John Hughes, the 16th of February 1763, gave his bond to John
Baynton, conditioned for the payment of one thousand pounds. On the
3rd September, 1764, John Baynton and Samuel Wharton, became bound
jointly and severally, to John Hughes in a bond conditioned for the
payment of six hundred and eight pounds fifteen shillings. On the
8th of May 1765, John Baynton, assigned the one thousand pound bond
to the plaintiff, Ann Wheeler, for a just debt, she being ignorant
of any dealing, between Hughes and Baynton. This action was brought
on the assigned bond; the defendant pleaded payment, and offered in
evidence the bond dated in September, in bar of the plaintiff's
recovery. To this the council for the plaintiff objected, and this
day, viz. 23rd April, the cause came on to be argued. [ Wheeler v.
Hughes
1 U.S. 23
(1776)
The Council for the Plaintiff contended, that by the * act of
assembly, bonds, bills and notes were negotiable, as promissory
notes in England under the 3 and 4 Ann. cap. 9; that negotiability
imported a currency from hand to hand; that this act of assembly
was formed on the plan of the statute, in many places using the
same words, and being made for the same purpose, viz. to encourage
trade and commerce, which could only be effected by such a
construction, as that an assigned bond should have a currency, from
hand to hand, and that the possessor should recover, independent of
any contracts or dealings between the obligor and obligee; that the
clause in the act of assembly, 'Should commence and prosecute his,
her, or their actions at law, for the recovery of the money
mentioned in such bonds or notes, or so much thereof, as shall
appear to be due at the time of such assignment,' meant as shall
appear on the face of the instrument itself. That, for this reason,
the obligor should either guard, in making the contract, by leaving
out the negotiable words, or should get his payments indorsed on
the bonds; that the words, 'To recover as the person or persons to
whom the same was or were made payable,' only referred to the mode
of recovery, where the assignee brought his action in his own name,
as he might under this act; that any other construction would
defeat the intention of the act, which was to encourage trade and
commerce; but if the assignee was to take the bond subject to the
dealing between the obligor and obligee, there was an end of this
species of traffic, as no one would ever take an assigned bond in
the course of trade, or in any other case, but of a doubtful or
desperate debt. To show that a third person, coming in bona fide,
and for a valuable consideration, would be in a better situation
than his vendor, the
Page 1 U.S. 23,
24
following cases were cited: 1 Siderfin. 134. A made a feoffment
to B. by covin. B. makes a feoffment to D. for a valuable
consideration and bona fide. The first feoffor enters and makes a
feoffment for a valuable consideration. The feoffee of the first
feoffee shall retain the land. Cro Fac. 32. Debt on obligation for
two hundred pounds; Defendant pleads the statute of usury, and
shows that he was indebted to one Alder in one hundred pounds, and
agreed with him that the should forbear him for a year in
consideration of thirty pounds, and that he should make a bond to
Alder for the payment of thirty pounds, and for payment of one
hundred pounds. That then he and Alder entered into the bond for
two hundred pounds. The plaintiff replied that Alder was justly
indebted to him in one hundred pounds, and for payment thereof
entered into this bond, that he was not knowing to any corrupt
agreement between the defendant and Alder. The Court determined in
favour of the plaintiff upon his being a fair and innocent
creditor. To show that promissory notes in England, are not subject
to any discount or sett off, between the promissor and promisee,
the following cases were quoted. 1 Salk, 126. Bill lost; finder
transfers it to C. for a valuable consideration the original owner
cannot bring trover against C. 1 Burrow. 459. S. P. 1 L. Raymond
738. 2 Burr. 675.6. 1224. 1227. 2 Freeman 257. Bill payable to A.
or bearer, is like so much money paid to whomsoever the note is
given; that let what discount, or conditions, soever, be between
the party who gives the note, and he to whom it is given, yet it
shall not affect the bearer. 3 Bacon. title. Merchant. Comyns 43.
Marius 72. 3 Burrows 1523.27.29. It was contended farther by the
plaintiff, that the act of assembly had changed the nature of these
contracts; that they were not to be construed on commercial
principles only; that the doctrine of the defendant established
this principle, that it was nudum pactum, there was no
consideration at the time of the bond being given or assigned. To
which it was answered, that, judging on commercial principles, a
want of consideration was no objection, for there is no such thing
as nudum Pactum in mercantile transactions. 3 Burr. 1669. Plaintiff
also denied defendant to be within the defalcation a&c.
The council for the defendant contended, that it was not the
intention of the Legislature to make bonds negotiable here as
promissory notes in England. They allowed the law as laid down in
the above cases, but denied the application; insisting that they
stood upon quite a different footing. That nothing more was meant
by the act, than to give assignees the benefit of suing in their
own names and preventing any release, or other dealings, affecting
the assignee after assignment once made; that in England, a bond
passes into the hands of an assignee subject to all the equity it
had in the hands of the assignor, for which they quoted 6 Vern.
692. 675. 10 Mod. 445. 1 P. Wms. 383. 452. 459. That the
construction, contended for by plaintiff, would open a door to
numberless frauds; that a satisfied bond might be passed away, and
the obligor compelled to pay it twice; that even a forged bond
might pass in the same
Page 1 U.S. 23,
25
manner; that the preamble has little weight in the construction
of a law, being often made by the clerks in Parliament; that trade
and commerce would be best promoted by their construction, as it
would only impose a duty on a person taking a bond, to enquire in
what state it stood.
That in case of bonds mislaid, or lost, no money could be paid
on them; that the intention of the Legislature was to make these
bonds, bills , &c. subject to a common law remedy, and
substitute the doctrine of the courts of equity in England in this
Province, and no farther. That it was evident, that a general
negotiability was not intended; if it had, the Legislature would
not have varied the expression in those parts of the statutes,
expressly refering to inland bills of exchange, and making
promissory notes negotiable as bills of exchange; the act of
assembly, on the other hand, expressing such a recovery by assignee
as the assignor could have had, and confining the recovery to such
money as was due at the time of the assignment. That this was
further confirmed by the last clause of the act, which prohibits
the assignee releasing any money actually, or really, due. That
custom and practice, which are good expositors of laws, are with
them; and that the statute of 4 and 5 Ann. being declared on, shows
it was the sense of the Practitioners, that promissory notes are
not negotiable here as in England. That as to the defalcation act,
it is a remedial law, and to be extended by equity to all cases
within the same mischief; that though that part of it, which gives
a seire facias, does not apply to this case, yet the other part
does; and the defendant is fairly within the reason of it.
The council for the plaintiff, in reply, admitted the law in
England as laid down by the defendant in the case of bonds; and,
that before the statute, promissory notes were only evidence of a
debt; there was no property transfered; but that the act of
assembly and act of parliament, being made parimateria, are to
receive the like construction. That the construction made by the
defendant, would render the act nugatory. That merely to give the
assignee a right of suing in his own name, unless some solid
advantage attended it, was trifling, nor would it at all encourage
trade and commerce. That a limited negotiability was an absurdity;
it must be negotiable, or not; if negotiable, it was so in all
cases when honestly come by, or not at all. That the intention of
the act must wholly fail, if assignee is only to stand in the place
of assignor, and his recovery made to depend on circumstances and
proofs, which, in the nature of things, are not in his power. That
to say the assignee must make inquiry before he meddles with the
bond, is begging the question. We contend, that this act of
assembly meant something, and that was, for the sake of trade and
commerce, to annex a property in the debt, and a currency to the
paper, and to improve vigilance in the debtor, to take care either
to guard his contract in the first instance, or in case of payment,
or other satisfaction, to fee his payments indorsed, or his bond
cancelled.
Page 1 U.S. 23,
26
That there is no ground for supposing the intention of the law
was only to give a chancery jurisdiction; because there was a
chancery in this Province until the year 1718; since this act
passed, and as soon as ever the chancery powers ceased to be
exercised, the Courts of Law took them, and have exercised them to
the great satisfaction of the Province. That, if they were
competent in one case, they were also in another; and they have in
many instances gone much farther than in this. That, in construing
this law, we are to regard the state of the Province at that time.
There was little Specie; no Paper Currency; a medium of trade was
wanted; the act of Parliament had shown how promissory notes had
been made a medium of commerce; they took it for their guide, and
extended it to bonds and penal bills. That the variance in wording
the act is easily accounted for. Foreign bills of exchange were not
in much use, Inland Bills not known; to have used the language of
the act of Parliament, would have been penning laws in a language
not understood, and it would be absurd to refer to a species of
contracts known and understood by very few in the Province. That
custom and practice is with the plaintiff, as there is scarcely a
news-paper which does not forewarn persons from taking assignments
of bonds, bills, notes, &c. a practice peculiar to this
Province, and, therefore, most plainly demonstrating, that this law
made such a change in these alignments, as to put an obligor in a
worse situation in case his bond was assigned, then while it
continued in the hands of the obligee. That the practice of
declarers in this Province on promissory notes under the statute,
may with more propriety be resolved into the convenience and ease
of the lawyers, than flowing from any principle of law. That the
defalcation act is expressly confined to persons having dealings
together; and as a seire facias is admitted not to ly, it must be a
new construction of statutes, which makes a person a subject of a
statute in one part, and not in another; that he may be prejudiced
under the law, but can receive no benefit from it. The Plaintiff's
council closed with a case from Lancaster determinded by Messieurs
Lawrence and Willing. It was that of Bausman assignee of Henry
Bough, assignee of Jacob Stily, assignee of Henry Waggoner. The
action was brought on a note of hand for one hundred and four
pounds. Plea, payment. Defendant offered to show in evidence an
agreement, signed by Waggoner, the original promissee, made at the
time the note was given, tending to show a want of consideration.
Plaintiff objected. The court held it could not be offered, as it
would effectually destroy the negotiability of notes; and said it
would be attended with the most dangerous consequences, if the
claim of an honest assignee of a bond, or note, should be defeated
by any bargains, or agreements, made at the giving such notes, or
bonds, and not expressed therein. The evidence was accordingly
over-ruled.
The court took time, till the 25th April, to consider, and this
day gave judgment.
Page 1 U.S. 23,
27
Chew, Chief Justice. The question in this case is, whether
Hughes can have the same defalcation against Wheeler, which he
could have had against Baynton, if this had not been assigned? It
was contended for the Plaintiff, that bonds were negotiable as
inland bills of exchange. It was also contended, that defalcation
by the act, is only where there are dealings between the parties.
For the defendant it was contended, that the act does not make them
negotiable, as bills and notes are by the statute of 3 and 4 Ann.
c. 9. It is plain however that the act was drawn from the statute,
for in many places it follows it, totidem verbis, though in others
it varies. This shows the legislature intended in those instances,
to vary the law. Bills in England were negotiable before the
statute; notes were only evidence of a debt; the statute was made
to put them on the same footing with bills. The question is whether
the act of assembly has done the same as the statute. He then
compared the act with the statute, to show that it was drawn from
the statute. The act however says, 'for the encouragement of trade,
commerce and credit;' the statute adds, 'and to make notes
negotiable in the same manner as bills.' This is a material
variance, and is carried through the act. The Defendant relied on
the words in the act entitling assignee to recover the money, that
should appear to be due, in like manner as obligee could. Here is
the same variance as before; for, by the statute, the assignee is
to recover what shall be due, 'in like manner as indorsee of a bill
of exchange.' Had the act pursued the statute in these respects, or
expressed the same meaning in other words, the plaintiff would be
right. What shall appear to be due at the time of the assignment,
has been differently applied by the opposite council; The
Plaintiff's council contended, that it meant what appeared to be
due on the bond; so that, if the bond should be paid, yet if
payment was not indorsed, the assignee might recover the whole. The
Defendant contended, that the clause related only to the manner of
proceeding, enabling the assignee to sue in his own name. We have
considered this matter very deliberately, and are clearly of
opinion, that the variance between the act and the statute, was
intentional, not accidental. An argument of force with us, not
mentioned by the defendant, arises from the wording of the act. The
words 'so much as shall appear to be due,' relate to the time of
trial, and not to the time of the assignment; they are in the
future tense.
Page 1 U.S. 23,
28
It has been said, that it is the obligor's fault not to have the
payment indorsed on the bond; but it is not in his power, for the
money must be paid before he is entitled to a receipt; and then, if
the obligee is a bad man, he may refuse to indorse it.
We are, therefore, clearly of opinion, that an assignee takes
the bond at his own peril; and that he stands in the same place as
the obligee, so as to let in every defalcation which the obligor
had against the obligee, at the time of the assignment, or notice
of the assignment. The only intent of the act being to enable the
assignee to sue in his own name, and prevent the obligee from
releasing after assignment.
Judgment for the Defendant.
Footnotes
[
Footnote *] 1 Gte. 1. e. 8. See 1
State Laws. 77.
Comments
Be the first to comment
Leave a Comment