THE case was, briefly, this: Kepple and Zantzinger, Philadelphia
merchants, being indebted to Carr and Sons, English merchants, for
goods sold and delivered, bought a bill of exchange from John
Swanwick for the amount, drawn in their favour and indorsed by
them; delivered the bill to one of the partners of Carr and Sons,
who was in Philadelphia, but who expressly refused to remit it, on
the account and risque of his house; and informed Carr and Sons by
letters, dated, respectively, the 20th of May, and 20th of June
1796, 'that the bill, when paid, will be in full for merchandize
(high charged) to our G. Keppele, by your invoice dated the 31st of
March 1795.' The bill was duly presented and protested for non-
acceptance, on the 27th of June, and for non-payment, on the 29th
of August 1796; and, on its being returned with the protest, notice
was reqularly given to the drawer and indorsers. Keppele and
Zantzinger then ( about the 5th of November 1796) tendered to Carr
the principal and interest of the bill, and demanded restitution of
it, with the protest; but Carr refused to accept the tender, or to
deliver up the bill; saying 'that he would settle the bill himself
with Swanwick:' whereupon Zantzinger declared, 'We shall consider
the bill at your risque, from this day.' Carr then entered into an
arrangement with Swanwick, took his promissory note for principal,
damages, and charges, and delivered to him the bill and protest.
Before the note became due,
Page 4 U.S.
155, 156
Swanwick had failed; and Carr demanded payment from Keppele and
Zantzinger, on the footing of the original account for goods sold.
On the other hand, Keppele and Zantzinger demanded from Carr, the
twenty per cent. damages, included in Swanwick's note, with
interest from the date of the note. And, upon these adverse claims,
the present actions were instituted, and tried at the same
time.
At the trial of the cause, three grounds were taken in favour of
Carr and Sons: 1st. That the language of the letters, written by
Keppele and Zantzinger, was not meant to retain an interest in the
bill of exchange; but to preserve, unimpaired, the original
contract, if the bill was not honoured; or, at most, to protect
them, as indorsers, from being liable for damages; but not to
entitle them to receive any. Carr and Sons had a complete power
over the bill; they might have cancelled it after acceptance, for
the acceptor's note; or they might have released it upon any, or no
consideration to the drawer's agent in England; the only effect of
which would be, to ender the bill payment of the preceding debt, as
in Watts v. Willing, 2 Dall. Rep. 100. And Chapman v. Steinmetz, 1
Dall. Rep. 261. differs from this case; because the suit was there
against the drawer of the bill, who was, also, the original debtor,
expressly stipulating, that he should not be liable for damages;
and here Carr and Sons do not sue Keppele and Zantzinger on the
bill, for damages. 2d. That whatever might be the operation of the
original contract, the claim of Keppele and Zantzinger to damages
was extinguished, when Zantzinger declared, that 'the bill would be
considered for the future, at the risque of Carr and Sons;'
changing essentially the relative responsibility of the parties.
3d. That the suit brought by Keppele and Zantzinger, for the
damages, was a disaffirmance of any implied contract, that the bill
of exchange was paid, or received, in satisfaction of the precedent
debt; and, consequently, Carr and Sons are entitled to recover upon
the old account, whatever may be their responsibility for the
principal, as well as the damages, of the bill. In that respect,
too, Keppele and Zantzinger have chosen to regard them as agents;
and can only be entitled to recover, what Carr and Sons received,
to wit, Swanwick's promissory note.
In favour of Keppele and Zantzinger, it was urged, 1st. That the
remittance of the bill of exchange was, by express stipulation,
upon their account, and at their risque; and the terms of the
remittance came, pointedly, within the principle of Watts v.
Willing, and Chapman v. Steinmetz. Till the bill was paid in
England; or, in case of a protest, till it was recovered from the
drawer here, it was, exclusively, at the risque of Keppele and
Zantzinger; and they, who were exposed to the whole risque were
entitled, in law and equity, to the whole benefit of an
indemnity.
Page 4 U.S.
155, 157
2d. That the declaration of Zantzinger, does not, either in the
intention, or the expression, amount to a waiver of the claim for
damages; nor can it, in any respect, impair, or alter, the
conditional contract on which the remittance was made. 3d. That the
conduct of Carr and Sons has made the bill of exchange an absolute
fund for the payment of the precedent debt; and that debt was
eventually extinguished and satisfied, by taking Swanwick's note:
but their conduct creates no right to receive, more than the amount
of the precedent debt; and, consequently, they are liable for the
damages in one suit, though they cannot recover upon the account,
in the other suit.
1SHIPPEN, Justice.
The sum in controversy is small; but the principle of the
decision, is of great and general importance. What is the law, the
justice, and the usage, upon the subject? It appears from two
cases, that have been cited ( 1 Dall. Rep. 261. 2 Dall. Rep. 100.)
to be the settled law, that where a bill of exchange is not paid
and received, in satisfaction of a debt, due from a merchant to his
correspondent, it goes at the risque of the debtor; and the
creditor who remits it for acceptance and payment, stands on the
footing of an agent only, until the bill is actually paid. Then, in
point of justice, it seems but fair, to allow every incidental, or
casual, profit and emolument, to the party who is exposed to all
the hazard and inconvenience of the remittance. As to the usage,
the jury are best able to ascertain it from personal experience;
but so far as I have been able to collect information, there
appears to be only one opinion among commercial men; to wit, that
he is entitled to the damages, on whose account and risque the bill
of exchange is remitted. To disturb this usage, would, obviously,
operate very injuriously to the American merchant, in favour of
foreign merchants; but, if the usage were not established, or if it
were an unreasonable one, our decision would not depend upon
considerations of that nature: we should say, fiat justitia, ruat
coelum!
Let us, then, consider the facts of the present case, under this
general view of the law, justice, and usage, of merchants. The debt
was due and payable in London. The creditor refused to accept
payment here, on account of the rate of exchange. The immediate
loss and expense of the remittance fell, therefore, on the debtor,
as well as the contingent risque of the bill. The creditor, also,
refused to take the hazard of the remittance to himself; and, in
effect, agreed to act as the agent of the debtor, in all that
related to the bill of exchange. There is not, in short, the least
doubt on this important fact, that the bill was remitted on account
of Keppele and Zantzinger, though indorsed by them
Page 4 U.S.
155, 158
to Carr and Sons. When the bill returned protested, the debtor
demanded it, tendering the amount of principal and interest; but
this overture to a payment was peremptorily rejected by Carr; and
he assumed the sole management of settling the business with
Swanwick. Whether it was settled by a cash payment, or by a
promissory note, is not material; the bill being delivered up
without the authority, or consent, of Keppele and Zantzinger; and
Carr and Sons becoming, consequently, responsible to them, for the
full value of their interest in the bill. That interest was the
amount of the damages, on the principles, which have already been
suggested; particularly, because Keppele and Zantzinger defrayed
the whole expense, and run the whole risque, of the remittance.
Suppose, produce had been shipped to Carr and Sons, to be sold on
account of the shippers, but the proceeds were to be applied to the
payment of their debt, could it be pretended, that the consignees
would be entitled to any profit on the sale; or that, in case of a
loss, it must be borne by them? No: in that instance, and I think,
with a parity of reason, in the instance before the Court, Carr and
Sons are neither to know profit nor loss, in the transaction. It is
surely enough for the British merchant, to enjoy the fair profit
charged upon the goods, which he sells and transmits to his
American customers; without being allowed to speculate upon the
damages on bills of exchange, the usual medium for paying his
account, in a way, that enables him to pocket all the gain, and to
cast upon that all the loss.
In justice to Carr and Sons, however, it is proper to take
notice of another ground, on which their cause has been placed; the
only ground, indeed, that has created any doubt, or difference, in
the minds of the Judges. On the 5th of November 1796, when they
refused to accept a tender of principal and interest, Keppele and
Zantzinger made a declaration, which, at the first view, looked as
if they relinquished every pretension to the bill of exchange: 'We
shall consider the bill as at your risque from this day.' This
expression, however, cannot, in law, be regarded as constituting a
new contract, or agreement; for, certainly there was no mutuality
of bargain; no coincidence of proposition and assent: But it may,
in point of fact, be regarded as an extinguishment of the
conditional terms of the remittance; as an abandonment of all claim
upon the bill of exchange; a fact which the jury must decide. It
appears to me, however, that if law, justice, and usage, had
previously vested the right to damages in Keppele and Zantzinger,
it is too light, too equivocal, an expression, to be construed into
a waiver of that right; particularly, when it may with, at least,
equal propriety be construed to mean, that they should consider
Carr and Sons responsible, if Swanwick failed in payment.
On the action by Carr and Sons, against Keppele and Zantzinger,
it is unnecessary to detain the jury with any explanatory
Page 4 U.S.
155, 159
remarks. The account was settled; and, by the conduct of the
plaintiffs, it has been completely paid, in law and justice.
SMITH, Justice. I concur in the opinion of my venerable brother,
as to the second action; and subscribe, indeed, to all the general
principles, which he has stated, in reference to the first. But it
is my misfortune to view in a different manner from him, the
important transaction of the 5th of November 1796: for, whatever
may have been the antecedent rights of Keppele and Zantzinger, the
conversation of that day, does, in may opinion, essentially change
the situation of the parties. The bill was thenceforth entirely at
the risque of Carr and Sons; and if Swanwick had failed the very
next day, before any arrangement for payment, or before any laches
in the endeavour to obtain payment, Carr and Sons could never have
recovered from Keppele and Zantzinger, either on the original
account, or on the indorsement of the bill. The risque of Keppele
and Zantzinger being thus as end, all their legal and equitable
claim to the damages, on account of risque, must, also, be extinct.
In an early stage of the transaction, too, I think there is some
fallacy in treating Carr and Sons merely as the agents of their
debtor, in relation to the bill of exchange. If they had lost, or
destroyed, it; if, on the protest, the drawer's friend had paid it
in London for his honour; or, if Carr and Sons, after an
acceptance, had released the acceptor, with, or without, a
consideration; surely, in none of these instances could a claim to
twenty per cent. damages arise; and all that Keppele and Zantzinger
could insist upon in law, justice, or usage, would be, that the
bill, under such circumstances, should be deemed a payment of their
debt, notwithstanding the conditional terms of the remittance. In
these sentiments, I am uninfluenced by any consideration of
attachment to the American merchant, or of enmity to the British
merchant: and, I think, they will be found to conform best to the
honour of all merchants, which, like the chastity of a female,
should be free from suspicion, as well as free from taint.
M'KEAN, Chief Justice. Upon the refusal of the tender in
November 1796, Zantzinger declared, that the bill of exchange
should be at the risque of Carr and Sons for the future. The
meaning of this declaration, I understand to be (at least, it is a
reasonable interpretation) that Carr and Sons themselves should be
answerable to Keppele and Zantzinger, for the principal, interest,
and damages, even if Swanwick should become insolvent. Under the
view of the case, I concur with my brother SHIPPEN, in all his
remarks which he has delivered to the jury. Verdict for Keppele and
Zantzinger in both actions. Ingersoll and Brinton, for Keppele and
Zantzinger. Dallas, for Carr and Sons.
Footnotes
Footnote 1 The Judges
differing in opinion, each addressed the jury; but the Chief
Justice, on account of indisposition, added only a few words, in
affirmance of the sentiments of SHIPPEN, Justice.
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