Townsley v. SumrallAnnotate this Case
27 U.S. 170
U.S. Supreme Court
Townsley v. Sumrall, 27 U.S. 2 Pet. 170 170 (1829)
Townsley v. Sumrall
27 U.S. (2 Pet.) 170
Bills of exchange, payable at a given time after date, need not be presented for acceptance at all, and payment may at once be demanded at their maturity.
It is admitted that in respect to foreign bills of exchange, the notarial certificate of protest is, of itself, sufficient proof of the dishonor of a bill without any auxiliary evidence.
It is not disputed that by the general custom of merchants in the United States, bills of exchange drawn in one state on another state are, if dishonored, protested by a notary, and the production of such protest is the customary document of dishonor.
If a person undertake to accept a bill in consideration that another will purchase one already drawn or to be thereafter drawn, and as an inducement to the purchaser to take it, and the bill is purchased upon the credit of such promise for a sufficient consideration, such promise to accept is binding upon the party. It is an original promise to the purchaser, not merely a promise for the debt of another, and having a sufficient consideration to support it, in reason and justice as well as in law, it ought to bind him.
If A. says to B. pay so much money to C. and I will repay it to you, it is an original independent promise, and if the money is paid upon the faith of it, it has been always deemed an obligatory contract, even though it be by proof, because there is an original consideration moving between the immediate parties to the contract.
Damage to the promisee constitutes as good a consideration as benefit to the promisor.
In cases not absolutely closed by authority, this Court has always expressed a strong inclination not to extend the operation of the statute of frauds so as to embrace original and distinct promises, made by different persons at the same time upon the same general consideration.
It can make no difference in law whether the debt for which a bill of exchange is taken is a preexisting debt or money then paid for the bill. In each case there is a substantial credit given by the party to the drawer upon the bill, and the party parts with his present rights at the instance of the promisee, whose promise is substantially a new and independent one, and not a
mere guarantee of the existing promise of the drawer. Under such circumstances, there is no substantial distinction, whether the bill be then in existence, or be drawn afterwards. In each case, the object of the promise is to induce
the party to take the bill upon the credit of the promise.
If the holder of a bill of exchange, at the time of taking the bill, knew that the drawee had not funds in his hands belonging to the drawer, and took the bill on the promise of the drawee to accept it, expecting to receive funds from the drawer, the promise of the drawee to accept the bill, constitutes a valid contract between the parties, notwithstanding the failure of the drawer to place funds in his hands. The acceptance of the drawee of a bill binds him, although
it is known to the holder that he has no funds in his hands. It is sufficient
that the holder trusts to such acceptance.
This suit was originally instituted by Joseph K. Sumrall, in a state court of Kentucky, and afterwards, on the petition of Thomas F. Townsley the defendant below, removed into the Circuit Court of the United States for the District of Kentucky, where the same was tried before a jury and a verdict rendered for the plaintiff.
The action was upon an alleged verbal promise made by the defendant as one of the partners of Townsley & Co. that they would accept a certain draft or drafts, to be drawn on them at New Orleans by one Richard S. Waters in favor of Joseph K. Sumrall, and the cause of action alleged was a failure to comply with the promise. The bill was drawn and remitted to New Orleans, and not being paid, was returned under protest to Kentucky, and this suit was brought.
On the trial in the circuit court, various bills of exceptions were taken by the defendant, all of which are stated in the opinion of this Court, and in which opinion is also stated, the points on which the plaintiff in error sought to obtain a reversal of the judgment of the circuit court.
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