Matthews v. Hall

1 Vt. 316

• Court: Supreme Court of Vermont
• Decided: February 15, 1828
• Status: Published

Opinion

Hutchinson J.

delivered the opinion of the court. This is an action upon a note, signed by the defendant, and payable to one MarJc Richards, or bearer. The declaration alleges the executing of the note by the defendant; and then allegés that said Richards assigned over, and delivered said note, to the plaintiff; of which die defendant had notice, Sic. "To this declaration the defendant has demurred, and the plaintiff has joined in demurrer. Upon the argument of the demurrer before this court, the only exception taken to the declaration is, that it is not therein averred that tire assignment by Richards to the plaintiff of the note in question was made in writing, by endorsement on die back of said note. There being, in fact, no such averment in the declaration, the exception is well taken, unless by law the plaintiff can maintain the action by averring himself to be the bona fide bearer of the note without any endorsement thereof. Therefore,the only question to be decided is, whether the law be so, or not ?

It is 'urged by tire defendant’s counsel, that the statute of this state, on page 144, only gives the right of action to the endorsee of a note like the present. This is correct,and| the plaintiff can fferiveno aid from that statute.. On the other hand, if the plaintiff otherwise could maintain the action, his right of action is not taken away by the statute; the whole objectof the statute being to preserve all.the.offsets and equitable defences of the signer of the note, before notice of an assignment thereof. It is further urged that this action cannot be maintained by the common law, or the .law merchant, or by any practice in this state amounting to -common law here. It is therefore necessary that the court should advert to the nature of this contract, and to the common law,and the practice of this state with regard to such contracts. ■

With regard to the nature of the contract, it is an express written promise to pay the sum mentioned to Marie Richards, or bearer; and acknowledging a value received for such promise.. Now, if this were a case entirely new, and the question never before agitated, and, of course, títere was no common law about it, it would seem natural, in the application of a-nalagous principles, to say, the words to R. M. or bearer, are used as the description of the persons who are severally promisees of the note. If the note vm-® payable to A. B. or C. D. it would seem difficult to assign any good reason,why either A. B. or C.D. should not maintain an action upon neglect of payment. The substituting the hearer instead of C. D. would seem to create a direct promise in the signer to pay to such person as should be the bearer.This would seem, by the force of the terms, to give a right of action to the plaintiff, without any endorsment,upon his becoming the bona fide bearer of the note. If the question were thus new, the court would adopt these principles and support the action. Nevertheless, as such contracts are not new, but have been made the subjects of judicial investigation, if the law concerning them is otherwise settled,we must abide by the law; if not otherwise settled, or if settled in favor of the plaintiff, the declaration must be supported.

Those who possess the first volume of CrancWs Reports, will there find an appendix, giving a more detailed history of the disputes upon this subject, than it would be proper for the court now to give. And yet, the litigation has not been exclusively upon notes, payable like the present, but more extensively upon the question,whether notes, however framed, were negotiable,according to the custom of merchants, adopted as the common law upon the subject of bills of exchange ? And by the law merchant, bills of exchange, foreign bills by that law merely, and inland bills by that law and by the statute 9&10 Will.III. were both negotiable, and might be declared upon as such bills of exchange, without alleging any consideration. And whatever contract did not come within the custom of merchants, if sued,must be declared upon with a consideration particularly set up in the declaration. And this mode of declaring upon bills of exchange was a feature in the law concerning them, no less prominent and distinguishing, than that which relates to their negotiability. This fully appears by the reports of early decisions,and in the books of entries of early precedents, and the earliest forms,that omit to set forth the consideration on which a note was given, set forth in its stead a custom, that when a man makes such a contract, he is liable so and so, and then set up a contract that comes within tlie cdstqm, and say, in consideration, Stc. the defendant became liable to pay, &c* and promised, &c. In the case of Hodges vs. Steward, reported in Comb, 204.—Salk. 125.—12 Mod. 36, and Holt, 115, the custom was laid in London,that where a bill is made 'payable to A 'or bearer,it must be paid to theendorsee. This custom was adjudged bad on account of repugnancy, Holt, Chief Justice, saying another person,and not the endorsee,might be the bearer. And in Salkeld’s report oí the case, it is said, a difference was taken between a bill payable to bearer, or to order; for a bill payable to J. S. or bearer, is not assignable by the contract, so as to enable the endorsee to bring affaction, because there is no such authority given to the party by the first contract. But,, when a bill is payable to J. S. or order, there an express power is given to the party to assign; and the endors.ee may maintain an action. This was in 5 William and Mary.

Hinton’s case, reported in 2 Show. 235, was-ten years earlier. There the bill was payable to J. S. or bearer; and the plaintiff brought his action as bearer, and it was ruled by Lord Pemberton, that the plaintiff must entitle himself to it on a valuable consideration; though among Bankers, they never make endorsements in such cases; for (assigning a reason why he must intitle himself on valuable consideration,) if he come to be bearer by casualty, or knavery, he shall not have the benefit of it.

It is worthy of notice,that in most of the ancient cases, bill and note are used as synonymous terms, when the reference is to an inland bill. And, in addition to what is above said by Pemberton, that bankers never make endorsements in such cases, I cannot find, nor ¿o I recollect,a case of a note or bill payable to one, or bearer, in which the holder sued declaring as endorsee. All that I find, or have known, have been sued by the holder as bearer.— This may be owing to the circumstance,, that the law has been considered, as stated in the above case of Hodges vs. Steward, that the contract confers no power to endorse. Therefore, an endorsement might be of no avail, only as against the endorsor. whereas the holder, becoming bona fide bearer, becomes payee, by the terms of the contract, without endorsement.

In the year 1692, in King’s Bench, in the suit of Williams vs. Williams, second endorsee against the first endorsor, the declaration throughout counted upon the custom of merchants, and other persons in the realm of England, and not in London, or other place, which would give it the name of local custom. The plaintiff had judgment in the King’s Bench; and a writ of error was.brought in the Exchequer Chamber; and the judgment was affirmed. And the only error assigned was, that the plaintiff counted upon a custom in the realm of England, which, if it existed, was the common law. The decisions in the case, therefore, went upon the ground, that the custom in the realm of England, or, in other words, the common law of England, was applicable to notes endorsed, the same as to foreign bills of exchange.

The case of Nicholson vs. Sedgwick, reported in 1 Ld. Ray, 180, and in 3 Salk. 67, was just like the present: and, after a verdict for the plaintiff, judgment was arrested because the action should have been brought in the name of the original payee. And in 3 Salk. 67, Jordan vs. Barlow, it is said to have been ruled that a bill payable to W. R. or order, is within the custom of merchants, and maybe negotiated and assigned by custom, and the contract of the parties; and an action may be grounded upon it, though it be not a specialty ; but if it be made payable to W. R. or bearer, it is not within the custom of merchants. And, where plaintiff declared that the defendant made süch a bill, according to the custom of merchants, and had not paid it, the declaration was adjudged ill, because the custom was too general. Itdoes not appear by the report whether the plaintiff, in the case of bearer, sued as bearer or as endorsee. If as b,earer, the case above of Nicholson vs. Sedgwick, might govern the decision. If as en-dorsee, it would be founded pn the decisiqn of the above case^ of Hodges vs. Steward.

The case of Clark vs. Martin, in King’s Bench, in 1 Anne,reported in 2 Ld.Ray. 757,& 1 Salk. 129, was upon several promises, and, amongethers, one was indebitatus assumpsit, and ope upon a promissory note, payable to the plaintiff or order, and declared upon as a bill of exchange, according to the .custom of merchants. Verdict for the plaintiff, with entire damages; and motion in arrest, because such a note was not within' the custom of merchants.. But plaintiff should declare-in indebitatus assumpsit for money lent,, and give his note in evidence. Ld. Molt, says the reporter, was' '¡totis viribus opposed to the action, and ¿said that this could not be a bill of Exchange, and after one or two' terms,, the judgment was arrested by the whole court. That is, though, the original payee of the note was plaintiff in the action, yet the declaration was Bad, because it declared upon the note, according, to the custom, of merchants,, instead of declaring, as upon a promise, setting forth the consideration of that promise ; or else, giving the note in evidence upon the general money counts. Three or four decisions succeeded this, all'in the same strain of excluding from promissory notes all. appendages of the , law. merchant..

¡ ..These decisions, on accountof which Ld. Molt has been often, spoken of for his obstinacy and peevishness, gave such dissatis- „ faction, that it produced the Stat. of Anne. The preamble of the-act is,whereas,it hath been held,&c.reciting. the very points of decision, which had thus stripped promissory notes-of all the appendages of bills of exchange, and enacted, that such notes should be. taken, &c. and various persons might maintain actions upon them,, as upon inland bills of exchange, made or drawn according to the custom of merchants. This statute creates, or rather restores,, the similarity between notes, and inland bills of exchange, both, with regard to their negotiability, and the mode of-declaring, without naming the consideration. After this statute, however, the declarations, in raising the liability and promise, instead of saying by the custom, as formerly, say, by the force of the statute. And, even the greatness of Ld. Holt is scarcely more kept in. remembrance by the allusions of judges and reporters in later times, than that unreasonable opposition of his to the application of the law merchant to promissory notes, which produced that. Statute. It appears strange that so great a judge, as he certainly was, should permit that to proceed indirectly to establish a right,, which he would not suffer to proceed directly — That he should consider the note sufficiently prima facie evidence to entitle the plaintiff to recover on a general count, when he would not support a count drawn upon the same note, and alleclging with legal certainty all the facts which could he proved by reading tire note.

'During rail these discussions, there seems no suggestion but that- a note, payable to the bearer only, is 'a good and binding note to recover upon,'in some form of action or other. Nbr does it appear to be doubted at all, at this day, but that upon such a note an action may be maintained in the name of the holder, whether he were the person from whom the consideration first passed, or any after bona 'fide bearer. And it seems difficult to conceive any possible reason why there ever should be any distinction between the rights oizbonafide bearer of a note, by purchase, without indorsement, whether that note be payable to A. B. or bearer, ■or to bearer only. The statute of Anne., if correctly recited in the book I.have, gives no action whatever to the bearer of such note, unless by reference to inland bills of exchange. They are named in that clause of the statute which enacts that notes shall be construed to be payable to the person to whom they purport to be made payable. But they are not named at all in that clause ■which creates the negotiability. That clause enacts that every ■such note, payable to any person or his order, shall be assignable ■or endorsable over,in the same manner as inland bills of exchange are, or may be,according to the custom of merchants. And the payee may maintain an action against tire maker, and the endorsee against the maker, or any prior endorsor, in like manner as in cases of inland bills of exchange. As, therefore, such bills payable to bearer, or to A. B. or bearer, might be sued without this ■statute,-so might notes thus"payable be sued by virtue of the stat-•ate.

But few disputed cases upon such notes have been reported since that statute. The case cited from the 3 Burr. 1516, Grant vs. Vaughn, is an authority strong in point in support of this declaration, both in its direct application; and in its disposal ■of such former decisions as militate against it. That was brought upon a bill payable to ship Fortune, or bearer. It is said, and ■correctly too, that no action could be maintained at all upon this contract, unless in favor of some person, as bearer, because, ship Fortune could be neither plaintiff nor assignor. Hence the man to whom delivered, or the first bearer, holds as'he would if the words “ship Fortune or” had been omitted in the bill. This'reasoning is good in support of the action upon the bill in favor of the person to whom it was first delivered. But this reasoning does not at all affect the parallel between that case and this .* for Grant, the plaintiff in that action, was not the original bearer of the bill. It was sent to one Bicknell who lost it; and it was found and sold by the finder. And Grant, after due caution, became the Iona fide purchaser, and the court decided that he should recover of the maker, he having sued as bearer. Bicknell was the original bearer. Grant was bearer after him, and recovered. — In the case before the court, Mark Richards was original payee, and first bearer, and Matthews is the second bearer, and he must recover, if that case is law here.

But, it is objected that the case in Burrow is of no force here, because founded upon the statute of Anne, which was never adopted here. On reference to the case,we find that Lord Mansfield assigns his reasons in full, as his custom was, and begins with saying, that he was not satisfied at the trial with the reason of those cases cited by the defendant; and proceeds to deny the correctness of those several decisions, and cites several cases in point for the plaintiff, not here named, but which can there be seen, and adds, that great force arises from the act of Parliament, 3d and Ath of Anne. Before he alludes to the statute at all, he says, among other things, “ It appears in the books that these notes are by law negotiable ; and that the bearer of them may maintain an action as bearer, where he can entitle himself to them on a valuable consideration — and it would be absurd to endorse such bills as are-made payable to bearer.

Justice Wilmot expressly says, “this note is negotiable, and maybe sued in the name of the bearer. Bearer is a description of the person, and a person may take by that description, as well as any other. It is a contract to pay the bearer, or to the person to whom he shall deliver it.” And he adds that Hinton’s case, before cited, is decisive of the one under consideration. And, it will be remembered,thatíE«to?i’s case was decided long before the statute of Anne, and he adds : “ were this a question antecedent to that act, I should stand by that first case of Hinton, rather than the latter ones cited, which differ from it.” The court were unani-unous for the plai&tifl; and] their reason-ings show conclusively that their decision would have been the same had the statute been out of the question. This case, from the investigation it evinces, should command more respect than those shortly reported cases, which are not very consistent with each other,and which evince none of that expanded investigation by which Lord -Mansfield extricated the common law from so many difficulties that were technical, but without substance or use. We consider this case as settling what the common law was upon this subject at that period, and we discover no case decided at a later period which militates at all against it. And there is no doubt but that decision has ever since been considered law in England. But it is possible that more disputes would have arisen .upon the subject,if the statute had been repealed ; though it is not very probable, for that decision, treated as common law, must have been as convenient and useful in practice, as the same law when applied to foreign bills of exchange. Bat were we compelled to doubt whether the common ,law of England, without the statute of Anne, would support this action, the doctrine it embraces is so just, and so convenient, we should be unwilling to reject it, unless we find it clearly opposed to the common law. It is very just that persons should abide by their contracts understandingly made,when upon good consideration ; and it is a rational construction of -this instrument,that the defendant promised to pay to the person, who should be the bona fide holder or bearer of the same.

It is now about fifty years since this state was established, with an organized judiciary in some form or other; and during all, or nearly all, that time,we have had a statute adopting the common law of England,so far as applicable to the circumstances of this state.

There was a short period,during -which those statutes of England, which were in affirmance ©f the common law, were adopted by our statute. There was anciently, and for a short time, I believe one year only, a statute of this state in force,destroying all negotiability of notes. During all this time,it has been necessary for courts to adopt,either by express decisions, or tacit practico, .-such of the common law as they deemed applicable here. A.s the early decisions of our courts were not reported, we must infer their decisions from what we can be sure has been treated as law, time out of mind, and not the subject of litigation.

In the first place, then, that part of the ancient common law which required the particular consideration on which a note was given, to be set up in a declaration upon that note, was never adopted here. The allegation of for value received has always been considered sufficient in a declaration upon note.

In the next place, declarations upon notes have never referred either to the law merchant,or the statute of Anne, to raise any liability in the promisor.

In the third place, in this part of the state, and Judge Prentiss sa}rs the same of his extensive practice, we have seldom seen or heard of a declaration upon note that alleged an express promise, and afterwards jiroceeded to raise a promise in law. The reason for raising the promise in law in England, was to bring in the aid of the law merchant, or the statute, to create the liability of the defendant. That becomes a useless form when preceded by an express promise of binding force upon the defendant.

During all this time, as before observed, we have never heard of a declaration upon a note, payable like the present, in which the plaintiff declared as endorsee : nor has there ever been any dispute in this part of the state, and probably few in any p&it, but that actions like this might be maintained in the name of the bearen Judge Doolittle informed me of a case the Supreme Court had then just decided in Bennington county., about seven or eight years ago, in which they supported an action in favor of the bearer without endorsement. But it is not recollected whether the note was payable' to A B or bearer, or to bearer only; but it was undoubtedly in favor of a bearer, who became such by purchase. So wasthe information as'now recollected. These actions „in favour of bearer have been frequent, and have generally passed without objection. This shows the general understanding that such was the law of the state. In 1 Mason's Rep. 251, Bullard vs. Bell, ghe Circuit Court decided that they had jurisdiction of an action l®a bill payable to A B or bearer, and not endorsed, because it w!%i direct promise to pay to bearer, the same as if it had been payable to the bearer only.

■ This state has so long existed, that we may well treat,as common law of this state, that which has always been considered law here. Many years since, the Supreme Court of the United States decided, in a case carried up from this state, that two or more tenants in common might join, as plaintiffs, in an action of ejectment. This is contrary to the common law of England. And this decision was founded upon the long and uniform practice of the courts in Wer-mont. See the case of J. B. and Elias Hicks, vs. Wm. Rogers, reported in Crunch.

Upon every view of this case,the decision of the majority of the court is, that the declaration is sufficient, and the plaintiff have judgment.

Chief Justice Skinner, expressed a dissenting opinion.