Bank of the United States v. Hatch
31 U.S. 250 (1832)

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U.S. Supreme Court

Bank of the United States v. Hatch, 31 U.S. 6 Pet. 250 250 (1832)

Bank of the United States v. Hatch

31 U.S. (6 Pet.) 250

ERROR TO THE CIRCUIT COURT OF THE

UNITED STATES FOR THE DISTRICT OF OHIO

Syllabus

A suit was instituted by the bank against Pearson, the drawer of a bill of exchange endorsed by Hatch, which suit stood for trial at an approaching term. The attorney and agent of the Bank agreed with Pearson that the suit against him should be continued without judgment until the term after that at which judgment would have been entered if Pearson would permit a person in confinement under an execution at his suit to attend a distant court as a witness for the bank in a suit in which the bank was plaintiff. The witness was permitted to attend the court, and the suit against Pearson was continued agreeably to the said agreement.

By the court:

"This was an agreement for a valuable consideration, and not a mere voluntary and discretionary exercise of authority on the part of the agent of the bank. It was a virtual discharge of the endorser of the bill."

The case of McLemore v. Powell, 12 Wheat, 584, cited and confirmed.

The notary public, on the nonpayment of a bill of exchange, left a notice of the same for the endorser at a private boarding house, where the endorser lodged. Calling at the boarding house and inquiring for the endorser of a bill of a fellow boarder, he was informed that he was not within, and he then left the notice with the fellow boarder, requesting him to leave it with the endorser. Held that this was sufficient notice to the endorser to make him liable for the payment of the bill.

This action was brought by the plaintiffs in error, in the Circuit Court of the United States for the District of Ohio, against William S. Hatch, by scire facias upon a judgment obtained against Elijah Pearson, in a suit brought against him and the said William S. Hatch, in which the marshal returned "not found" as to William S. Hatch.

The action was upon a bill of exchange drawn by Elijah Pearson and endorsed by William S. Hatch. The issue was joined upon the plea of nonassumpsit.

At the trial, the defendant offered in evidence a deposition of one John M. Ferry, to which the counsel of the plaintiffs objected on the grounds stated in the opinion of the Court, which objection was overruled by the court and the deposition read. To this opinion of the court the plaintiffs' counsel excepted.

Page 31 U. S. 251

The jury found the following special verdict, to-wit:

"And afterwards, to-wit, at the December term of said court in the year last aforesaid, came the parties, by their said attorneys, and thereupon, for trying the issue joined, came a jury, which found that E. Pearson made the bill of exchange, a copy of which is attached to the declaration of the said plaintiffs in the original suit against said Pearson, the drawer of said bill, and that the said bill was regularly endorsed by the present defendant Hatch. It also found that on 25 July in the year 1820, said bill of exchange was duly protested for nonpayment, and that on said day last mentioned and on the succeeding day, the said defendant Hatch was boarding at the house of Henry Bainbridge in the City of Cincinnati; that on 26 July in the year 1820, the notary public by whom said bill was protested called at the house of said Bainbridge and inquired for said Hatch, and was informed by a Mr. Young that said Hatch was not within; the said notary then left a written notice of said protest with said Young, who was at that time in the house aforesaid, and requested him to deliver said notice to said Hatch, and that in the summer of said year 1820, said Young was a boarder at said house. It also finds that a suit was commenced against said Pearson, the drawer, on said bill of exchange, which suit stood for trial at the September term in the year 1822 of the Circuit Court of the United States for the District of Ohio. It also finds that, previous to the year 1822, one Griffin Yeatman was confined on the jail limits of Hamilton County in said state on a 'capias ad respondendum' issued at the instance of and on a judgment in favor of said Pearson. That said Yeatman was a material witness for the plaintiffs in a number of suits then pending in said court; that one George W. Jones, who was the then agent for plaintiffs, and one William M. Worthington, the then attorney for the plaintiffs, agreed with the said Pearson that, in consideration he, the said Pearson, would permit the said Yeatman to leave the said jail limits and attend said court during the term aforesaid, then the suit then pending in said court against said Pearson on said bill of exchange should be continued without judgment until the term of said court next ensuing said September term, A.D. 1822. That in pursuance of this agreement, the said Pearson permitted the

Page 31 U. S. 252

said Yeatman to leave said jail limits and attend said court, and that said suit against said Pearson was continued agreeably to said agreement. Now, therefore, if upon this finding the court shall be of opinion that the plaintiff is entitled to judgment, then the jury finds for the plaintiff to recover of the defendant the amount of said bill, together with the interest thereon; but if the court shall be of opinion upon the said finding that the defendant is entitled to a judgment, then, and in that case, the jury finds for the defendant."

Upon this special verdict, the court below gave judgment for the defendant, and the plaintiffs below thereupon prosecuted this writ of error.

Page 31 U. S. 254

MR. JUSTICE STORY delivered the opinion of the Court.

The Bank of the United States, as holders, brought an action upon a bill of exchange, jointly against Elijah Pearson as drawer and against William S. Hatch as endorser under a

Page 31 U. S. 255

statute of Ohio authorizing such a proceeding. The marshal having returned the writ "not found" as to Hatch, the bank proceeded to take judgment against Pearson alone. The present suit is a scire facias against Hatch to make him a party to the same judgment, so that execution may also issue against him, according to the provisions of the same statute. The declaration and bill of exchange in the original proceedings have not been, as they ought to have been, sent up in the record, as they constitute a part of it, and for this imperfection a certiorari ought to have been awarded if anything material in it were now controverted by the parties. It appears from some exhibits in the proceedings that the bill of exchange was dated at Cincinnati on 23 May, 1820, and was as follows:

"Sixty days after date hereof, pay to the order of William S. Hatch, at the office of discount and deposit of the Bank of the United States at Cincinnati, $6,600, which charge to the account of yours respectfully, E. Pearson."

Addressed, "Mr. Thomas Graham, Cincinnati, Ohio." It was endorsed by Hatch, and accepted by Graham. Hatch pleaded the general issue, nonassumpsit, and at the trial the jury found a special verdict, as follows:

"And afterwards, to-wit at the December term of said court in the year last aforesaid, came the parties by their said attorneys, and thereupon, for trying the issue joined, came a jury, to-wit: William B. Van Hook, David Todd, John Larwell, Randall Stiver, Isaac N. Norton, A. R. Chase, Truman Beecher, J. R. Geddings, William Rayne, William A. Needham, Ira Paige and William A. Johnson who, being empanelled, elected, tried, sworn and affirmed to try the issue between the parties, upon their oath do say, that E. Pearson made the bill of exchange, a copy of which is attached to the declaration of the said plaintiffs in the original suit against said Pearson, the drawer of said bill, and that the said bill was regularly endorsed by the present defendant Hatch. They also find that on 25 July in the year 1820, said bill of exchange was duly protested for nonpayment, and that on said day last mentioned and on the succeeding day the said defendant Hatch was boarding at the house of Henry Bainbridge, in the City of Cincinnati; that on the 26 July in the year 1820, the notary public

Page 31 U. S. 256

by whom said bill was protested called at the house of said Bainbridge, and inquired for said Hatch, and was informed by a Mr. Young that said Hatch was not within; the said notary then left a written notice of said protest with said Young, who was at that time in the house aforesaid, and requested him to deliver said notice to said Hatch, and that in the summer of said year 1820, said Young was a boarder at said house. They also find that a suit was commenced against said Pearson, the drawer of said bill of exchange, which suit stood for trial at the September term in the year 1822 of the Circuit Court of the United States for the District of Ohio. They also find that previous to the year 1822, one Griffin Yeatman was confined on the jail limits of Hamilton County in said state, on a 'ca. sa.' issued at the instance of and on a judgment in favor of said Pearson. That said Yeatman was a material witness for the plaintiff in a number of suits then pending in said court; that one George W. Jones, who was the then agent for plaintiffs, and one William M. Worthington, the then attorney for the plaintiffs, agreed with the said Pearson that in consideration, he, the said Pearson, would permit the said Yeatman to leave the said jail limits and attend said court during the term aforesaid, then the suit then pending in said court against said Pearson on said bill of exchange should be continued without judgment until the term of said court next ensuing said September term, A.D. 1822. That in pursuance of this agreement, the said Pearson permitted the said Yeatman to leave said jail limits and attend said court, and that said suit against said Pearson was continued agreeably to said agreement. Now, therefore, if upon this finding the court shall be of opinion that the plaintiff is entitled to judgment, then the jury finds for the plaintiff to recover of the defendant the amount of said bill, together with the interest thereon; but if the court shall be of opinion upon the said finding that the defendant is entitled to a judgment, then and in that case the jury finds for the defendant."

Upon this special verdict the court below gave judgment for the defendant.

Two questions, arising out of the special verdict have been argued at the bar. First, whether the notice to Hatch of the dishonor of the bill was sufficient. Secondly, if it was,

Page 31 U. S. 257

whether the agreement between the bank and Pearson was a discharge of the endorser.

Upon the first point, we are of opinion that the notice was sufficient. In cases of this nature, the law does not require the highest and strictest degree of diligence in giving notice, but such a degree of reasonable diligence as will ordinarily bring home notice to the party. It is a rule founded upon public convenience and the general course of business, and only requires that in common intendment and presumption the notice is by such means as will be effectual. In the present case, the notice was left at a private boarding house where Hatch lodged, which must be considered to all intents and purposes his dwelling house. It was left, then, at the proper place, and if the delivery had been to the master of the house or to a servant of the house, there could be no doubt that it would have been sufficient. Stedman v. Gooch, 1 Esp. 4. The notary called at the house, and upon inquiry of a fellow boarder and inmate of the house he was informed that Hatch was not within; he then left the notice with the fellow boarder, requesting him to deliver it to Hatch.

The latter must necessarily be understood, by receiving the notice under such circumstances, impliedly to engage to make the delivery. The question, then, is whether such a notice so delivered does not afford as reasonable a presumption of its being received as if delivered to a tenant of the house. This is not like the case of a public inn and a delivery to a mere stranger who happens to be there in transitu, and cannot be presumed to have any knowledge or intercourse with the party. Boarders at the same house may be presumed to meet daily and to feel some interest in the concerns of each other, and to perform punctually such common duties of civility as this. In our large cities, many persons engaged in business live at boarding houses in this manner. It is not always easy to obtain access to the master of the house or to servants who may be safely entrusted with the delivery of notices of this sort. A person who resides in the house upon a footing of equality with all the guests may well be supposed to feel a deeper interest in such matters than a mere servant, whose occupations are pressing and various, and whose pursuits do not lead him

Page 31 U. S. 258

to place so high a value upon a scrupulous discharge of duty. We think that a stricter rule would be found inconvenient and tend to subvert, rather than to subserve, the purposes of justice. No case exactly in point has been cited at the bar. That of Stedman v. Gooch, 1 Esp. 4, approaches near to it, but there the notice was left with the woman who kept the house at which the party was a lodger. No stress, however, seems to have been laid upon this circumstance to distinguish it from the case of a delivery to any other inmate of the house, either servant or fellow boarder.

The other question is one of more nicety, and not less important. It appears from the special verdict that the contract with Pearson for the continuance of the suit on this very bill, without judgment, until the next term of the circuit court was for a valuable consideration, and not a mere voluntary and discretionary exercise of authority on the part of the agents of the bank. What, then, is to be deemed the true construction of it? Did it amount to no more than an agreement that that particular suit should stand continued, leaving the bank at full liberty to discontinue that on the morrow, at its discretion, and to commence a new suit and new proceedings for the same debt? Or was it intended by the parties to suspend the enforcement of any remedy for the debt for the stipulated period and rely solely on that suit for a recovery? We are of opinion that the intention of the parties apparent on the contract was to suspend the right to recover the debt until the next term of the court. It is scarcely possible that Pearson should have been willing to give a valuable consideration for the delay of a term, and yet have intentionally left avenues open to be harassed by a new suit in the interval. Indeed, no other remedy, except in that particular suit, seems to have been within the contemplation of either party. If the bank had engaged for a like consideration not to sue Pearson on the bill for the same period, there could have been no doubt that it would be a contract suspending all remedy. What substantial difference is there between such a contract and a contract to suspend a suit already commenced, which is the only apparent remedy for the recovery of the bill during the same period? Is it not the natural and necessary intendment that the defendant shall have the full benefit of the whole period

Page 31 U. S. 259

as a delay of payment of the debt? It is no answer that a new suit would be attended with more delay. That might or might not be the case, according to the different course of practice in different states, and at all events it would harass the party with new expenses of litigation. But the true inquiry is whether the parties did or did not intend a surceasing of all legal proceedings during the period. We think that the just and natural exposition of the contract is that they did.

If this, then, be the correct exposition of the contract, the case clearly falls within the principle laid down by this Court in McLemore v. Powell, 12 Wheat. 554. That was the case of a voluntary agreement, without consideration, by the holder with the drawer of the bill for delay after the parties had been fixed by due notice of the dishonor of the bill. The Court held that the agreement was not binding in point of law, and therefore it did not exonerate the endorser. On that occasion the Court said

"We admit the doctrine that although the endorser has received due notice of the dishonor of the bill, yet if the holder afterwards enters into any new agreement with the drawer for delay, in any manner changing the nature of the original contract or affecting the rights of the endorser or to the prejudice of the latter, it will discharge him. But in order to produce such a result, the agreement must be one binding in law upon the parties, and have a sufficient consideration to support it. . . . If the holder enters into a valid contract for delay, he thereby suspends his own remedy on the bill for the stipulated period, and if the endorser were to pay the bill, he could only be subrogated to the rights of the holder, and the drawer could or might have the same equities against him, as against the holder himself. If, therefore, such a contract be entered into without his assent, it is to his prejudice, and discharges him."

The same reasoning applies with full force to the present case. If the bank could not have any remedy on the bill to recover payments, but was bound to wait until the next term of the circuit court, the defendant Hatch, as endorser, could not, by paying the bill place himself in a better situation. He would be liable to the same equities, under the agreement suspending the remedy, as the bank. The same principles which this Court adopted in the

Page 31 U. S. 260

case of McLemore v. Powell, 12 Wheat. 554, will be found illustrated and confirmed in an able opinion of Mr. Chancellor Kent in King v. Baldwin, 2 Johns.Ch. 554, and applied to a case between principal and surety. There are other authorities to the same effect. Gould v. Robson, 8 East 576; Laxton v. Peat, 2 Camp. 188; Hubbly v. Brown, 16 Johns. 70; Bayley on Bills 234.

There is a recent case in England which approaches very near to the circumstances of the present case. We allude to Lee v. Levi, 1 Carr. & Payne 553. In that case, the holder, after suit brought against the accepter and the endorser, had taken a cognovit of the accepter for the amount of the bill, payable by installments, and at the trial of the suit against the endorser, Lord Chief Justice Abbott thought that this was a giving time which discharged the endorser, and the jury found a verdict accordingly. That case afterwards came before the whole court for revision, 6 Dowl. & Ry. C. 475, and was then decided upon a mere collateral point, viz., that the defense having arisen after suit brought against the endorser, should have been taken advantage of by special plea, and could not be given in evidence under the general issue, so that the ruling of the Lord Chief Justice was not brought directly into judgment. It was not, however, in any measure overruled.

Upon the whole, we are of opinion, upon the ground of the agreement stated in the special verdict being a virtual discharge of the endorser, that the judgment of the circuit court ought to be

Affirmed with costs.

This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the District of Ohio and was argued by counsel, on consideration whereof it is ordered and adjudged by this Court that the judgment of the said circuit court in this cause be and the same is hereby affirmed with costs.

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