Ward v. Smith - 74 U.S. 447 (1868)
U.S. Supreme Court
Ward v. Smith, 74 U.S. 7 Wall. 447 447 (1868)
Ward v. Smith
74 U.S. (7 Wall.) 447
1. The designation of a bank as the place of payment of a bond imports a stipulation that its holder will have it at the bank when due to receive payment, and that the obligor will produce there the funds to pay it.
2. If the obligor is at the bank at the maturity of the bond with the necessary funds to pay it, he so far satisfies the contract that he cannot be made responsible for any future damages, either as costs of suit or interest, for delay.
3. Where an instrument payable at a bank is lodged with the bank for collection, the bank becomes the agent of the payee to receive payment.
4. Where such instrument is not lodged with the bank, whatever the bank receives from the maker to apply upon the instrument, it receives as his agent, not as the agent of the payee.
5. Without special authority, an agent can only receive payment of the debt due his principal in the legal currency of the country, or in bills which pass as money at their par value by the common consent of the community.
6. The doctrine that bank bills are a good tender, unless objected to at the time, on the ground that they are not money, only applies to current bills, which are redeemed at the counter of the bank on presentation, and pass at par value in business transactions at the place where offered.
7. If the rule that interest is not recoverable on debts between alien enemies during war of their respective countries is applicable to debts between citizens of states in rebellion and citizens of states adhering to the national government in the late civil war, it can only apply when the money is to be paid to the belligerent directly; it cannot apply when there is a known agent appointed to receive the money, resident within the same jurisdiction with the debtor. In this latter case, the debt will draw interest.
In August, 1860, William Ward, a resident of Alexandria in Virginia, purchased of one Smith, of the same place, then administrator of the estate of Aaron Leggett, deceased, certain real property situated in the State of Virginia, and gave him for the consideration money three joint and several bonds of himself and Francis Ward. These bonds, each of which was for a sum exceeding four thousand dollars, bore date of the 22d of that month, payable, with interest, in six, twelve, and eighteen months after date, "at the office of discount and deposit of the Farmers' Bank of Virginia, at Alexandria."
In February, 1861, the first bond was deposited at the bank designated for collection. At the time there was endorsed upon it a credit of over five hundred dollars; and it was admitted that, subsequently, the further sum of twenty-five hundred dollars was received by Smith, and that the amount of certain taxes on the estate purchased, paid by the Wards, was to be deducted.
In May, 1861, Smith left Alexandria, where he then resided, and went to Prince William County, Virginia, and remained within the Confederate military lines during the continuance of the civil war. He took with him the other two bonds, which were never deposited at the Farmers' Bank for collection. Whilst he was thus absent from Alexandria, William Ward deposited with the bank to his credit at different times, between June, 1861, and April, 1862, various sums, in notes of different banks of Virginia, the nominal amount of which exceeded by several thousand dollars the balance due on the first bond. These notes were at a discount at the times they were deposited, varying from eleven to twenty-three percent. The cashier of the bank endorsed the several sums thus received as credits on the first bond; but he testified that he made the endorsement without the knowledge or request of Smith. It was not until June, 1865, that Smith was informed of the deposits to his credit, and he at once refused to sanction the transaction and accept the deposits, and gave notice to the cashier of the bank and to the Wards, obligees in the bond, of his refusal. The cashier thereupon erased the endorsements made by him on the bond.
Smith now brought the present action upon the three bonds to recover their entire amount, less the sum credited on the first bond when it was deposited, the sum of twenty-five hundred dollars, subsequently received by the plaintiff, and the amount of the taxes paid by the defendants on the estate purchased.
The court below instructed the jury, that if they found that the defendants executed the bonds, the plaintiff was entitled to recover their amounts, less the credit endorsed on the first
one, and the taxes paid by defendants, and the subsequent payment to the plaintiff with interest on the same. The plaintiff recovered, and the defendants brought the case to this Court by writ of error.