inas Call-loans- payable may regarded this case a collateral in' was

much as the payable'at future-day, the, -is unreasonable one the not an arrange implication' an to the as a benefit to- ment injury holder.and operated Such a reason doubtless have the debtor pledgor. is is means certain that it the 'true foun but it no weight; holder, as title of' the other authorities hold that' of the dation for such some- is in purpose security-transferred debt, condition sense a conditional being payment not if the realized. Belshaw that the debt revives 191-205; Owen, 18 & Bush, B. Mee. W. 11 C. Griffiths 58, 64. v. Misa) case satisfied; not (Currie Still the'defendant rendered of affirmance judgment appealed' Oct. 1880.] instruc- of Lords. to the House Much

Exchequer Chamber the issue between the parties is derived in tion respect of the maintained the counsel referring propositions are the most important: following appellant, consideration, inasmuch as a total failure of 1.' That there was his’ received value for draft the defendant 'Misa never any- four bills which were dishonored. 2. That except the. check in a bill nor a exchange, promissory note, for the on demand. nor an order money debt is not a consid- 3. That the existence .of sufficient past eration for the transfer the check. .for the

Enough reported arguments appellant was left undone his show that counsel their nothing 'sustain to do. to those the learned power propositions'; all, overruled them affirmed the rendered judges n (cid:127) courts. the two lower In giving opinion, principal that, said that hе Lord Chelmsford entertained no doubt check, between the defendant and there depositor consideration, was a sufficient the bankers were value, and he holders for remark that the counsel proceeded admit of that judges appellant opinion will of the case. All the concurred dispose judges value, holders holders' for result same as were Currie, in the court of Misa v. original jurisdiction. App. Cas. Bench, views are Queen’s held in th'e

Corresponding and in Court of the Court of Appeals, Where High Chancery. of a means false or-condition which he party by. pretence, fulfil, does not another to him a note or procures party give of in' favor a third to he it and acceptance person, pays whom value, Queen’s who receives Iona the Bench decided it fide that the remains same, liable to the because his giver pay transfer the same acceptance facie, value imports prima and he can relieve his himself from to the only promise pay value, holder that he is not a holder that by showing he faith, received the instrument in bad or with notice Russell, 34, Watson v. B. & S. 40. infirmity Two the that without justices‘concurred proposition and the Chief Justice'also concurred in any qualification, the bo ad Rah it the debt of the holder was the extent of same to pledged J., Shaw, secure, C. with the con sqme which is the rule-that associates, of all his nearly twenty currence adopted years 40. Bank v. 8 Metc. Chapin, earlier.- (Mass.) Chicopee securities, when transferred discharge pre Commercial admitted, the holder a title which debt, give good existing the in a and Court shut out- Appeals prior equities; will was no that there difference case decided recent regard consideration be and present between found past of a bill of for a the transfer valu books, lading held that transferee defeats the to a bona right able consideration fide the goods, vendor unpaid transitu stoppage n although not thе was time consideration given the past the transferee the lawful delivered to the bill lading Scott, Q.2 D. B. Leask v. holder. their debtors for better bankers security,

Certain pressed debtors., promised .and having comply request, the with.the the ware merchandise-for purpose,'evidenced.by hypothecated n .certificates, the debtors to deliver soon agreed house as. warehouse. They, could from procured as they warrants,'but.refused same, debtors, deliver the procured ’ suit, to which instituted the when- present plaintiffs demurred, existence of the debt insisting respondents for such an consideration is no sufficient agreement. Among, contended the respondents allegations things, where the did a transaction bill not exhibit complainants n their demand for certain to abstain suing promised time;' held that the bankers did in Vice-Chancellor receive, did the benefit of arid that respondents (cid:127)effect give, would and benefit that of forbearance some they degree had not made the agreement, have obtained Bank v. overruled. Alliance Broom demurrer accordingly Co., 2 & Drew. Sm. & n more, these are sufficient to authorities show that Without but one voice the courts of subject there is and that with speak point country, they, parent well .calculated to excite of unanimity uniformity degree the- rule decision and to confidence admiration inspire court, but is both just. only every every ."Not correct Oct. 1880.] oourt,'in concurs

judge every country proposi- tion, of such before holder a negotiable security- to a debt notice of as collateral without maturity, pre-existing the usual is a bona holder for value in any prior equities; fide business, course of that his title to the instrument is good, such between the unaffected wholly by any prior equities Text-writers the same antecedent parties.. everywhere adopt rule, rule and commend as the correct and true recogijize - of decision. . b,e

So, if a or note indorsed as a bill collateral security, says Chittv, that is an сonsideration to enable the adequate party thereon, he sue advanced ho credit-on the bill or though new time; note at the and he down the same rule as to the lays of a bill note in of a debt. receipt pre-existing Bills 74. (13th Chitty, ed'.),

In the course of Mr. ordinary Justice things, says Story, holder to be the holder of presumed such a secu- prima facie value, and he is not -bound to' evidence that rity he give it, value for until the other (cid:127)gave establishes the party ,or want or consideration, failure or that illegality bill had been lost or before it came stolen -to the possession show, the holder. It then be incumbent- on' him to that- it, he has value for not, because.he given under such cir- ought cumstances, to be in a better situation than placed the antece- dent whom he obtained the instrument. through Story, 193; Bills sect. Co. (cid:127) collateral in the of the all such holder

agreed -security, value, cases, is lor if the holder he took bona fide between the antecedent without notice of equities parties, any or or if there was to. time any agreement, express implied, give ; that, of but admits the debt to:tke debtor he where payment of case, the neither of conditions exists in the- is question these he one of more Those two propositions supports by difficulty. sound and then reasons convincing proceeds suggestions, the for proposition, argument examine reached where there is no same conclusion should be even new from the relation consideration other than what arises of debtor creditor, nor extend the time of agreement any express is, issue in such a view case must turn His payment. is whether there' suspension implied due, until the collateral becomes debt an the prior as as one in terms, is binding expressed .implied agreement no is one entertains least doubt. which it supposed author, are and the Different' examples put by proper stated; case is but in each he supposed presumption finally that, as-the the conclusion inasmuch holder such a comes to the collateral and that he becomes party security, case burden as such holder of fixing liability thereby assumes indorser, he is to be as a holder for regarded properly, of the faith and without took the-collateral notice value, good he Daniel, between the antecedent parties. of any 827-830; Securities Blanchard v. (2d ed.), Negotiable sects. 162, Stevens, Maitland v. 3 Cush. Na (Mass.) Citizens' Baltimore, 40 Md. Bank tional theories involved are controversy pre- Three examination; for Parsons caréful 1. Where ne- Mr. sented by debt; is an antecedent received gotiable paper as it is of that is con- discussion topic unnecessary, further holder in such a case that the case is in this title ceded cash. 2. is contents were it as if the paid as good .Where debt. Where pre-existing received collateral a debt-contracted as collateral received security'for n date transfer. states, taken to as the author are usually

Two objections, That, no consideration two theories: 1. of the last new each National Bank. Oct. 1880.] bolder, he .is .injured impeachment paid by title. 2. That such a transfer as is in either of his supposed cases is not made in the usual the last two One course busi- ness.- securities,

Transfers purpose supposed, made, seldoni the execution of some except agreement ; which the transferrer is to be benefited as understanding, by credit, or forbearance or further or the delay giving up collaterals, another, other the substitution of one collateral for or the the means of promise forego obtaining indemnity or security. of,’ cases, it is

Few arise where the presumed, interest consulted; that; is not so debtor if the rule should be confined _ oases within the defence, abstract of such falling a theory would cease to be of much nor importance, would> that', true it often-be the title of the holder should be im- . as, he would be left in as condition peached, he was good befofe." Parsons, Notes, Bills and 1 219.

Debtors are often benefited but creditors are by-delay, usually kind, Transactions of the said, sufferers. is are not to be .it business; as transfers made usual course of but regarded is the court unable to conclusion, as the statement adopt of the learned author is correct, believed to be that a large of the use that is made of part is as a means negotiable paper or debts borrowing money securing .of previously contracted.-^. kind, Bills and instruments the’ indorsed in blank or pay- bearer, able to when ‍‌‌​‌​​​‌​​​‌​​​​‌‌​‌​‌‌​​‌​​​‌‌‌‌​​‌​​​‌‌​​​‌‌​​‍to an transferred innocent holder create same as if indorsed at the time of the liability transfer. a executed a note to Where take a note, party up such prior delivered it and his to a third as collateral agent person secu- debt, his own Shaw,, J.,‘ for C. held pre-éxisting rity took a title as holder the maker to good extent debt, of his but that he could not recover more than the amount of his debt. Kimball, Stoddard v. pre-existing 6 Cush. (Mass.) cases, that, number,, almost without

Adjudged decide where debt is pre-existing title of the discharged,, innocent is holder question; beyond is frequent made "to attempt is that there show distinction between such a note in taking v. Co. National Bank. of a payment debt and it as a pre-existing collateral taking for sueb a due, is One whose debt payment. says Redfield, J., must it, C. or become a in the com- bankrupt pay If, mercial note, sense. instead of he bill money, gives either on time or at whether this is form or sight, payment is debt, time, as collateral to given his he and is saved gains from the and ruin disgrace consequent upon stopping payment. Viewed be, as'it the debtor' in either case derives benefit of an the creditor will not implied' understanding unless the new press immediately proves payment, sécurity and, does, if it that the creditor unproductive, may.pursue any Difference form between proper remedy. payment existed; admitted, but the collateral it-was court security, held that was no diffеrence in there unanimously principle, the indorsement was so as provided unqualified, impose upon the holder the law to conform to the merchant in obligation Brooks, 569, Atkinson v. enforcing payment. Vt. decisions, citation, numerous for Other State too hold that a of, -a note in as a collateral party "taking payment for, debt, is a bona holder for precedent a valua fide consideration, ble and that he entitled to the same protection aas holder who receives the same in deliv goods transfer, time of ered or one who cash for the pays Hartshorne, when it instrument Allaire v. 21 N. delivered. 191; 187, J. L. 84 id. Hamilton v. Culver Vought, v. Benedict, 7, 10; Johnson v. 27 Ohio St. Gray Way, (Mass.), 388; Scribner, Gwynn Lee, v. Brush v. 11 Conn. 9 Gill 138. (Md.),

Even is that the of the title under the suppose plaintiffs good law, of the commercial as understood and administered in rule courts, the’Federal still it is insisted the defendants that the case, courts have a different in such a State .rule adopted that the rule of is the one State decision the case applicable before, State; are Both citizens of the same court. must: be if the and it admitted that State rule applicable case, then the of the Circuit Court erroneous. ruling Various were advanced arguments support proposition, most the one derived is that pressed thirty-fourth which Act, section of the that the laws of provides Judiciary Oct. 1880.] Co. v. treaties, or Constitution, States, where'.the except

the several shall or provide, otherwise reqúire of the United States statutes law in in trials at common rules of decision be regarded where, States, fin cases they apply. of the courts United 92. 1 Stat. common law decision in trials at rules of laws furnish

State leaves courts, in cases where they apply, in the Federal laws that those do understood apply it be plainly do not cases, apply and was decided early Southard, v. Federal courts. of the Wyman process practice 10 Wheat. State, and more the statutes of a espe on

In cases depending land, the court titles adopts in those representing cially State, construction is settled where that construction of Wendell, Cranch, v. and can bé ascertained. Lessee Polk's 87, 98 settled in the has been rule of real Where any property court that courts, this the same rule will State applied by Chew, Jackson Wheat. would them. be applied by court refuse to this will arise where often Controversies court, of a as in the-construction of th'e a decision State adopt become, has will, the decision acqui unless it'appears Vick, escéncé, 3 How. Lane a rule of State. property 464, 476. the rule of courts show that decisions from State Three n of the at that the courts State sup

decision period adopted by that-the- defendants, we the views regret say port later, in the same tribunals decisions of some of the tendency Bank New York direction. Atlantic National in the same Franklin, 55 N. Y. 235. fact, decide the it becomes ques- Such being necessary this court to the decisions of State'court compel tion whether decision, to be the case a rule of believed to the facts of apply law. conflict with the rule of commercial Nearly -in direct first since this have presented elapsed forty years then entertained decision. this court for Doubts were but, settled; rule was the State whether absolutely ad- decision, unconditionally point purposes n Then now chief mitted. argument support was that the was controlled proposition thirty- Act, section of the fourth to which the court re- Judiciary first “laws,” that the word place, by denying sponded,-in section, used in the included the decisions of the local tribunals within the its In scope meaning. ordinary meaning Mr. Justice it said be contended language, Story, will'hardly laws, that the decisions of the courts that, constitute adding most, is, are evidence of what the law and are not of they only re-examined, reversed, themselves laws. often and They themselves, the courts whenever are' found qualified by to or be either defective ill-founded or.otherwise incorrect. His views were that the laws aof State are more usually be rules and understood enactments legislature, to established customs the force of local laws. long having None, believed, view, dissent-from and can we have that', in of that cases opinion saying prior authority time,.the section, court had to uniformly supposed when was limited properly interpreted, application local, and'the construction thereof State laws.strictly tribunals, and local and titles rights things per- having a. estate, and manent such as titles to and real locality, rights matters immovable and intra-territorial other their nature character; that the court had never that the sec- supposed or was tion the construction of applied, designed apply, instruments, contracts other written nor to ordinary ques- commercial tions law general enforced, illustrations, were These views many — court decided member of the court but one concur every — section, its true intendment construc ring tion; is limited to local statutes and local strictly usages, that it does extend to contracts and other instruments aof nature, commercial the true effect of which interpretation tribunals, not in the decisions the local sought, are. and doctrines of commercial general principles jurispru 16 Pet. Tyson, dence. Swift

Judicial view's character were corresponding expressed Mansfield, Lord Bench, Chief Justice nearly King’s earlier, when he said that the maritime is not-the century law Oct. 1880.] National Bank. Railroad tbe law but' nations. general law of a particular country, 882 Burr. Luke Lyde, . of the case, in to that support referred

Mr. Justice Story court, the celebrated maxim of the decision quoted Cicero, is to the effect that mari- which, interpreted, liberally and another in one Mm thing is not one time law thing try to-mor- one and another nor different thing to-day country, nations, that, it is immutable im- row, but in all times 360. Translation -(London, 1858), by Yonge perishable. Bouvier, is a tos law, phrase employed Commercial says which to the of the relates the branch law rights denote the relations of commerce. persons engaged property adventures, in commercial they wherever engaged Persons domicile, business their have relations throughout have world, it results that law from which commercial the civilized other than is less local and more international any system law, of nations. the law except ordinances, States, other a learned Codes, laws, and says of. modern, writer, are received the courts ancient or whether in them- as containing any with not authority great respect, law merchant. selves, Wbiere but as evidence general decisions, cease to have contradicted they these are judicial law is decided to where value jurisdiction any Levi other (2d ed.), way. decisions of

Authoritative that support proposition, case, is also do not control such a derived the State courts court, other of this in which member every decisions court concurred. Washington v. The Providence Carpenter Co., Pet. Insurance fire in that case a mort-

Insurance was effected by amount the and one of the was as to the questions gagor, cases from insured entitled recover. State Reported rule, of decision. wére referred furnishing reports remarked, that Mr. Justice. argument, Story Responsive was a other the question question presented among things, law, of an the construction commercial involving general character, contract, which no local in-its insurance by means customs; that the decisions policy local regulated by are entitled to great respect, State tribunals Co. v. 5.6 case; conclude cannot of this court in such a and that this court is bound to the instrument accord- interpret own of its true intent and ing opinion objects. decisive views have often bеen this Equally expressed by one, cases, court deserves notice. special decided, the court Preliminary point ad-' very properly mitted that the Federal courts will due to the laws pay .regard tribunals; construction States their the State decided, but the court Mr. Justice Harlan giving opinion, this bound court the decisions of State courts law; commercial determining general court, such is the established doctrine of the so an frequently as to nounced not require extended citation of authorities Bank, ; in Oates National 100 U. S. support. 239 Amis Smith, 303, 314; 16 Pet. Treatise Conkling’s ed.), (5th. 140. to show that the decisions of

Argument this court referred to contradict the decisions of the State court the matter in upon decision is as that'is quite admitted. Nor is it- unnecessary, case, correct to that the suppose the leading views contradicting court, the State is to its full unsupported extent' (cid:127) that, of this court. decisions Instead of the doctrines of that case were in case, reaffirmed the directly fully following more than decided twelve later. years Watson Tarpley, How. 517. case,

State as shown in that had legislation, prescribed regu- in' lations respect protest bills and notice exchange, dishonor of their to repugnant the'requirements the law merchant; and this court held the State were regulations that or indorsee operative, bill, of the payee law, of the State his enforce spite might Federal rights court, defined and the decisións of recognized by this court. was there made Reference sentiments Lord expressed by Mansfield, that the maritime law was not-the law of one coun- ; of the commercial world and but -the only, court try decided (cid:127) commercial law not circumscribed .within any limits, and that citizens local the Federal resorting tribunals for the ascertainment of their rights' well claim the might the rules of benefit of commercial general law. Six of Oct. 1880.] v.-National Bank. Justice, court, held the same of tlie Chief including

justices case, still to which referеnce is made. views later special Simonds, 20 How. Goodman v.

Collaterals, case, held in that had been surrendered' previously made, when and the showed evidence arrangement new forbearance; court, an and the in order to pre- agreement dissent, case, vent a rested so far as respected consideration, facts; those it is deemed upon; special to state that two-thirds the court proper entirely approved of the views of Mr. Justice v. Ty- Story, expressed Swift son, his works bills valuable exchange prom- notes. that his Confirmation views issory proposition that decision are correct also derived from a note appended Commentaries, to the text of the third volume of Kent’s author, in which he that he is inclined distinguished says in that' to concur decision as the and better doctrine. plainer Kent, Com. Lim. ed.) Const. (12th Cooley, (4th ed.) decisions, in State titles real estate and transfers respect furnish the rule of decision in the property, usually Federal courts, virtue of the before-mentioned provision Act; is, but the established does not Judiciary practice character; in matters of a local except apply,' strictly statutes States and the positive say, interpre- tribunals, tations of same their own including rights titles to such as real things having permanent locality, prop- that it does not extend to and com- questions general erty, law, which that where mercial it'follows any controversy as to the of a to a bill arises liability party exchange, prom- note, or in one of the issory negotiable paper, other Federal courts, which is not determined words of.a State positive courts, statute,' or its as construed. the State meaning its Federal courts will to solution the apply general principles merchant, Daniel, of the law local decision. 1 regardless any sect. 10. Inst.. Neg. (2d ed.)

Transactions a commercial éxtend character throughout world,' and it is the civilized well they chiefly known other medium of bills of conducted through exchange of decision is a matter of instruments. negotiable Uniformity National Bank. convenience and great- public universal acknowl- necessity, commercial'nations. Should this edged by-all court adopt of decision which when principle carried into effect would different rules for the determination many establish of com- mercial controversies as there are States in Union, it would be considered as' it public must justly calamity, necessarily our depreciate securities markets foreign of the world our where merchants have commercial transac- tions. Stable immutable rules are to confidenceto necessary give

those who business, receive such securities course of .usual when blank, indorsed bearer, ill' or made to so that payable such a bill or note is consideration, made without or be lost or stolen, and afterwards be for value to one having negotiated no facts, of such businéss, the usual knowledge course of his title shall be and he be shall entitled to good, collect amount. desirable, of decision in such cases is

Uniformity highly these observations are sufficient- to show that is want- nothing but the concurrence ing of a accomplish great object courts, _none few more of the are more to State desired than the courts of York New It is Pennsylvania. concur no will distant hoped day.

For these reasons the conclusion is that should judgment be affirmed.

Mb. Justice Bbadlet. I in the ren- concur case, dered in this and in most of the reasons given But, in reference consideration of the opinion. transfer note collateral I do not security, regard obliga- tion assumed the indorsee bank), note (the present notice of as the give non-payment, only, consideration of such transfer/ The true consid- principal, indorsee, eration was the debt due from the indorsers to the and the or secure said 'Had debt. obligation pay been as a a given, mortgage, pledge collateral it would have been sustained the consid- property, equally eration referred and the obligation tonamely, debt. it or If the indorsers secure had pay payment. assigned Dayton. Oct. Bank National 1880.] of the bank to hold the for that the title purpose; mortgage that case indubitable. In would been prior have mortgage of the have might prevailed against equities mortgagor the. bank; a commercial because a is not title mortgage transfer consideration does whatever for any security, of com- But the bona transfer not cut off prior equities. fide ; such before does.cut off mercial maturity paper and in is held the creditor such title collateral every to its nature and such manner qualities. Security as appertain is a 'considera- for the of a debt owing good payment actually to a transfer of When sufficient tion, support property. as a such transfer is made for such it has due effect purpose, transfer, to the nature and incidents complete according note or bill of transferred. When it is a property promissory cut- it has the effect title and of absolute exchange, giving exist off conditions ting prior equities, provided ordinary it that If transferred before not give maturity effect. or. course, then, course, business, due .of it cannot have such effect. But 1 think it is well shown in the principal opinion that a transfer for the a debt is transfer purpose securing course. on the And that ends the argument due really subject. Dayton. Bank B.,

A., being proposed, money, indebted in consideration of a further loan (cid:127)deliver, sums, quantity stipulated of both certain of wood at a per proposal, agreeing price accepted B. cord. C. the wood receive made, A., price. pursuant agree- him at that The loan was parties, premises Held, ment delivered wood of C. passed by delivery, subject levy A.’s that the wood was title under executions thereafter issued his creditors. Court Supreme Wyoming Territory. Error The facts are stated in of the court. opinion Mr. Samuel and Mr. S. for the Jeremiah Shettabarger Wilson in error. plaintiff

Mr. A. for the defendant error. William Maury notes them among above-desoribed security; $5,000, 9, for note executed 1873. All the loans May by bank, $36,000,- to the one had .been off before prior paid that loan was made. .$10,000 1873, The loan of on 11th July, Howes, notes as collateral Two notes following security: $2,605.98 $3,540.15, & Co. and and two H. Hyatt, L. $3,320.17 $2,14.6.92. & Co. for and Ritch 1873, Howes, the 22d of On & July, Hyatt, having insolvent, become Hutchinson & Ingersoll executed deliv- bank, ered at its antedated request, June $36,000 was the date of the a- written (which instru- loan), “ ment, with the securities, bank that «11 they agreed whereby bonds, stocks, action, or other or things evidences property whatsoever, which or have been property time may any or hereafter be left account, us or our on deposited with by bank, said whether not, or pledged be held specifically may bank, pledged hereby said shall be deemed to be and are and. (cid:127) -Ct. for the indebtedness, payment- any every or on our bank, held said liability, engagement part, that on the when due and’ non-payment, sum payable, any n orsums of been money or. hereafter be have lent, said bank advanced to or for the paid,'or account or rise ,in us, or for which we are or become liable .may any way bank, or indebted bank, to said the said or president cashier, or at thereafter, time may immediately thereupon, any &c., sell, . . . and the net of sale to the apply proceeds pay- ment of sum or sums' due arid from us any to said payable bank, and hold of such net any surplus proceeds, together with securities, any remaining evidences property then held said- sold, bank and not property, and all other of our existing then liabilities and to said bank.” remaining engagements ' executed, no When writing was made agreement the.loan, or to refrain from extend it in. calling bank knew that The Hutchinson & were Ingersoll note-bro-

Notes

Notes Bills 218.. (2d ed.), Another courts have declined to ground upon'which some is, sanction the rule Tyson upon announced Swift .(cid:127)Oct. .Cо. 1880.] collateral, for an transfer negotiable paper merely — indorsee, debt is Surrendered the. antecedent nothing by between prior prevail deprives permit -transfer, time of- of no him advantage enjoyed right burdens, and him to him additional no subiects upon imposes additional no inconveniences. some, cases, but it is not true most This true in bemay note, ever when the nor, is it true upon in our opinion, transferee, is in such form as to make him a delivery dutjes him the instrument, tó upon impose party, law, must be which, discharged according commercial fix order to liability the holder in' paper' negotiable the indorser.' did the note suit as a mere The bank not'take agent it convenience due when suited the receive-the amount It received the note under an obli- to make debtor- payment. law, to it for present imposed pay- gation commercial ment, in the mode notice non-payment, give prescribed law. of’ settled rules of that We are opinion to fix the of the bank prior liability parties, by undertaking and due notice'’ case of non- due .payment for presentation — an undertaking necessarily implied by becoming payment, — instrument, was a sufficient consideration to party between existing parties, against equities protect it had no notice. It assumed duties and respon- value,- and should have the of a holder sibilities rights, The this correctness position. pertaining privileges like the how before us. in cases one The nóte rule is apparent form, and was delivered maker in suit Had’ it been of being negotiated. purpose regularly

notes certain law mercial payable money promissory ; but how far the of are parties place rights designated here. rules and doctrines of that law is Federal affected by determine, their as to what these upon courts own are.” doctrines rules and doctrine, which received of all the this approval To announced, have, first this court when we as our of members show, аdhered. We no reason for perceive steadily decisions whatever We could degree its modification any not. infringe case, it, without this disturbing endangering upon in. which, to be essential maintained in the rules of stability court, The decisions of the New York law. commercial of to follow are asked rights parties we determining made, there not in of contract are exposition under a any legis- of enactment of They express opinion lative State. under court, not as law local rights State, but as to their under the commer- rights general Union, where it law existing except cial throughout some modified or local statute. It is been changed have State, one local author- dependent law peculiar up9n v. out of the ity, arising on.e commercial world. usages court, it, State in .a case before Suppose should determine what were the laws of aswar to that and similar applicable' courts,, The cas.es. Federal State, in that sitting possessing, must be conceded, with the equal State court power determination must, such questions, coun- upon theory error, sel for the plaintiff conclusions of the State accept court as the for that of the laws true'interpretation, locality, war, and as the “law” of the.State in the sense “ statute which makes the laws of the States rules decision in trials at common law.” however, We that no apprehend, one would that far-in force of go State asserting binding decisions courts of the United States upon the when the latter in the of their functions, required, discharge judicial law, suits, consider questions general to which arising their jurisdiction extends. To so hold would be to defeat one for which those were established, objects courts introduce infinite confusion in their decisions such questions. Further would elaboration seem to be unnecessary. Judgment affirmed. Mi. Miller Justice and Mr. Justice Field dissented. Mr. .Bradley, Clifford Mr. con- .Justice Justice — delivered the curring judgment, following opinions.: Mr.- Justice Clifford. Commercial law is a system nations,- jurisprudence maritime acknowledged by ipore be, is it of that there

Notes sect. (7th Promissory ed.), Pritchard 6 Man. & G. so, it then Suppose insisted the defendant that the is not a plaintiff holder for value in the usual bona-fide course of business within the of the commercial law. meaning Questions of fact are set at tlie from which rest'by findings, the note is appears treasurer de- payable order, fendant whom it was indorsed in blank as well as n firm, consisting president financial agent that it was the maker' in hands company; placed of the brokers for sale to raise maker, for the use of the money

Notes Story, Promissory sect. 382. (7th ed.), the same learned person, says Every author, is in the treated sense the rule as a bona holder fide value, it, not who has advanced or other value for only money but who has received it in a debt, or has payment'of precedent it, a lien on or has taken it-as collateral for a precedent debt, or for future as well as for advances. on Bills past Story sect. 192. ed.), (4th modified rule referred to was During period recog- nized as law the courts of the where good it was country first it must be admitted -that the courts of promulgated, several rule, of the States in our own- the same accepted country that the effects from those pernicious resulting examples still to be seen some of the more recent -State decisions. time was made one to maintain that the holder of Attempt if he a received it as of a negotiable security, precedent Oct. 1880.] Co. v. debt, holder for value bona could regarded fide business, it without the usual course of even he took though transferrer, notice of in the title defect any between the antecedent that erroneous parties; rule of decision abandoned and overruled. Bank St. Albans Gilliland, Smith, 23 Wend. Small v. 1 Den. Y.) (N. 586; Edwards, Bills and Notes (N. Y.) (2d ed.), 322. also show that'it-was decided cases Reported during courts of samé State that if period ajparty good faith a holder without due took negotiable security inquiry, or with facts such and circumstances knowledge would man purchases put prudent upon inquiry in-making per

Notes party. Story, Promissory (7th ed.),'sect. however, Differences still exist where the transfer opinion, debt, is made as a collateral for a without pre-existing other than what consideration flows from the nature of- delivered, the contract at the the instrument is time and such as ba inferred from relation of debtor and creditor the- in! respect pre-existing"debt. Further show that where is argument negotiable .paper .received extinguishment pre-existing.-debt n holder is.entitled to protection quite unnecessary, support proposition, even this ..authorities country, l too numerous for ‍‌‌​‌​​​‌​​​‌​​​​‌‌​‌​‌‌​​‌​​​‌‌‌‌​​‌​​​‌‌​​​‌‌​​‍quite citation. v. Gramral Townsley 182; Parsons, Notes, 2 Pet. Bills and is it to add Nor that the title necessary anything prove the holder is if he took the note good outright goods sold and delivered to the property bf note t^ansfer-rer at-'the time the transfer was made. All this admitted, or if is so admitted established fully not-to re-' hylauthority further in -quire any argument Substantial uni- support'. (both exists in this formity judicial opinion and in country extent, to that but there is «-still stnne England diversity in this whether country decision .same

notes at a future to bills or day; defend- plied payable on demand that inasmuch-as check ant insisted payable .the consideration, there no because- did rule not apply,.as

Notes (4th sects. ed.), Story, (7th ed.), creditor, A to take says a bill as Byles, may collateral agree for a due, debt without his already affecting present, debt; to sue for the if a creditor elects right but, do, so to he becomes debtor, that extent of the the.trustee is'bound holder, the duties of a perform respect presentment dishonor, and, dó'so, notice of he fail to the parties'only actual, liable as no one but conditionally discharged, holder can those duties. perform Bills Am. Byles, (5th ed.), 369; Purcell, Peacock v. 32 L. J. s. c. 14 C. B. n. s. - qases often arise where there is a Litigated consid- present transfer;. eration and- given Mr. Daniel it regards vol. xii.

Case Details

Case Name: Railroad Co. v. National Bank

Court Name: Supreme Court of the United States

Date Published: May 10, 1880

Citation: 102 U.S. 14

Docket Number: 229

Court Abbreviation: SCOTUS