*1 THE DECISIONS
OF THE COURT OF THE SUPREME STATES, UNITED
AT TERM, W. George Tyson. John Swift Action in the Circuit Court exchange of New York on a of bill in New accepted citizen, instituted the holder, a of the state of Maine. The and acceptance allegations endorsement the bill were and admitted, the defence was rested on the bill had been received in and pre-existent acceptance given had been for lands which the had from the drawer of the acceptor purchased lands the drawer bill, which had no and that lands had title; quality been and the misrepresented; fraud purchaser drawer, imposed upon by and those who were co-owners of the in the The sale. land, co-operators had been received bona fide, and before it was accepted due. is negotiable There no a bona doubt th'at fide holder a a instrument for valuable con- without sideration, notice which between the facts implicate validity he antecedent if takes under án made before the samé endorsement becomes parties, although, holds the title unaffected recover due, thereon, facts; may legal antecedent be without transaction parties, validity. The holder of before is not bound he is bona due, paper, prove holder law fide for valuable without for the will consideration, notice'; that, presume rebutting on a absence all and therefore incumbent defendant, proof: n defence and thus to over to establish satisfactory contrary, way proofs title of the come the facie plaintiff. prima “ judiciary section aict of That declares, thirty-fourth laws where the or statutes of the several Constitution, treaties, United, except recognise regarded States shall otherwise shall be rules decision in provide, trials at common law the-Courts where States, cases they apply,” to be in- its limited uniformly supposed by application to state local: that the state, laws statutes of say, strictly positive rights thereof construction local and to and titles to tribunals, adopted by Vol. XVI. —A COURT. SUPREME v,
.'[Swift things having rights such as the and titles permanent locality, estates, real their, matters other immovable intraterritorial nature and character. The sec- not tion does extend to contracts other instruments of a commercial nature; effect, sought, true whereof interpretation decisions of the general local but in the and doctrines tribunals, jurispru- of commercial principles *2 dence. Un a Circuit Court of division from the of the United certificate States for-the of New York. Southern District Circuit
This action in the bill was instituted of a. state Portland, Maine, of on the exchange, dated first of five hundred and day 1836, for one thousand May, thirty-six dollars and cents; date, six months aftér drawn thirty payable by Keith, Nathaniel and S. and Norton, üpon the accepted by Jairus defendant, the to the order bill been drawn having of Nathaniel (cid:127)Norton, him endorsed to the and'by plaintiff. principal and the trial,amounted interest .on to the time to one of thousand bill,up .eight arid hundred dollars six cents. The and defence sixty-two to the action rested on the answers to of filed discovery by the defendant which it that against plaintiff; by appeared bill had Norton, been received him. from Nathaniel with by another the same draft-of amount in note payment protested drawn Keith, Norton and and which by him paid by had to the Maine was Bank. When the' draft received' thé by plain- tiff, it had been defendant, in accepted who by resided 'York. The had no' consideration plaintiff knowledge which had been and had no received for the other acceptance, transaction with the had the- drafts defendant. He received and acceptances note, with full belief payment protested that the same due, were to their and he justly according tenor; had no other note security except protested drafts, nor had he contract any. pr knowledge dealirig defendant the said draft of which Norton, out. arose.
The defendant then bill of offered to exchange prove was accepted him as by part purchase consideration certain Norton, lands Maine, in the state of which Keith and the drawers bill, owners, of. the to be the themselves represented . certain represented pf value, them to be .-made estimates great TERM, 1842. correct, and also warranted them be by were which them to the all of which land; title to convey good repre- contracted false; respect' were every fraudulent sentations never been able to make a title to Norton have Keith and said counsel, his objected whereupon plaintiff, lands: against testimony, said testimony, any. admission of of the consideration the failure or showing impeaching plaintiff, admitted under the facts aforesaid said bill accepted, him, said reading defendant, and those proven And in evidence. equity answers divided opinion point the Court was entitled the defendant mentioned, last whether, under facts as if the suit was between action the same-defence Norton, the said or the bill, say, original parties the. whether And and the defendant. Keith, .the Norton said was admissible as in defence objected so offered evidence in this action. the plaintiffs against *3 was, of law the- said or at the And point thereupon as stated of the counsel the said above for under request plaintiff, the of this to be certified Court, direction of under thé the States, this Court to the Court of the United seal of at Supreme thereof to held thereafter; finally the next be decided session last mentioned Court. the by said The case'was to the Court on printed submitted arguments Fessenden, Mr. and Mr. Dana, for the by by de- plaintiff;' fendant. offered
Mr. Fessenden defence and argued, objectéd i’nthis action. The to is no defence as against plaintiff right the first recover, of the on resting, place, admissions plaintiff and facie. The defendant, is established his by proof, prima First, course has admitted: that'the bill in proceeding, suit course, was during endorsed as plaintiff' due, about .five months before it became paper, to its according tenor.
Second, That was received he had no plaintiff, .when by notice, or intimation of fact knowledge, any dishonour he was bill; on the assured his debtor it contrary, would COURT. SUPREME
[Swift Tyson.] at afud'that' acceptances maturity, previous be'paid promptly had of land been maturity. of the sale given paid payment taken iii pre- Third, payment acceptance That had no other that the debt, security existent plaintiff and but and Keith this due to him. Norton acceptance, debt his of the character-for claim same an-acceptance residue he Keith; on Norton and arid receiving acceptance on been en- Keith, the note of had which had given-up Norton (cid:127) Child. dorsed one of Salina v. .Babcock and others, cases of Bank' -By 21.Wendell, 499, others, and Bank of Sandusky Scoville that the latest Wendell, 115, distinctly'appears, opinion as is, Court York if that seemingly of N'ew —rand otherwise, Court receiving negotiable had never decided —that in all of an antecedent same thing, paper as endorsee of such regards ’'recipient respects, rights other as he had consider- paid money, if valuable paper, the credit of time, ation for at 'the it, paper. with
But if cannot tnese. oases reconciled. are unsustained as they, Swift’s side of present question, they this the states in Union-; like other -of decisions of the case Of do, misinterpretation On an obvious resting, they the earliér and'contradicting,-- do, and Bay; they Coddington same in the case of War- very Court on point, decision referred to; tending, ren and -Lynch, do, to drive commercial of one of the negotiable paperout they still to overthrow the paths of its deci- greatest utility —are sions of this Courtfrin the cases of'Coolidge Payson, contended,, and Sunirall? It is Townsley part are, and that defendant, high bound that they *4 submission, with the bill follow them because unreasoning in was drawn on the in the- question of New city state the the and on account Of section of York; thirty-fourth judi- the seve- “the laws of which provides, ciary act Constitution, or statutes of the treaties, the ral where except or shall be re- States shall. otherwise provide, United require cases decision, as rules of in trials common law-in garded where they apply.” this, answer to after that, the-first ob- urged, place, TERM,
[Swift®.-Tyson.] the that the decisions of not pretended serving on, or are in to, founded exposi- York referred of New state, that statute of that phrase or constitution the the of, tion the in the section states,” ju- several thirty-fourth the “laws of else constitutional than act, nothing means written diciary that, if framers states; such statutes of system states writ- that all the had such had known act of Congress laws of government paramount authority constitutions ten wished to their states; and had not frame enactments in accurate, as well as and comprehensive, language popular they “statutes,” used the word technical would have appropriate word “ laws instead framed word legislature, If had intended to embrace in the
laws.” section tra- they otherwise derived common law of such states, or as ditionary, as .decisions of- state Courts; expounded being, they were, as scholars well as lawyers, would have incorporated section, in the of substitute by way addition, some such general of law.” In common phrase “systems parlance, word “laws,” means, plural, did mean in 1789, legislative enactments. The embraces, same word also and tech- popularly when nically, speaking regulations of the respective States, their constitutions of government, well as their legisla- tive enactments; and the former, as well as latter, were doubtless intended to be included in the thirty-fourth section. For these reasons word “laws,” instead of the word “statutes,” of the makes section. parti
It is admitted if bill had been delivered to the plaintiff Norton value delivered him, Norton, kt the time on the credit bill, strength the defence should be rejected. But it is contended part of defendant, that inasmuch as the received payment, though were payment absolute debt-; he though of, no evidence or security for, such the new except in his hands, received in security of -the old; the bill in was not to him trade, endorsed course usual so as him give any rights it, holder of different from those who transferred it person him; however he received it and in fairly good faith, and without notice thing which would him, it to disenable party transferring ' a *5 SUPREME COURT.
6 v.
[Swift Tyson.] however the fact as to acceptor it of its recover —and is the This court to lawfulness. decide: original so transferred Contended, being received endorsee, debt, gives all the of a pre-existing in which he would have had, if, at the acceptor as against rights he had it, it, received amount in paid time he money, endorser. be so. The Use of negotiable should It has certainly paper service to man, civilized in been of hardly facilitating greater and thus in equivalent money, transmission answering, itself, than in money some the purposes in respects, preventing in courts of law hostile collection of proceedings money effects of the principal good one Indeed, due. former is, suits at law. of fact, tends to point that it prevent thousands a bill by receiving suits prevented exchange with an additional name note, it, upon at a promissory payable which, of a debt, future in discharge day, although due, the could at the moment no other discharge But way. debtor if it law, that the comes to be settled creditor such an occa- ascertain sion, must, at his the additional peril, party, whose name is has no defence to its paper, good payment as toit such against person proposing creditor, it will transfer it, deter him in lieu receiving of the money from he demands; instances, suits, will, lead to in many otherwise would not have been commenced.
This once and decided the high again very question case, in the case involved in this et Coolidge al. v. et Payson al., 73, 2 Wheaton, 66 and in v. Townsley Sumrall, 2 Peters, 170 to 180. as to rule general is, that where it paper is not
unlawful and void he to inception, whom it is transferred current, form, while due who receives in good faith, and consideration,, for valuable without notice of any thing which would exonerate maker or itof from acceptor it to paying the one whom he it, from receives Can recover its amount from such maker or from acceptor, he although re- párty whom ceived could not. Lord 1 Salkeld, 126; Raymond, 738; Sal- keld, Grant 71; 1516. But Vaughan, Burrows, surely debt is a discharge of valuable consideration. just Comyn’s TERM, tv 1, 300, title, vol. York ed. “Action on page Digest, “3, Case B. of a debt a Discharge good upon Assumpsit,” raise an In Baker Arnold, assumpsit.” consideration *6 it was 279, decided the Court of New 3 Caines’ Rep. by Supreme that in an not in York, note, action endorsee of a void by creation, due, consideration, and endorsed before it became note, could hot be previous parties inquired In Russell v. 2 Johns. Ball, 50, into. a decision simi Rep. lar will Cited, be' found. Warren v. principles also, Lynch, Johns. later
But it on deci- defendant, contended of part sions have established an Court of New York and that a note of a in opposite.principle; receiving pre- payment in trade, debt course of nor existing not.receiving usual which the endorsee gives rights on consideration beyond endorser paper trade,” “usual course is rather and indefi- phrase, vague usual course debts, nite. It of'-'trade and it .once pay- *7 of that state; affected statute thebill any although of exchange on the was drawn of New York. city in otherwise, is that the But if law submitted decisions of the state is the Court of the for the Correction highest of v. Hoyt, Wheaton, 248. Errors'.. Gelson the Court of Er rors in of Bay decision has Coddington, with disapprobation. spoken of law, local,
If there but any question widely general -tip effects, its nature and It present question. is one in the citizens of states, .which different foreigners, their contests with each other, nay, nation of every civilized commer- world, cial interested. all without deeply By United States, this-Court is looked to judiciary.of whole na- tion, States, known as the whose commerce and transact are as diffused as is the of bills tions use widely exchange. wisdom the thirty-fourth and admitted section of obvious excellent, to our but delicate act, in reference and judiciary the section does not receive the complex system government, if. constyuction contended and which it is believed framers for> that act will lose its become and the nature and designed, folly; seems, mischiefs, in will; section as it be expe- productive will be lost of which its rience and remembrance benefits sight shall of, if the of the defendant urged prevail. part principle JANUARY TERM, 1842. . ' ovqr this Court control preserve can
How and affec- reason of the United States; people tions of control in which its consists, and which its own usefulness untrammelled learning would enable it naturally if its judgment maintain; records that it has be show decided —as compelled decide if the referred, section construction to, part advocated defendant, is established —the same identical question, arising first one exchange, on a vacil-. other, and. then with way, In what will lating inconsistency? light judicial character States of'the- United abroad, under such circumstances. appear In cases in which the Courts of the States juris- Unite.- Constitution, diction, United-States, and laws of the common mercantile law of the states respective applying tq. cases, is .as much governing submitted the actual con- sciences and judgments minds of the who consti- Courts, tute those to be considered and without declared, respect state any Court, decision binding authority, same in cases where the United States have not Courts ju- risdiction, is the best judgment Courts, of the state without to the decision of States, Court of the United respect as bind- authority. alone, ing Congress, Congress power regu- commerce late between the states. But it will fot impossible Congress regulate commerce if it left state Courts to declare in the absence of statute authoritatively point, force, of, and the meaning right parties under that most instrument of such important commerce—the bill of exchange; when drawn and held a citizen of one state, and an- citizen of accepted and payable other state. *8 Dana, Mr. for-the defendant. -of,
The first part was of Mr. Dana argument upon question, whether the -of by the bill of acceptance exchange York, defendant was not in New the contract h.aving-been given to be not regulated that state. This was by question laws of division, before the Court of. by the certificate brought there- discussion of the the counsel of the point by defendant fore omitted.
Mr. -whether, Dana the laws declined the question arguing SUPREME COURT. state of the of' New the defence set up by defendant admissible, would have he did not arose, suppose pro- the certificate upon of division. perly, tlje He did thought not in fact divide that point; but, gave on a case contrary,-they judgment made by the set aside the verdict for plaintiff, elaborate defendant; the decisions examination of all of the Courts of the state of New York, that defence to be good'; the-verdict not set ought that state aside, the laws of case. if applied whethér, section of the Upon thirty-fourth Í789, act of law of thé state New judiciary York must be the rule of decision of this case; he argued, that injunc- under tions of section that the laws' of' the several except “ the Constitution, where treaties, or statutes shall otherwise pro- vide or shall require, regarded as rules of decision in trials at law Courts of the ^States, .common United where in.the in.cases imposed Court an they apply,” obligation, as' the. well to of this as the apply state, Courts sta- decisions to cases which come tutes, before this Court.
It was necessary some adopt system to. or code of law for the administration of justice, Courts newly-erected United States.
These Courts were anomalous in character, statute; created by under the general provision of the Constitution States, jurisdiction limited certain subjects; and without rules of decision in the cases would arise. that-
To have to create code attempted of laws legislative enactment, would have been without avail present the Courts; with the even aid of future experience after and. vears could labour, to be expected perfect. alternative was
The an adopt existing of laws.. system law was sufficiently would complete, common furnished rulés of decision for all cases, as well as modes of judicial pro- ; but it would have ceedings then been one law the system Federal Courts, for the whole It United States. be ques- tioned law the whether the contract, place although a had principle mcognised by common would have effect to the several That reference states. principle reference But the foreign contract. territorial limit jurisdiction *9 TERM, 1842. «.Tyson.] [Swift would one be to one law: country subject Federal Courts within that limit the of it arise, cause action Wherever might to the same administration of law these subject would be by to resorted for the enforcing when purpose Courts right. to This would have led eonfliction between state perpetual Courts. and Federal law, be, would however objection commpn
Another still structure, in its had peculiarities adapted many perfect to be in this modi country,'and the condition of things requiring Such mo of an exigencies fied meet the enterprising people. of-which, in all states, had in taken in all the dification place fact had an law English origin, at least common having the entire been inherited. Instead therefore of or rather adopted .of with all it could body common be peculiarities, so the Federal doing, modified adopted woqld with-the tribunals) Courts be to harmonize state made the law of .the of contract preserved. place be examined with question section in If phraseology for, was to that Congress provide to the whole subject reference for necessary that was it all will be found substantially express for the the state to the extent and purpose laws adoption It is all the pro- had view. to have been supposed we it short of and in'so far as falls the subject;' vision there Cburts, the' defect the direction of laws for. adoption law never been otherwise for. -The common unprovided still to create or they adopt the Courts nor have power adopted, laws— existing. administer law must would sufficient perhaps it refer. support position Worrall, 2 The Dallas, 384; The States v. the cases United Justice, Chief Burr, States delivered United v. (opinion Goodwin, Hudson and States v. 3d, The United Sept. 1807;) States, Wheaton, 32; Coolidge, 7 Cranch, United whether the Courts was, Cases, In these is true, .it States, at of crimes and offences had of- United jurisdiction law,-which had not been Constitu- provided common . but involved the' States; general laws tion or if it had law whether the common question, adopted: jurisdiction. could was all, be referred source equally in the discussion as it Accordingly, would be rule of decision. SUPREME COURT. question, thought necessary assume, utmost latitude, that the common law was the basis our federal juris- *10 as it states; was of the several the decision prudence, ought be regarded with the which ground juris- coextensive was asserted,- diction and to have of it. finally disposed Yet, as the were not unanimous, subject been since debated with much and zeal learning distinguished writers, (see Duponceau Jurisdiction of the Courts of the States; Commentaries, Kent’s 311, 322; North Ameri- Review, No., can 1825; 1 July Commentaries on the Story’s Constitution, not be to examine 141;) supererogatory as the anew; is now in a presented form that calls for and final decision of the specific whole matter.
It seem to be a self-evident the adop- proposition, would tion law of the common must have been the Constitution or legislative enactment. the Courts could not of their own Surely, establish as the authority land, law of or the. code foreign sys- tem, no how. consonant with our character, matter how political or familiar the same could well By authority its principles. they have the civil law as in France or existing Holland as adopted the English law.
But, it is although conceded that there is express recognition no or adoption law, common either in the Constitution laws of the United it is contended that the Constitution States; presup- and is predicated the existence of poses, the common law. Justice in The United 448; States v. Gal. Story, Coolidge, Bay- ard’s Speech, 372; Debates on the Judiciary North p. Review, American before cited.
Mr. Justice refers to the Story in the provisions Constitution and laws, in to trial respect by jury, the writ habeas &c., corpus, as instances when recourse must be had to the law common interpretation terms. 1 Gal. 488. These observations are what is there- just the conclusion —but from? we Because have used terms, we ap- have thereby the entire propriated law, common to its become subject ^.nd authority? Do we not borrow arts, terms in science and without being pledged they may principles ap- ? The derives plied physician his nomenclature from Greek but is his false language; controlled notions which practice TERM,
[Swift Tyson.] or the indicate, often theories those whn invented terms The common law itself has borrowed terms of pleadings them ? we proverbs law, and familiar from the civil but do and processes original any supposed ook to ? Our law idiom obligation law common essentially origin, It is yet foreign. to us in the familiar language jurisprudence respective It is there assimilated-and states. modified our own circum- from usages. coming together stances. respective and our states, Constitution, framers of representatives in view them, must had having after Congress regarded re- states which laws, and institutions of the language, If, therefore, in of the federal organization judi- presented. laws is American ciary, system presupposed, French; English which is now as distinct in character as the it in the as it is not adoption uniform yet, to some legislative Federal Courts subject would necessarily *11 law to to which the as the cases and circumstances provision, would,' the should be law The of applicable. general language however, occur, legislation upon and be used obviously any the as be re- subject, without the might of definition necessity if some were to quired, code of its foreign provisions law, transferred and which was like the Athenian appropriated, in a the twelve Romans, transmuted the into tables. mass by But it is said of that some the Constitution can provisions take effect only law, recourse to the as common the clause in the article section all cases"hr 2, extending power judicial- Constitution, &c., the law and under equity, arising admi- maritime the ralty The laws jurisdiction. practices of here, argued, cannot referred because in many existed, ho and the law of them maritime equity jurisprudence of the states been too imperfect unsettled supposed 1 law. 488. furnish that of Gal. department basis for To this the states answered, in some of bemay although law were no the common there distinct from tribunals equity those Courts, of from yet distinguished as equity, principles state, of common were understood perfectly every were of them administered, in fact some without although of aid a Court of The Chancery. organization present of very Federal usage Courts in fact conforms with the Yol. XVI.—B
14 SUPREME COURT. v. this defect of states where equity power' supposed exist- is an there equity jurisprudence carried fully effect, into without Courts of séparate Equity. (cid:127) A¡s to the maritime jurisdiction and course of proceeding,¿í Courts, settled; sufficiently of proceedings our in the
exercise of jurisdiction, now, regulated Engi- lish law, but admiralty practice our own country, 10 engrafted English. Wheaton, 473.
Mr. Dana cited the debates on the Constitution
United-
States in the Convention of
and in
Virginia
other states to show
without the aid
statute
common law cannot be
called
in aid of the
of-
Courts,
for rules
jurisdiction
decision
for. the
-legislation
necessity
.authority,
manner of
Courts of-
United
proceeding
States; he cited
opi
of Mr. Justice
Chisholm’s Executors v. The State
nion.
Iredell in
432. That
Dallas,
Georgia,
provisions
twenty-
..of
confined,
“statutes,”
fourth section are not
hé
cited,
decided
Court,
Chew,
in this
Jackson v.
At admitted, and the there The rested his case. plaintiff 'defendant á in evidence to dis- then introduced the answer of Swift bill of it the bill before that Swift took covery, appeared by TERM, 1842. v. Tysoh.] note due him Nor- due, in payment promissory became that he understood that the bill .and-Keith; was accepted ton in New lands Norton to of some sold a company part bill, Swift was a bona fide holder- of not having the York.; that. n any lands, in the sale or title to or other- Of the notice thing the transaction, and with the belief that the full wise,.impeaching was due. The set justly fully bill circumstances particular answer in the but-it does record; necessary forth not seem to-state The then prove, farther them. defendant offered Dill defendant as consideration for accepted by 'the part of certain in the state Maine, purchase lands which.Norton to be owners Keith.represented themselves ofrand.also to he of great represented value, good contracted convey, thereto; and that the were in representations every respect title false, had no title to the Keith fraudulent Norton The and that the same were- little or no valúe. lands, plain- to the admission of such or testi- testimony, tiff objected him, failure of the showing against impeaching mony, as on which the bill was ad- consideration, under accepted, facts defendant, him, and those proved by reading mitted of discovery. answer divided thereupon opinion following Circuit law; last Whether, mentioned,' under facts or question point the. was entitled to the to the action as the defendant same defence bill,- suit was that is'to original if between parties qr. Keith, Norton -and and the and'whe- Norton, .defendant; say, so offered was against plain- evidence- ther the admissible And certified us for action. our tiff .is decision, doubt,
. a bonsi fide holder no. negotiable There is in-. consideration, notice for-a valuable of facts without.anv strument >the if validity parties, which impeach antecedent .as under an same endorsement he takes becomes made.before recover due, may the title unaffected bythese.factsfand holds as between the antecedent transac- thereon, parties although tion, so a doctrine be without -This any legal.-validity.- established, security and so-essential to-the so long,-and .well up.among laid paper,-that fundaméntate andr be now brought no law; authority reasoning requires *13 COUR,T. SUPREME v. - .holder,
in its As little doubt is there, that support. of any due, negotiable before paper, not bound to prove tha't.he a bona fide a holder for valuable consideration, without notice; for the law will that, presume absence or ail rebutting proofs, therefore it is incumbent defendant to esta- blish by defence way of the satisfactory proofs contrary, and thus to overcome the facie title of the prima plaintiff.
In the present case, is a bona fide holder without notice for what the law deems good and valid consideration, that is, for a debt; and the real pre-existing only question in the is,whether, under the circumstances of the cause present case, such a pre-existing debt constitutes a valuable consideration sense of the rule general applicable, negotiable instruments. We say, under the circumstances case, present for the ac- York, ceptance been made in'New having argument on behalf of the defendant that is, is to be as a contract' treated New contract, York and therefore to be governed by-.thelaws of New York, as' its by Courts, as well expounded- upon geneial principles, by of the express provisions thirty-fourth section con-, act of 1789, ch. 20. And then it is judiciary further tended, that the daw of New as thus expounded Courts, a constitute, debt does not in the sense pre-existing general rule, valuable consideration applicable negotiable instruments. then, first let us examine into the' place, decisions of the
.In Courts New York the. earliest subject. case, 5 Johns. R. Warren v. Lynch,
York appear held, that a debt was a sufficient consideration to entitle a bonü fide holder without notice to reco- ver the him, amount a note endorsed to not, might between, the be valid. The same doctrine was original parties, affirmed by Mr. Chancellor Kent in Johns. Bay Coddington, Chan., said, he Rep. occasion" Upon can be paper or factor or transferred an assigned agent other the true person, so as to bind owner fraudulently, the holder, taken in the usual course of against provided trade, and fair and valuable without notice of consideration were added, fraud. But he holders in that case to,, rule, entitled because was not benefit of negotiated TERM, 1842.
[Swift«. Tyson.] trade, nor in course of business the usual them cash, or nor for ad property and existing antecedent *14 (cid:127) incurred, strength or created, responsibility debt vanced, that pre-existing affirming, thus notes; directly credit within protection consideration and valuable a fair was debt doctrine, the same has since affirmed And he rule. of the general Comm, 3 Kent. it, Commentaries, review a full his upon v. The decision in the case of Bay Coddington 44, sect. p. 20 R. Errors, 637, Johns. affirmed Court of
was afterwards was sustained. of the chancellor fully reasoning and the general case, that which the circumstances in were indeed peculiar There have it to be treated seem to entitling Court considered rule, either because general an exception upon ground circumstances, the notes was under the receipt suspicious been made after transfer the known having insolvency endorser,-or because the holder had received it as a mere security for contingent with which the holders had not responsibilities, then become There charged. was, a considerable however, Court, that diversity the members opinion among upon occasion, several of them re decree holding ought versed, others that a was affirming debt a valuable pré-existing consideration, sufficient to others protect holders, and again insisting,-that-a debt was pre-existent not From that sufficient. however, for a series of it period, seemsto have been held years, Court of the staté, debt anot sufficient consideration to shut out the equities origi nal in favour of the holders. parties But case to that effect has no ever been decided in the Court of Errors. The cases cited at'the. bar, and Roosa v. especially Brotherson, 85; 10 Wend. R. Ontario Bank v. 12 Worthington, 593; Wend. R. v. Payne 13 Cutler, 605, Wend. R. re But the more directly point. cases, cent The Bank of Salina 490, Babcock, 21 Wend. R. The Bank of v. Scoville,24 Sandusky R. have greatly Wend. shaken, if decisions, not they entirely overthrown those seem to have back brought doctrine to that promulgated the earliest cases. So.that, the least sáy it, admits -doubt, serious whether doctrine can this upon the present "timebe treated certain, finally established; and it is
b SUPREME COURT. Court of Errors have not pronounced positive ahy opi- it.
nion-upon the doctrine.to But, settled in New admitting fully York, it Court, considered, to be whether it is this obligatory remains upon established in the differs from principles general if commer that the It is observable Courts of law. do cial York N&w this their decisions local point statute, found but fixed, ancient local usage: deduce the doc positive, law. It from commercial general principles is, trine how ever, that the section of the contended, thirty-fourth judiciary act ch. 20, furnishes a rule 17S9, upon- obligatory n follow of the state tribunals in all cases to which decisions “ That section that the laws they apply. provides of the several where the Constitution, treaties, except- or statutes of the otherwise shall require United States provide, shall be' re .or *15 in trials at as rules of decision common law in the garded Courts ^States, in cases where of In they order to apply.” it' is éssential, therefore, hold, maintain argument, to that the this laws,” section, in includes within the of its scope .word “ decisions of local tribunals. In meaning use ordinary be of will that language hardly contended Courts the.decisionsof are, laws. They most, evidence of what the only constitute laws and are not bf are; themselves are re They laws. often examined, reversed, and qualified themselves, Courts to whenever are found be either defective,.-orill-founded, or otherwise laws of a state are under more usually incorrecf. stood to rales and .enactments promulgated by mean -thereof, legislative authority long established or local customs ' of laws. all the force having the various casés which have before, hitherto come us for this decision, Court have uniformly that the true supposed, interpretation section thirty-fourth limited its to local, state laws application to strictly say, positive state, .the of and the construction statutes thereof the local tribunals, adopted by and to rights things. title's .and having permanent such as the and to real locality, titles rights estate, and other matters immovable and' in their intraierritorial and never has us, supposed character. .It nature the section did or apply, designed questions apply, general not nature,- at-all or’ local more statutes dependent upon TERM, 1842. as, for example, operation, and permanent a fixed usages local -written instru other contracts ordinary the construction commercial of general to questions ments, especially and like upon called perform tribunals are state where reason géneral to ascertain is, upon ourselves, functions of the contract is the true exposition what analogies, and legal ing rule furnished by principles is the just or what instrument, we not have now the case. And law to govern commercial section, its true that this holding, upon difficulty the slightest statutes limited to local construction, is strictly intendment does not ex stated, and the character before local usages nature, a commercial- other instruments tend to contracts true, not are to sought, effect . interpretation whereof tribunals, general principlés but the local the decisionsof Undoubtedly, commercial jurisprudence.. and doctrines to, entitled subjects such the local tribunals upon decisions attention receive, respect most deliberate and -will or conclusive au rules, cannot furnish Court; positive but they are to be bound up our own judgments thority, by The law instruments bemay respecting negotiable governed. Cicero,, declared in the Lord Mans truly language adopted in a 883, 887, 2 Burr. R. mea great field Luke Lyde, the law but of the commercial sure, country of a single only, Athenis, nunc, world. Non erit alia lex alia alia alia Romee, et sed omnes et omni una eadem-. posthac, apud gentes, tempore, lex obtenebit. que
It becomes occa- us,,therefore, necessary present sion to our own the true express result of opinion commer- we cial law now us. And no before n hesitation that a debt does constitute a saying, *16 rule, valuable consideration in the sense of the general already stated, as to to Assuming it applicable negotiable instruments. from, true, (which, however, well some doubt may admit generality a that the holder of negotiable language,) with, instrument is unaffected the antece- equities dent parties,-of he ha’sno receives-it notice, where he only in the usual course of considera- business for valuable trade tion, before it becomes say, to due; are we prepared receiving debt, it in of, or as payment for-a security pre-existing SUPREME COURT.
[Swift Tyson.] -the known usual according course of trade and business. should And not a why upon principle debt be pre-existing deemed a valuable ? It is such consideration for benefit and conve- the commercial nience of world to as wide an give extent as to,the credit and circulation of practicable negotiable paper, as for may only new pass security purchases advances, thereof, made the transfer but also of and as payment debts. The security pre-existing enabled thereby creditor debt, realize or to secure his and thus safely give pro- or credit, forbear from longed taking any legal enforce steps also his debtor has the. rights. advantage his making securities of negotiable value to equivalent cash. But establish conclusion, that opposite cannot paper applied of or payment debts, without pre-existing all security letting original between-the equities antecedent add the parties, such value and circulation of securities must be diminish- essentially ed, and the debtor driven to the embarrassment of a sale making thereof, at a discount, often ruinous to some third-person, and then by circuity apply proceeds of his debts. What, indeed, such a doctrine would become of that class of large where new notes are given the same cases] other parties, of renewal or in. banks, lieu of old way security bv. securities them, at which have arrived ? maturity discounted Probably than one-half all bank transactions more in our country, as countries, of other are of well this nature. The doctrine fatal at all blow discounts strike of negotiable would securities debts. for pre-existing several times
This before this Court, be.en and it held, that it makes no uniformly has been difference whatsoever holder, whether the debt for rights which the ne is transferred to him is a instrument gotiable time of the transfer. In each case he equally is contracted to the instrument. The cases credit gives Coolidge Payson, 73, and Wheaton, 66, 70, R. v. Sumrall, 2 R. Townsley Peters, 170, 182, directly point. the same doctrine has been acted England uniformly upon. as the case Pillans
As long ago Rose v. Van Meirop and Burr. Hopkins, made and very point objec- tion That,indeed, was overruled. was a case stringency of far more *17 TERM, 21 1842. Tyson.] if. the one now before for bill of there drawn us; exchange, thaii a to discharge-of, was held bind the pre-existing party a mere made acceptor, upon tp him before promise accept bill actually Mansfield, drawn. that occasion Lord Upon caáe, letter of likening that a.letter of said, credit, credit for given money advanced,, well as already for be' advanced in future: money Court held the whole entitled to recover. plaintiff From that there downward period is not a case to single be found in in which it has ever England Court, a debt was not a held valua ble consideration, sufficientto protect holder, within-the mean ing, rule, general incidental dicta have been although sometimes relied on establish the such as the dictum contrary, Witt, Chief Justice Abbott in. Smith v. 6 Dowl.& Lord De 120, and Ryland, De la Chaumette v. The Bank of England, 209, Barn. & where, however, Cres. the decision turned upon different very considerations.
Mr. Justice his valuable Bayley, Work on bills of exchange notes, and. lays down the rule in promissory the most general terms. "The of consideration,’* want he, "in or in says pkrt, foto on, cannot be insisted .if the or- intermediate party bill, him defendant the. took or note bonáfide a valid on upon', Bills, consideration.” 499, 500, Bayley p. edition, 5th London It is observable that he here uses "valid .words consideration,” obviously intending make that it distinction, is not apply solely cases, intended consideration for advances of present where money goods takes otherwise the time transfer place credit in this'he is out thereof. borne fully And authori farther, establish, ties. They go transfer security for even will,for-this past, responsibilities, purpose, future sufficient, valid, Thus, and valuable consideration. in the case Dudman, Starkie, it was held Bosanquet R. Lord by' that if Ellenborough, a banker to an amount acceptances Under be. the cash his beyond hands, balance in he holds of that every customer’s, fide,he boná value; to be considered as holding and makes no difference he hold collateral secu though other coyer rities, more than excess of his sufficient acceptances. COURT. SUPREME f Swift®. in Ex parte Lord Eldon was affirmed. The same doctrine *18 to future and Bloxham, past to Ves. 531, 8 as equally applicable cases, Watson, wood v. of Hey "The subsequent acceptances: 469, Ca. Roberts, 496, Bing. R. Bramah Bing. & Rose, 180, are Cromp. and Percival v. Frampton, Mees. holder, bona fide establish that"a effect. directly same .They for a as security pre a note negotiable payment'of taking consideration, entitled a valuable holder for a existing'debt,'is. parties. between' the antecedent all the against equities protection which our researches latest-decisions, And .these Courts the English been made in us to to have" ascertain enabled this subject.' trace the . have been able Courts, so the American we In far universally decisions, same but not doctrine seems generally Scribner, 11 Conn. R. In Brush v. to'prevail: t Connecticut, of the English an elaborate review after Cour of ,of held, York’ principies- áhd New adjudications, upon general valuable, considera that a debt was a commercial a a valid title to fide holder against sufficient boná tion, convey to a is no reason all antecedent There parties negotiable note. ' doubt, that rule has been ad adopted same and constantly certainly hered to in there is no trace fo be Massachusetts; "of truth, found to silence contrary. any adjudi ip a case'of frequent such almost subject, cations occurrence, in the commercial daily may fairly pre sumed, that whatever valid considera constitutes a and .valuable tion in other cases of contract to titles the-most solémn support nature, is á held fortiori-to-be sufficient in cases of negotiable
instruments, as security holders, indispensable facility safety their circulation. Be this as it may,-we doubt, entertain no that a holder, debt, bona fide for-a-.pre-existing aof negotiable instrument, affected by any equities the antecedent parties, where he has received the same before dffe, became all, without- notice of such We are equities. therefore, of opinion, that the on propounded by point, the Circuit Court for our consideration,, to be answered in ought the negative; and we shall direct it accordingly so to be certified . to the Circuit Court. TERM, 1842. Tyson;] ?v said:
Mr. Justice Catron of difference between the Upon below,. the. I point concur, that the extinguishment and the giving post consideration, such as the record will presents, protect pur- chaser note assignee from affect- infirmity wus before it ing negotiated. But I am instrument unwilling the introduction into sanction of this Court, a opinion doc- trine aside from the case record, made or argued by the counsel, maintain, that a assuming negotiable note for a pledged Security previous debt, is collateral taken creditor in the due course trade; and that he stands on foot of him who in the market for purchases or takes the money, in- strument in extinguishment of a debt. State previous Courts of on commercial high authority questions' have otherwise; held *19 and that will to a yield mere of this expression opinion Court, their change course of decision in to the conformity recent cases referred to English principal opinion, impro- : if the whereas, question bable was to rest until it permitted fairly arose, the Court, decision of it either this would, 'way probably, it. I think to settle such a result ought As is not to 'ex- from the this am cause, I pected opinion-in unwilling embar- with so much itof as treats of myself instruments rass as- a I taken never heard this pledge. of as spoken case, to the until-the was belonging principal opinion presented last I evening; therefore am not prepared give' opi- nion, itwas even called-for record.
This cause came to be heard on the transcript record from the Circuit Court States, south- district, ern of New and on the and question on which point of the said Circuit Court were opinion, opposed which were certified to this Court for its to the opinion, agreeably act of in such case Congress made and was provided, argued whereof, counsel. On consideration is .the of this opinion Court, that the defendant under-the not, stated, facts entitled to the same defence if the suit was between the action original bill; Norton, that is to parties said say, said Norton and Keith defendant: and that evidence . COURT. SUPREME v. as against objected was not admissible to, defence
offered.in
here ordered
now
Whereupon
action.
in this
the negative
.in
that an answer
Court,
and adjudged by
Court.
Circuit
certified to
said
still be so. Most of
notes
should
discounted
banks are
due,
renewal of notes to fall
or for the
given
payment
for.the
debts.
decisions of
The later
the Supreme
York,
Court of New
refer
to, are
founded on
red
to be decided
professedly
nrlnciples alleged
v.
54,
in the
Coddington,
Bay
Chancery Rep.
case
5 Johns.
case under the
the same
name
v.
in
Coddington
decided
Bay,
the Court
Correction of Errors
that state,
on appeal.
20 Johiis.
637. This case
Rep.
does not sustain the
position
It
the defendant.
was decided
Chancellor Kent expressly
“
on
the defendant' did
ground
not receive
notes in
the. coúrse of business,” nor in
in
payment
whole
part
then
of any
existing debt.
In the Court for the Correction of Er
rors the
decision
Chancellor Kent was affirmed.
case
Ward et
al. v. Howell,