Bank of the United States v. Carneal
27 U.S. 543 (1829)

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U.S. Supreme Court

Bank of the United States v. Carneal, 27 U.S. 2 Pet. 543 543 (1829)

Bank of the United States v. Carneal

27 U.S. (2 Pet.) 543

ERROR TO THE CIRCUIT

COURT OF OHIO

Syllabus

The evidence in the case was that the day when the note became due, the bank being the holder thereof, and it being payable there, after the usual banking hours were over it was delivered to a notary by the officers of the bank, they informing him at the time that there were no funds there for the payment of the note. This was a sufficient proof of due demand of payment.

When a note is payable at a bank, it is not necessary to make any personal demand upon the maker elsewhere. It is his duty to be at the bank within the usual hours of business to pay the same, and if he omits so to do and a demand is there made of payment by the holder within those hours, and it is refused or neglected to be made, the holder is entitled to maintain his action for such dishonor.

It is difficult to lay down any universal rule as to what is due diligence in respect to notice to endorsers. Many cases must be decided upon their own particular circumstances, however desirable it may be, when practicable, to lay down a general rule.

When notice is sent by the mail, it is sufficient to direct it to the town where the party resides if it is a post town; if it is not, then to the post office or post town nearest to his residence, if known. But the rule, as to the nearest post office, is not of universal application, for if the party is in the habit of receiving his letters at a more distant post office, or through a more circuitous route, and the fact is known to the person sending notice, notice sent by the latter mode will be good. And where the party is in the habit of receiving his letters at various post offices to suit his own convenience or business, it may be sufficient to send it to either.

A suggestion was made at the bar that the letter to the endorser stating the demand and dishonor of the note is not sufficient unless the party sending it also informs the endorser that he is looked to for payment. But where such notice is sent by the holder or by his holder, it necessarily implies such a responsibility over.

This suit was originally brought against William Steele, William Lytle, and Thomas D. Carneal. The plaintiffs counted in assumpsit for money lent and advanced under a provision of the statute of the State of Ohio authorizing a joint suit against all the parties to a promissory note.

The original process was served upon William Steele and William Lytle. As to Thomas D. Carneal, the Marshal of

Page 27 U. S. 544

the District of Ohio returned "not found," and this return being suggested of record, the plaintiffs, at the September term of the circuit court for the year 1823, proceeded to judgment against Steele and Lytle.

In May, 1824, the plaintiffs, in pursuance of another statute of the State of Ohio, sued out of the clerk's office of the circuit court a writ of scire facias against Thomas D. Carneal (as to whom the marshal of the district had previously returned "not found"), the object of which writ was to call upon him to show cause why he should not be made a party to the judgment against Steele and Lytle, and why execution should not issue against him agreeably to the provisions of the statute.

This writ having been served upon the defendant, a rule was taken against him for a plea. At the September rules, 1824, the defendant's default was entered and judgment "nisi." At the January term, 1825, this default was set aside and the defendant filed the plea of nonassumpsit, upon which issue was joined.

The cause was regularly continued upon the docket until the July term, 1827, at which term the defendant's attorney filed a further plea.

"And the said Thomas D. Carneal, by the leave of the court, first had and obtained for further plea in this behalf, defends the wrong and injury, when &c., and says that the said promise in the said declaration, in the original cause supposed, was made by the said Carneal as co-endorser with William Lytle, upon a promissory note, made and executed by the said William Steele, the said Carneal and Lytle being endorsers, as securities for the said William Steele, and, after the making of the said promise, and after the commencement of this suit, to-wit, on 17 December, 1824, in consideration that the said Lytle had transferred to the plaintiffs a large amount of real estate, in payment and satisfaction of the debts of the said William Lytle to the said plaintiffs, including the debt due the plaintiffs upon the endorsement aforesaid, and had given his notes for the payment of a large sum of money, to-wit, the sum of $40,000, upon account of and in satisfaction of his said

Page 27 U. S. 545

liabilities to the plaintiffs, including the endorsement aforesaid; the said plaintiffs agreed with the said William Lytle that they would accept and receive the real estate so conveyed and the notes so made and delivered in satisfaction of the said debt due from the said William Steele, upon which the said Carneal, with the said William Lytle, were endorsers and securities as aforesaid, and did then and there accept and receive the same in satisfaction of said debt, and this the said Carneal is ready to verify, wherefore he prays judgment if the said plaintiffs their action ought further to have or maintain against him."

At the December term 1827, the plaintiffs filed their replication to the above plea, in the following words:

"And the said plaintiffs, by Daniel J. Caswell, their attorney, as to the plea of the defendant, by him last pleaded, to the further maintenance of the said action, say that for anything in the said plea set forth, they ought not to be barred from further having and maintaining their said action, because, protesting that the said William Lytle did not transfer to the said plaintiffs the real estate in the said plea set forth, nor give his notes for the sum of money in the said plea set forth; for replication to the said plea, they say that the said plaintiffs did not accept the same in satisfaction of the sum of money due the said plaintiffs, as set forth in their said declaration; and this they pray may be inquired of by the country, and the defendant doth the like,"

&c.

The cause was tried at the July term, 1828, and a verdict and judgment rendered for the defendant.

The counsel for the plaintiffs tendered their bill of exceptions and prosecuted this writ of error.

The bill of exceptions sent up with the record, contains the whole of the testimony given on the trial. The facts of the case, as they were understood and considered by the Court, are stated in the opinion of the Court delivered by MR. JUSTICE STORY.

On the trial in the circuit Court of Ohio, after the evidence was closed, the defendant's counsel moved the court to instruct the jury as in case of a nonsuit

"upon the ground that the evidence adduced by the plaintiffs was not sufficient in

Page 27 U. S. 546

law to charge the defendant as endorser of the note aforesaid, and the court, upon the motion aforesaid, decided that the evidence in writing adduced by the plaintiffs was insufficient in law to charge the defendant and render him liable as endorser of the note aforesaid, and so charged the jury, to which opinion of the court and charge to the jury the plaintiffs by their counsel except and pray the court that this, their bill of exceptions, may be signed, sealed, and made a part of the record, which is hereby ordered."

The plaintiffs, by their counsel, moved the court to charge the jury that, under the present state of the pleadings in the cause, it was not necessary for the plaintiffs to prove that they gave notice to the defendant of the nonpayment of the said note at the time the same became due and payable in order to charge the said defendant, which instruction the court refused to give the said jury, and on the contrary charged the said jury that it was incumbent upon the plaintiffs to prove such notice. To which opinion and charge of the court, the plaintiffs by their counsel excepted and prayed that this, their bill of exceptions may also be signed, sealed, and made a part of the record. All which was ordered by the court.

Page 27 U. S. 547

MR. JUSTICE STORY delivered the opinion of the Court.

The Bank of the United States brought a joint action against William Steele, William Lytle, and Thomas D. Carneal (the defendant in error) upon a promissory note dated at Cincinnati on 22 August, 1820, whereby Steele promised to pay Carneal or order, at the office of discount and deposit of the Bank of the United States at Cincinnati, the sum of $11,563 in sixty days after date, which note was afterwards successively endorsed by Carneal and Lytle and was discounted by the bank and dishonored at its maturity.

The declaration is for money lent and advanced, and the suit is authorized to be brought in this form jointly against all the parties to the note, by a statute of Ohio. The process was served upon Steele and Lytle, but returned "not served" upon Carneal. Judgment was afterwards duly obtained against Steele and Lytle, and a scire facias issued according to another statute of Ohio against Carneal, to which he appeared and pleaded the general issue of nonassumpsit at the January term of the court in 1825. The cause was then regularly continued until July term, 1827, when by leave of the court he pleaded as a further plea the receipt of certain real estate of Lytle by the bank, after the commencement of the suit, in satisfaction of the debt due upon the note, and prayed judgment if the plaintiffs their action ought further to have or maintain against him. To this plea there was a replication and issue to the

Page 27 U. S. 548

country, and at June term, 1828, the cause was tried and a verdict was found, and judgment thereupon entered for the defendant. A bill of exceptions was taken at the trial, upon which the questions arose which have been discussed at the bar, and upon which the opinion of the Court is now to be delivered.

The first question is whether the plea of satisfaction, so as above pleaded, is a substitution for the former plea of nonassumpserunt so as to displace it entirely, or whether it is an auxiliary plea, so that both issues were properly before the jury at the trial upon which they might pronounce their verdict. The latter is contended for by the defendant in error, and was supported by the judgment of the circuit court.

It is admitted that a plea puis darrien continuance is always pleaded by way of substitution for the former plea, on which no proceeding is afterwards had. The present plea was in fact pleaded after the last continuance, although it is not so stated in the plea. It differs from a technical plea of puis darrien continuance only in this circumstance, that the satisfaction is alleged to have been after the commencement of the suit, instead of after the last continuance of the suit. In principle, however, they do not differ, since each of them requires the same commencement and conclusion -- that is, instead of actio non generally, each must be pleaded with the prayer of actio non ulterius habere, &c., and the judgment must follow the prayer, and is repugnant to and incompatible with that of a general judgment upon matters before the suit brought. As therefore the same judgment cannot be rendered upon the general issue, and upon such a plea of matters arising after the suit brought, it is difficult to perceive how they can be united. But it is the less necessary to rest any absolute decision upon this point because we are all of opinion that the judgment below ought to be reversed upon the exceptions taken to the merits.

The court below ruled that the evidence adduced at the

Page 27 U. S. 549

trial was not sufficient in law to charge the defendant as endorser. That evidence was supposed to be deficient in two respects -- 1st, that there was not a proper demand of payment of the note of the maker, at the time when it became due, and 2d, that due notice was not given of the nonpayment to the defendant as endorser.

Upon the first point, the evidence is that on the day when the note became due, the note was in the bank at Cincinnati, the bank being the holder thereof, and it being payable there, and that after the usual banking hours were over, it was delivered to a notary by the officers of the bank for protest, they informing him at the time that there were no funds there for the payment of the note. We are all of opinion that this was a sufficient proof of a due demand of payment. Where a note is payable at a bank, it is not necessary to make any personal demand upon the maker elsewhere. It is his duty to be at the bank within the usual hours of business to pay the same, and if he omits so to do, and a demand is there made of payment by the holder within those hours, and it is refused or neglected to be made, the holder is entitled to maintain his action for such dishonor. But where the bank is itself the holder of the note so payable, no formal demand is necessary to be made of payment. The maker has the whole period of the usual banking hours to pay it, and if he does not pay it within those hours, it is equivalent to a demand and refusal of payment on his part, and the note ought not to be delivered out for protest until after those hours are passed. If the bank has funds of the maker in its hands, that might furnish a defense to a suit brought for nonpayment. But this is properly matter of defense to be shown by the party sued, like any other payment, and not matter to be disproved by the bank by negative evidence. This doctrine was recognized by this Court in Fullerton v. Bank of the United States, at the last term. 1 Pet. 604, 26 U. S. 617.

Then as to the other point of notice, the facts are that the defendant, Carneal, resides in Campbell County in the State of Kentucky. The note became due on 24 October, 1820, and on the next day the notary put a sealed

Page 27 U. S. 550

notice of the protest and nonpayment into the post office in Cincinnati, directed "To Thomas D. Carneal, Campbell County, Kentucky," the postage on which was not paid. At that time, Carneal's residence in Campbell County was without the limits of any post town, and about two miles from Cincinnati, across the River Ohio, and his residence was well known to the officers of the bank, as well as the postmaster at Cincinnati. The county seat of Campbell County is Newport, where there is a post office, about three miles distance from Carneal's residence, the River Licking being between them, and there is also another post office at Covington, below the River Licking, about two miles distance from his residence. In October, 1820, the mails from Cincinnati passed once a week only through Covington, and three times a week through Newport. Carneal was in the habit of receiving letters at the Newport office as well as at the offices in Covington and Cincinnati. He was in the habit of receiving all the letters directed to him at Cincinnati at the office in that place, and had given orders to the postmasters to detain all such letters there until he called for them. He visited Cincinnati very frequently and almost daily, having business and being a director of a bank located at that place. The postmaster was in the habit of sending letters directed to him in Campbell County, by the Covington mail, whenever he observed the address, unless, as was sometimes the case, he called for letters at the office before the Covington mail was sent. But other letters, directed generally to Campbell County, when the place of residence of the party was unknown, were sent by the postmaster to Newport. The notary himself, when he put the present notice into the post office at Cincinnati, supposed that Carneal received all his letters at that office. The first mail which left Cincinnati for Newport, after the deposit of this notice, was on 26 October, and the first which left for Covington was on the 28th of the same month. There is no evidence in the case that the letter in question went either by the mail of the 26th to Newport, or by that of the 28th to Covington. The defendant Carneal has not produced the letter, if it was ever

Page 27 U. S. 551

received by him, and the circumstances afford a strong presumption that it might have been received at Cincinnati.

Such is a summary of the material facts upon which this Court is called to pronounce whether there was due diligence in the transmission of the notice to the defendant. The latter having asked the court below to instruct the jury as in case of a nonsuit, and the court having acceded to his request, that instruction can be maintained only upon the supposition that there was no contrariety of evidence as to the facts which ought to have been left to the jury, and consequently every inference fairly deducible from the facts which afforded a presumption of due notice ought to be made in favor of the plaintiffs.

It is difficult to lay down any universal rule as to what is due diligence in respect to notice to endorsers. Many cases must be decided upon their own particular circumstances, however desirable it may be, when practicable, to lay down a general rule. When notice is sent by the mail, it is sufficient to direct it to the town where the party resides if it is a post town. If it is not, then to the post office or post town nearest to his residence, if known. But the rule as to the nearest post office is not of universal application, for if the party is in the habit of receiving his letters at a more distant post office or through a more circuitous route, and that fact is known to the person sending notice, notice sent by the latter mode will be good. And where the party is in the habit of receiving his letters at various post offices, to suit his own convenience or business, it may be sufficient to send it to either. The object of the law in all these cases is to enforce the transmission of the notice by such a route as that it may reach the party in a reasonable time. This doctrine is fully recognized by this Court in the case of Bank of Columbia v. Lawrence, decided at the last term. 1 Pet. 578.

It has been objected that the direction of this letter to Campbell County generally was not sufficient, but that it ought to have been directed to the nearest office, for otherwise it might happen that it would be sent to a post office, which, though the county seat, might be very distant from

Page 27 U. S. 552

the residence of the party. Whether a mere direction to the county without further specification, where the party does not reside in any town therein, would be sufficient in all cases and under all circumstances, we do not think it necessary to decide. That question may well be left until it is necessary in judgment. But where the description is general, if it is in fact sent to the proper post office, or if, after due inquiry it is the only description within the reach of the person sending the notice, we think it may be safely declared to be sufficiently certain, and that a different doctrine would materially clog the circulation of negotiable paper. We think the description in the present case was in every view sufficient. There was no misdirection, for Carneal did live in Campbell County. His actual residence was well known to the postmaster at Cincinnati, and the description did not and could not mislead him. If the direction was observed, it would be sent to Covington, or would be delivered at Cincinnati. If not, it would be sent at farthest to Newport.

Then was the notice in fact duly given or duly sent through the proper post office? We are all of opinion that it was. The post office at Cincinnati was almost as near to the party's residence as that at Covington. The difference is too trifling to afford any just ground of preference, and Cincinnati was the place where he was most likely to receive the letter promptly, since it was the place of his business and of his habitual and almost daily resort. If it had never been transmitted from that office at all, we are not prepared to say that under such circumstances the notice left there was not of itself sufficient, since the party was known there and his description unequivocal. It does not appear in point of fact that it ever left that place for any other post office. If it did not, the strong presumption is that it was there delivered to the party. But if it was sent to Newport, how can the court say that it was mis-sent? The party was in the habit of receiving letters there; it was the county seat, and the mail by that route was three times a week, and that by Covington only once a week. The probabilities, therefore, in favor of an early receipt of the letter

Page 27 U. S. 553

from this circumstance might fairly balance any in the opposing scale, from the increase of distance and the intervention of the River Licking. And in fact the letter would at that time have reached Newport, two days earlier than it would have reached Covington. We think it would be inconvenient and dangerous to lay down any rule that the person sending a notice ought under such circumstances to direct the letter to the nearest post office. We think that the notice would have been good by either route, indeed, good if left at the post office at Cincinnati.

A suggestion has been made at the bar that a letter to the endorser stating the demand and dishonor of the note is not sufficient unless the party sending it also informs the endorser that he is looked to for payment. But when such notice is sent by the holder or by his order, it necessarily implies such a responsibility over. For what other purpose could it be sent? We know of no rule that requires any formal declaration to be made to this effect. It is sufficient if it may be reasonably inferred from the nature of the notice.

For these reasons, we are all of opinion that the judgment of the circuit court ought to be

Reversed, and the cause remanded with directions to award a venire facias de novo.

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