Bank of United States v. Daniel
37 U.S. 32 (1838)

Annotate this Case

U.S. Supreme Court

Bank of United States v. Daniel, 37 U.S. 12 Pet. 32 32 (1838)

Bank of United States v. Daniel

37 U.S. (12 Pet.) 32

APPEAL FROM THE CIRCUIT COURT OF THE

UNITED STATES FOR THE DISTRICT OF KENTUCKY

Syllabus

A bill of exchange was drawn at Lexington, Kentucky, on James Daniel, on 12 October, 1818, by Robert Grilling, payable at one hundred and twenty days after date at the bank of deposit of New Orleans. The bill was accepted

by the drawee and was endorsed by H.D., I.C. and S.H. All the parties to

the bill resided in Kentucky. The bill was discounted by the Branch Bank of the United States in Kentucky and was transmitted to New Orleans for payment. It was there regularly protested for nonpayment, and was returned to Kentucky for payment of principal and interest from 9 February, 1819, the time it fell due, together with charges of protest, and ten percent damages on the

principal. The maker and acceptor of the bill paid the bank, in July, 1819, three thousand three hundred and thirty dollars and sixty-seven cents on account of the aggregate amount due and supposed to be due, and gave a promissory note for eight thousand dollars, the balance, to William Armstrong, to which H.D.,

I.C. and S.H. were parties, as co-drawers or endorsers. This note was discounted at the office of discount of the Bank of the United States at Lexington, Kentucky, upon the express agreement that the proceeds should be applied to the payment of the balance due on the bill. Afterwards, a payment of five hundred dollars was made on this note and a note for seven thousand five hundred dollars given which not being paid, and Griffing having died, suit was brought by the bank on the note and a judgment obtained against all the other parties to it. In 1827, the defendants in the judgment at law, filed their bill in the Circuit Court of Kentucky, claiming that by the law of Kentucky, the bank was not entitled to ten percent damages on the bill, as all the parties to it lived in Kentucky, and that therefore, the amount of the damages, one thousand dollars, had been included by mistake, in the note for eight thousand dollars, and as there was no legal liability for damages, the note, to the amount of the damages, was given without any consideration whatever. The bill prayed for an injunction to stay proceedings on the judgment, to the amount of the damages, and the interest on the same. In 1827, that amount was one thousand five hundred and fifteen dollars. A decree of the Circuit Court of Kentucky, allowed the injunction at November term, 1836, and the amount of the damages and interest; from July, 1819, which the three thousand three hundred and thirty dollars sixty-seven cents included and was paid in that sum, was at the time of the decree of the circuit court, two thousand and forty dollars.

The act of Congress provides that appeals shall be allowed to the Supreme Court from the final decrees rendered in the circuit courts in cases of equity jurisdiction where the matter in dispute, exclusive of costs, shall exceed the sum or value of two thousand dollars. The expression "sum or value of the matter in dispute" has reference to the date of the decree below, alike in case of appeals in equity and writs of error at law; they are each grounded on the original process of this Court, operating on the final decree or judgment, and are limited to the sum or value then in controversy, and of which the decree or judgment furnishes the better evidence, should it furnish any. The matter in dispute in the circuit court, was a claim to have deducted from the judgment at law, one thousand dollars, with interest thereon, after the rate of six percentum, from 8 July, 1819, up to the date of the decree, in November, 1836; being upwards of seventeen

Page 37 U. S. 33

years, and the circuit court decreed the reformation to be made of the judgment at law by expunging therefrom, and as of its date, the one thousand dollars, with the interest. The effect was to cut off the interest that had accrued on the one thousand dollars from the date of the judgment in 1827 to that of the decree in 1836, interest on the principal sum recovered being an incident of the contract by the laws of Kentucky, as well after judgment as before. The practical consequence of the decree will immediately be manifest when the bill is dismissed by the order of this Court; the appellants will then issue their execution at law and enforce the one thousand dollars, with the accruing interest, from 8 July, 1819, until payment is made. It follows that upon the most favorable basis of calculation, and disregarding the statute of Kentucky of 1789, giving ten percent damages in addition to legal interest on the sum enjoined, the amount to which the decree below relieved the appellees, and deprived the bank of the right of recovery, was two thousand and forty dollars -- that is, one thousand dollars principal, with seventeen years and four months of interest, this being the aggregate amount in dispute, and enjoined by the decree, of course, the Supreme Court has jurisdiction of the writ of error.

This Court, in accordance to a steady course of decision for many years, feels it to be an incumbent duty carefully to examine and ascertain if there be a settled construction by the state courts of the statutes of the respective states where they are exclusively in force, and to abide by and follow such construction when found to be settled.

A bill of exchange drawn, accepted, and endorsed by citizens of Kentucky, and there negotiated, payable at New Orleans, was not, by force of the statute of Kentucky of 1798, subject to the payment of ten percent damages.

Whether a bill of exchange drawn in one State of this Union, payable in another, is a foreign bill involves political considerations of some delicacy, although of no intrinsic difficulty, at this day. The respective states are sovereign within their own limits and foreign to each other, regarding them as local governments, and consequently foreign to each other in regard to the regulation of contracts; it follows a bill drawn in one payable in the other is a foreign bill.

The place of payment of the bill on which the suit was brought in the circuit court being within a jurisdiction foreign to Kentucky subjected the acceptor to the performance of the contract according to the laws of Louisiana, where it was payable, to every extent he would have been had he become a party to the bill at New Orleans, and the effect of the contract on all the parties to it does not vary from the one sued on in Buckner v. Finley & Van Lear, 2 Pet. 586. Being a foreign bill and not having been affected by the statute of Kentucky, of course, the holders, by commercial usage, were entitled to reexchange when the protest for nonpayment was made.

Courts of chancery will not relieve for mere mistakes of law. This rule is well established, and the Court will only repeat what was said in the case of Hunt v. Rousmanier, 1 Pet. 15,

"that whatever exceptions there may be to the rule, they will be found few in number, and to have something peculiar in their character, and to involve other elements of decision."

Courts of equity are no more exempt from obedience to statutes of limitations than courts of common law.

It is generally true that the giving of a note for a preexisting debt does not discharge the original cause of action unless it is agreed that the note shall be taken in payment.

The statute of limitations is a bar in a case where at the time of the return of a bill

Page 37 U. S. 34

of exchange, payable in New Orleans and drawn in Kentucky, protested for nonpayment, the parties to it, in 1819, paid as damages, on the bill ten percentum on the amount, and did not until 1827 claim that, by the law of Kentucky, no damages were payable on such a bill. In 1819, the parties to the bill paid three thousand three hundred and thirty dollars and sixty-seven cents on account of the bill for ten thousand dollars, the cost of protest, and damages, and gave their note for eight thousand dollars for the balance of the bill, which was discounted, and the proceeds by express agreement applied to the payment of the bill. If no damages were payable on the bill for ten thousand dollars, an action to recover back the same, as included in the payment of the three thousand three hundred and thirty dollars and sixty-seven cents, could have been instituted in 1829.

On the 29th day of October, 1827, the appellees, James Daniel, Henry Daniel, Isaac Cunningham and Samuel Hanson filed a bill in the Circuit Court of Kentucky stating that on 12 October, 1818, at Lexington, Kentucky, Robert Griffing, since dead, drew a bill of exchange on James Daniel, one of the complainants, for ten thousand dollars, payable one hundred and twenty days after date at the office of discount and deposit of the Bank of the United States at New Orleans. The bill was drawn in favor of Henry Daniel, Isaac Cunningham, and Samuel Hanson, and being accepted by James Daniel, was endorsed to the Bank of the United States by the drawees. At the time the bill was drawn, Robert Griffing and James Daniel lived and were in the State of Kentucky, and all the parties to the bill were at the time it was drawn and ever since have continued to be residents in that state.

The bill of exchange so drawn and endorsed was by the Bank of the United States transmitted to New Orleans, and not being paid, was regularly protested and returned to Kentucky, the holders claiming the amount of the same from the parties to the bill, with damages at the rate of ten percent on the amount. James Daniel, the acceptor of the bill, believing the demand of damages to be legal, paid to the Bank of the United States in June or July, 1819, three thousand three hundred and thirty dollars and sixty-seven cents on account of the whole amount due on the bill, consisting of principal, interest, charges and the damages, and for the balance of the bill, the drawers of the bill, Robert Griffing and James Daniel gave their negotiable note, payable sixty days after date, with Cunningham, Hanson, and Henry Daniel as co-drawers in favor of William Armstrong, which note was discounted by the bank, and the proceeds, by

Page 37 U. S. 35

express agreement, were appropriated to the payment of the balance due on the bill of exchange. The sum of three thousand three hundred and thirty dollars and sixty-seven cents, and the note for eight thousand dollars, were delivered to the bank at the same time, and all the complainants except James Daniel were only sureties for the payment of the note, having become co-drawers of the same for that purpose only. In August, 1820, Griffing and the complainants gave another note to the Bank of the United States for seven thousand five hundred dollars, Griffing and James Daniel having paid five hundred dollars on account of the first note, and the note for seven thousand five hundred dollars having become due and protested, a suit has been instituted on it and a judgment obtained on the law side of the Circuit Court of the United States for the Kentucky District.

The bill states that the Bank of the United States is not entitled to damages on the bill of exchange payable at New Orleans inasmuch as all the parties to it resided in the State of Kentucky at the date and maturity thereof, and therefore so much of the note for eight thousand dollars as includes the ten percent on the bill, amounting to one thousand five hundred and fifteen dollars, ought to be deducted from the judgment, and the bill therefore prays that the defendant may be restrained by an injunction from collecting the said sum of one thousand five hundred and fifteen dollars, part of the judgment, and at a final hearing on the bill the injunction may be made perpetual.

The circuit court in November, 1827, granted an injunction according to the prayer of the bill until further order. The defendants, in May, 1836, having proceeded to answer the bill, stated that one thousand dollars, being ten percent on the bill for ten thousand dollars, had been allowed as damages on the return of the bill from New Orleans, with a full knowledge of all the facts of the case, and of all the principles of law on which the same was claimed. The respondents do not admit that this was done under a clear mistake of the law; indeed, two of the complainants were lawyers of celebrity and deservedly of high rank, and no ignorance of the law can be imputed to them. The respondents allege that their claim to damages is within the provisions of the statute of Kentucky, and if not so, they are entitled to damages to the amount for the allowed nonpayment of the draft at New Orleans, and they resist the claim to set aside the allowance of damages fairly and voluntarily made by the complainants.

Page 37 U. S. 36

The respondents also say that all the grounds of equity alleged in the bill occurred to the complainants more than five years next before the commencement of the suit and are barred by lapse of time, and they further allege that the damages were liquidated, assented to, and discharged more than five years next before the commencement of this suit, and all claim to relief on account of the same is therefore, barred by the statute of limitation.

The cause came on for a final hearing in November, 1836, and the circuit court decreed that the plaintiffs be perpetually enjoined from taking out execution for the sum of one thousand dollars, the amount of damages charged on the bill, with the interest charged on the said sum of one thousand dollars up to the time of the judgment. The defendants appealed from this decree.

Page 37 U. S. 48

MR. JUSTICE CATRON delivered the opinion of the Court.

To a just comprehension of the legal questions arising in this cause, it becomes necessary that the facts be stated in the form and sense they present themselves to the Court.

The first transaction giving rise to the controversy was a bill of exchange in the following words:

"Exchange for 10,000 dollars."

"Lexington, October 12, 1818"

"One hundred and twenty days after date of this my first of exchange, second and third of same tenor and date unpaid, pay Henry Daniel, or order, ten thousand dollars at the office of discount and deposit of the Bank of the United States in New Orleans, for value received of him, which charge to the account of yours, &c."

"ROBT. GRIFFING"

"To Mr. JAMES DANIEL "

Page 37 U. S. 49

James Daniel duly accepted the bill, and it was endorsed by Henry Daniel, Isaac Cunningham, and Samuel Hanson, to the president, directors, and company of the Bank of the United States.

When it was made and accepted, the drawer, Griffing, and James Daniel, the acceptor, resided and were in Kentucky, where the transaction took place. The endorsers, Henry Daniel, Cunningham, and Hanson, also resided there.

The bill was transmitted to New Orleans for payment, but not being paid, it was regularly protested and returned, and the bank looked to the drawer, acceptor, and endorsers for the payment of principal and interest thereon from 9 February, 1819, the time it fell due, together with charges of protest and ten percentum damages on the principal. Griffing, the maker, and James Daniel, the acceptor, believing the claim for damages to be legal, paid the bank July, 1819, the sum of three thousand three hundred and thirty dollars and sixty-seven cents on account of the aggregate amount due and supposed to be due, and for the balance Griffing and James Daniel executed their negotiable note for eight thousand dollars, payable sixty days after date, to William Armstrong, to which Cunningham, Hanson, and Henry Daniel were parties either as co-drawers or endorsers, and which was discounted by the office of discount of the Bank of the United States at Lexington for the benefit of Griffing and James Daniel, upon the express agreement between the parties making and endorsing the note with the bank that the proceeds should be applied to the payment of the balance due on the bill.

Griffing and James Daniel were the principal debtors, and Cunningham, Hanson, and Henry Daniel sureties. The principals paid five hundred dollars in part discharge of the note, and in August, 1820, Griffing, James Daniel, Henry Daniel, Cunningham, and Hanson, executed their joint note to the bank for seven thousand five hundred dollars, payable sixty days after date, for the balance. Griffing having died and the note for seven thousand five hundred dollars not having been discharged when due, the bank sued James Daniel, Cunningham, Henry Daniel, and Hanson in the Circuit Court of the United States for the District of Kentucky and recovered a judgment at law for the principal and interest, at what time does not precisely appear.

In 1827, the defendants to the judgment at law filed their bill in equity, in the same court and, after setting out the facts substantially as above, further alleged

"they were advised the bank was

Page 37 U. S. 50

not entitled to ten percentum damages on said protested bill of exchange inasmuch as the drawer and acceptor thereof both lived in Kentucky at the date and maturity of said bill, and that therefore so much of said eight thousand dollar note as exceeds the balance due on said bill for principal, interest, and damages, after deducting said payment of three thousand, three hundred and thirty dollars, sixty-seven cents, was included in said note by mistake, as to the legal liability of said Griffing and James Daniel for said ten percent damages and as to said excess said note was executed without any consideration whatever."

The complainants also alleged that the failure of consideration on which the note for seven thousand five hundred dollars was grounded, being partial, relief against the excess in the note and judgment could only be had in a court of equity, and prayed the bank might be restrained by injunction from the collection of one thousand five hundred and fifteen dollars, the excess that entered into the judgment because of the mistake.

At the November term, 1827, an injunction was ordered by the court restraining the bank from proceeding to collect one thousand five hundred and fifteen dollars, part of the judgment, until the hearing.

The bank answered admitting the statements of the complainants in reference to the liquidation of the bill of exchange and the part payment and renewal of the eight thousand dollar note, and further averred that, on the return of the protested bill, the sum of one thousand dollars, being ten percent on the amount thereof, was claimed by the respondents as their damages, and the claim was assented to by the complainants with a full knowledge of the facts upon which it was founded and all the principles of law upon which it was asserted, and in pursuance of such assent the amount of said bill, with interest and the one thousand dollars damages was liquidated and discharged by complainants in manner alleged, but aver respondents cannot admit

"this was done under any mistake, either as to fact or law; indeed two of complainants were lawyers of celebrity and of deservedly high rank, and respondents cannot impute to them ignorance of the law, and ignorance of the facts is not pretended."

The respondents further alleged that by a statute of Kentucky, bills of exchange drawn by a person in that state on another out of the state, when returned protested, bore ten percent damages besides interest, and independently of the statute the bill for

Page 37 U. S. 51

ten thousand dollars was subject to damages for reexchange and expenses; that the effect of the statute was to reduce to uniformity and certainty the amount to which the holders were entitled in consequence of the money's not being paid at the place agreed upon and the loss arising from difference of exchange and expenses. It is insisted the claim for damages comes within the statute; yet, if not within it, that respondents are entitled to equal damages with those given by the statute, their risk and loss being the same.

In bar of the claim, the respondents say that all the grounds of equity alleged in the bill accrued to complainants more than five years next before the commencement of the suit, and are barred by the lapse of time; they further allege that the damages were liquidated, assented to, and discharged more than five years next before the commencement of the suit, and claim to relief is barred by the statute of limitations.

The allegations in the complainants' bill, not responded to, are admitted. To which answer a general replication was filed. The only evidence in the cause was an agreement of facts entered into by the parties, to-wit:

"It is agreed that the statements contained in said bill as to liquidation of the bill of exchange of ten thousand dollars, are true. It is also agreed that this liquidation was on 8 July, 1819, and that no interest was charged up to that time except upon ten thousand dollars. It is also admitted that such renewals of the eight thousand dollar note were made as are stated in said bill, and that the judgment at law was on one of the notes given in renewal."

Upon the pleadings and admissions, the court proceeded to a hearing of the cause at the November term, 1836, and decreed:

"That a credit be entered on the judgment at law, obtained by the defendants against the plaintiffs, as set forth in the bill for one thousand dollars, the amount of damages charged on the protested bill, with all interest charged on said sum up to the time of the judgment, and that the defendants be perpetually enjoined from taking out execution on said judgment, for the sum thus decreed to be credited, but the decree not to affect the balance of the judgment."

From which decree, the president, directors and company of the Bank of the United States appealed to this Court.

The first question raised on the facts, and in advance of the merits is whether the matter in controversy in the circuit court was of sufficient dignity to give this Court jurisdiction by appeal.

Page 37 U. S. 52

The act of Congress provides that appeals shall be allowed to the Supreme Court from final decrees rendered in the circuit courts, in cases of equity jurisdiction, where the matter in dispute, exclusive of costs, shall exceed the sum or value of two thousand dollars. The expression "sum or value of the matter in dispute" has reference to the date of the decree below alike in case of appeals in equity and writs of error at law; they are each grounded on the original process of this Court, operating on the final decree or judgment, and are limited to the sum or value then in controversy and of which the decree or judgment furnishes the better evidence, should it furnish any. The matter in dispute below was a claim to have deducted from the judgment at law, one thousand dollars, with interest thereon, after the rate of six percentum, from 8 July, 1819, up to the date of the decree in November 1836, being upwards of seventeen years, and the circuit court decreed the reformation to be made of the judgment at law by expunging therefrom, and as of its date, the one thousand dollars, with the interest. The effect was to cut off the interest that had accrued on the one thousand dollars, from the date of the judgment in 1827, to that of the decree in 1836; interest on the principal sum recovered, being an incident of the contract by the laws of Kentucky, as well after judgment as before. The practical consequence of the decree will immediately be manifest when the bill is dismissed by the order of this Court; the appellants will then issue their execution at law and enforce the one thousand dollars, with the accruing interest, from 8 July, 1819, until payment is made; it follows that upon the most favorable basis of calculation, and disregarding the statute of Kentucky of 1789, giving ten percent damages in addition to legal interest on sums enjoined, the amount to which the decree below relieved the appellees and deprived the bank of the right of recovery, was two thousand and forty dollars -- that is, one thousand dollars principal, with seventeen years and four months of interest, this being the aggregate amount in dispute, and enjoined by the decree, of course, the Supreme Court has jurisdiction.

The second question raised by the record, rests mainly on the pleadings in the cause. It is alleged the bank was not entitled to ten percent damages on the protested bill, inasmuch as the drawer and acceptor both resided in Kentucky; that the eight thousand dollar note included the damages of one thousand dollars through mistake; and so far it wanted consideration.

Page 37 U. S. 53

The defendants deny this was done through either mistake of the fact or law; insist they were entitled to ten percent damages by the statute of Kentucky; but if the statute did not apply, they were entitled to damages, for reexchange, and charges, and that the statute was justly referred to for the rule settling the measure of compensation.

As no mistake of the facts is positively alleged, and if impliedly stated is directly and positively denied, we must take it no such mistake existed, and such is manifestly the truth. In regard to the mistake of law, however, the pleadings can settle nothing; they make an issue and refer it to the court for decision on the local and general laws governing damages on bills of exchange of the character of the one set forth.

The statute by force of which the bank claimed damages, declares

"If any person or persons shall draw or endorse any bill or bills of exchange upon any person or persons out of this state on any person or persons within any other of the United States of North America, and the same being returned back unpaid, with legal protest, the drawer thereof, and all others concerned, shall pay the contents of said bill, together with legal interest from the time said bill was protested, the charges of protest, and ten pounds percent advance for the damages thereof, and so proportionally for greater or smaller sums."

In 1821, the Court of Appeals of Kentucky, gave a construction to their statute in the case of Clay v. Hopkins, 3 Marshall 488, where it was holden that where the drawer and acceptor were both of Kentucky, and the transaction took place there, the statute did not apply, although the bill was made payable in Baltimore. That and this case are alike in all their features.

In a subsequent cause of Wood v. Farmers and Mechanics' Bank of Lexington, 7 Monroe 284, the same court held that a bill addressed to "Mr. J. J. Wood, New Orleans," was within the statute, and drew after it ten percent damages on protest, distinguishing Wood's Case from that of Clay and Hopkins, because the acceptor was addressed at the foot of the bill as of New Orleans, although in fact he was of Kentucky.

This Court, in accordance to a steady course of decision for many years, feels it to be an incumbent duty carefully to examine and ascertain if there be a settled construction by the state courts of the statutes of the respective states, where they are exclusively in force,

Page 37 U. S. 54

and to abide by and follow such construction when found to be settled.

Looking to the two adjudications in Kentucky on the construction of the statute of 1798, in the spirit of the rule we have laid down for our government, and without any reference to the misgivings we may entertain of the correctness of the construction, declared to be the true one in Hopkins and Clay, we have come to the conclusion that Wood's Case did not overrule the former. It is therefore declared by this Court that the bill of exchange for ten thousand dollars drawn by Robert Griffing, although payable at a bank in New Orleans, did not, by force of the statute of Kentucky, subject the drawer or others bound to take it up to the payment of ten percent damages.

Not having been entitled by the statute, the appellants insist they were authorized to charge damages by commercial usage and that the statute prescribed a fair measure.

The assumption that the holder could lawfully demand damages depends on the fact whether the bill was foreign or inland; if foreign, then the bank had the right to redraw from New Orleans to Lexington, for such amounts as would make good the face of the bill, including principal, reexchange and charges, with legal interest; the law does not insist upon actual redrawing, but the holder may recover the price of a new bill at the place of protest. Had a jury been called on to assess the amount due, proof of the exchange against Lexington would have been necessary to the recovery of damages on the ground of reexchange, but the parties themselves having liquidated them at the rate the statute of Kentucky allowed, in cases very similar, we must presume, at this distant day, aside from any proof to the contrary, that ten percent was fair compensation; it may have been less; of this, however, the parties were the proper judges. Kent's Com. Lecture 44.

Whether a bill of exchange drawn in one State of this Union, payable in another, is a foreign bill involves political considerations of some delicacy, although, we apprehend, of no intrinsic difficulty at this day. The respective states are sovereign within their own limits, and foreign to each other, regarding them as local governments. 27 U. S. 2 Pet. 586. Kentucky and Louisiana, as political communities, being distinct and sovereign and consequently foreign to each other in regard to the regulation of contracts, it follows, a bill drawn in one payable in other is a foreign bill, and so this Court adjudged in the cause of Buckner v. Finley & Van Lear,

Page 37 U. S. 55

27 U. S. 2 Pet. 586. The bill in that case was drawn at Baltimore by citizens of Maryland on Stephen Dever at New Orleans, whereas the one in this case was drawn and accepted in Kentucky, but payable at a bank in New Orleans. Yet we think the place of payment, being within a jurisdiction foreign to Kentucky, subjected the acceptor, James Daniel, to the performance of the contract, according to the laws of Louisiana, to every extent he would have been, had he became a party to the bill at New Orleans, and that the effect of the contract on all the parties to it does not vary from the one sued on in Buckner v. Finley & Van Lear, 2 Pet. 586. Story's Conflict of Laws, secs. from 281 to 286. Being a foreign bill, and not having been affected by the statute of Kentucky, of course, the holders, by commercial usage, were entitled to reexchange when the protest for nonpayment was made, and those bound to take it up having paid, or agreed to pay the damages, with a full knowledge of the facts, and a presumed knowledge of the law, voluntarily giving the bank a legal advantage, it would be going far for a court of chancery to take it away; the equities of the parties being equal, to say the least, it cannot be against conscience for the appellants to retain their judgment.

The main question on which relief was sought by the bill -- that on which the decree below proceeded and on which the appellees relied in this Court for its affirmance -- is can a court of chancery relieve against a mistake of law? In its examination, we will take it for granted, the parties who took up the bill for ten thousand dollars, included the damages of a thousand dollars in the eight thousand dollar note, and did so believing the statute of Kentucky secured the penalty to the bank and that, in the construction of the statute the appellees were mistaken. Vexed as the question formerly was, and delicate as it now is from the confusion in which numerous and conflicting decisions have involved it; no discussion of cases can be gone into without hazarding the introduction of exceptions that will be likely to sap the direct principle we intend to apply; indeed, the remedial power claimed by courts of chancery to relieve against mistakes of law is a doctrine rather grounded upon exceptions than upon established rules. To this course of adjudication we are unwilling to yield. That mere mistakes of law are not remediable is well established, as was declared by this Court in Hunt v. Rousmanier, 1 Pet. 15, and we can only repeat what was there said, "that whatever exceptions there may be to the rule, they will be found few in

Page 37 U. S. 56

number, and to have something peculiar in their character," and to involve other elements of decision. 1 Story's Ch. 129.

What is this case, and does it turn upon any peculiarity? Griffing sold a bill to the United States Bank at Lexington for ten thousand dollars, endorsed by three of the complainants and accepted by the other, payable at New Orleans; the acceptor, J. D., was present in Kentucky when the bill was made, and there accepted it; at maturity it was protested for nonpayment and returned. The debtors applied to take it up, when the creditors claimed ten percent damages, by force of the statute of Kentucky. All the parties bound to pay the bill were perfectly aware of the facts; at least the principals, who transacted the business, had the statute before them, or were familiar with it, as we must presume; they and the bank earnestly believing (as in all probability most others believed at the time) that the ten percent damages were due by force of the statute, and influenced by this opinion of the law, the eight thousand dollar note was executed, including the one thousand dollars claimed for damages. Such is the case stated and supposed to exist by the complainants, stripped of all other considerations standing in the way of relief.

Testing the case by the principle, "that a mistake or ignorance of the law, forms no ground of relief from contracts fairly entered into, with a full knowledge of the facts," and under circumstances repelling all presumptions of fraud, imposition, or undue advantage having been taken of the party, none of which is chargeable upon the appellants in this case; the question then is were the complainants entitled to relief? To which we respond decidedly in the negative.

Lastly, the appellants rest their defense on the statute of limitations. If the thousand dollars claimed as damages were paid to the bank at the time the bill of exchange was taken up, then the cause of action to recover the money (had it been well founded) accrued at the time the mistaken payment was made, which could have been rectified in equity or the money recovered back by a suit at law. The courts of law and equity have concurrent jurisdiction, and the complainants having elected to resort to equity, which they had the right to do, were as subject to be barred by the statute in the one court as in the other. In such cases the courts of equity act in obedience to the statutes of limitation, from which they are no more exempt than courts of law.

Page 37 U. S. 57

This suit having been brought more than five years after the bill was taken up; to apply the bar, it becomes necessary to inquire whether the damages were then paid. The complainants allege that they paid in July, 1819, three thousand three hundred and thirty dollars and sixty-seven cents, on account of the whole amount due, consisting of principal, interest, charges, and damages; and for the balance of the amount of the bill, Griffing and James Daniel executed their negotiable note for eight thousand dollars, payable sixty days after date, to William Armstrong, to which Cunningham, Hanson, and Henry Daniel were parties as endorsers or co-drawers, which note was discounted by the bank for the benefit of Griffing and James Daniel, and upon the express agreement between them and the bank, and the other parties to the note, that the proceeds of said eight thousand dollar note, should be applied to the payment of the balance due on said bill of exchange. The parties to this suit agreed in writing, that the statement above set forth was true, and the bill was liquidated by the proceeds of the note, and the three thousand three hundred and thirty dollars and sixty-seven cents.

If the preexisting debt due the bank and evidenced by the bill of exchange was extinguished when the bill was taken up; then the remedy of the bank was gone, and the right to recover the one thousand dollars of excess arose. It is generally true that the giving a note for a preexisting debt, does not discharge the original cause of action unless it is agreed that the note shall be taken in payment; 10 U. S. 6 Cranch 264. In reference to this principle, it is insisted for the appellees, that the eight thousand dollar note given to the bank, and the renewals of it afterwards, furnished mere evidence of the continuance of the original liability, from which they should be relieved, because the notes covered too much by a thousand dollars, with interest; so the court below thought, and decreed the abatement.

This Court thinks the facts do not involve the principle referred to. We are not told by the appellees that the eight thousand dollar note was taken in payment of the balance of the bill of exchange, but that three thousand three hundred and thirty dollars and sixty-seven cents in cash was paid, and the note discounted, the money obtained upon it, and "by express agreement, applied to the payment of the balance due on said bill of exchange." The debtors raised the cash and paid the bill; nor did the eight thousand dollar note enter into the transaction further that that the proceeds were applied to the

Page 37 U. S. 58

extinguishment of the preexisting debt. Payment was therefore made on 8 July, 1819, and the thousand dollars could have been sued for then, as well as in 1827, when the bill of injunction was filed. It follows the act of limitations is a bar to the appellees, aside from any other grounds of defense.

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 Kentucky and was argued by counsel, on consideration whereof it is now here ordered, adjudged and decreed by this Court that the decree of the said circuit court in this cause be and the same is hereby reversed, and that this cause be and the same is hereby remanded to the said circuit court with directions to that court to discharge the injunction at law and to dismiss the bill in this cause at the cost of the complainants.

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