Riddle & Co. v. Mandeville and Jamesson - 9 U.S. 322 (1809)
U.S. Supreme Court
Riddle & Co. v. Mandeville and Jamesson, 9 U.S. 5 Cranch 322 322 (1809)
Riddle & Co. v. Mandeville and Jamesson
9 U.S. (5 Cranch) 322
The endorsee of a promissory note in Virginia may recover the amount from a remote endorser in equity, though not at law.
Equity will make that party immediately liable who is ultimately liable at law.
The remote endorser has the same defense in equity against the remote endorsee as against his immediate endorsee.
The defendant has a right to insist that the other endorsers be made parties.
Error to the Circuit Court for the District of Columbia, sitting at Alexandria, in a suit in chancery, brought by Riddle & Co. against Mandeville and Jamesson, remote endorsers of a promissory note, dated March 2, 1798, at sixty days, for $1,500, drawn by Vincent Gray payable to the defendants or order, and by them endorsed in blank. Upon its face it was declared to be negotiable in the Bank of Alexandria. The note so drawn and endorsed was by Gray put into the hands of a broker who passed it to D. W. Scott for flour, which he sold for $1,200 in cash, and paid the money to Gray. Scott passed it, without his own endorsement, to McClenachan in the purchase of flour, and McClenachan endorsed it to Riddle & Co. the complainants, in payment of a precedent debt; Gray failed to pay the note, and was discharged under the insolvent act of Virginia upon an execution issued upon a judgment in favor of the complainants upon the same note. The complainants then brought a suit at law against the defendants upon their endorsement, and obtained judgment in the court below, which was reversed in this Court upon the principle that an endorsee cannot maintain a suit at law against a remote endorser of a promissory note. 5 U. S. 1 Cranch 290. Whereupon the complainants brought the present bill in equity, which was decreed to be dismissed in the court below, that court being of opinion that there was no equity in the bill. From that decree the complainants appealed to this Court.
The only facts stated in the bill were, that Gray made the note payable to the order of Mandeville and Jamesson, who put it in circulation. That it was afterwards delivered and transferred, for a valuable consideration, to McClenachan, who, for a
valuable consideration, endorsed and transferred it to the complainants. That Gray failed to pay it, and was discharged from execution under the insolvent act, whereby the complainants were unable to recover from him any part thereof, in consequence of which the defendants became liable in equity to pay the same, but have refused so to do.
Among the interrogatories contained in the bill, it is asked "with what view was the note made and endorsed?" and whether one of the defendants did not, upon inquiry, declare that the note was good and would be punctually paid?
The defendants pleaded the judgment at law in their favor in a suit brought upon the same note in bar of the relief in equity.
To this plea the complainants demurred, and the court sustained the demurrer and ruled the defendants to answer.
The answer states that the note was endorsed by them for the purpose of being discounted at bank for the use of the collector's office, in which Gray was the chief clerk or deputy and had the whole management of the business. That the defendants refused to endorse it until Gray promised to deliver to the defendants as security their bond to the United States, given for duties, to the amount of $1,168, which he never did, and they had to pay it. That they never received any value from any person for their endorsement; that they never gave circulation to the note otherwise than by endorsing it and delivering it to Gray to be discounted at bank, for which purpose only they endorsed it. They deny that they ever made any contract with any person touching the note, and say they have no recollection of any conversation with any person respecting the note before it became due.
The deposition of D. W. Scott stated that he gave 200 barrels of flour for the note, but before he
concluded the bargain, he asked Jamesson, one of the defendants, if the note was good and whether there was any objection to it, and informed him it was offered to him for flour. Jamesson told him it was a good note, and observed that whenever he saw the name of Mandeville and Jamesson on any paper he might be sure it was good. That Scott sold the note to McClenachan for 207 barrels of flour, but did not endorse it, and it was expressly agreed that he should not be answerable for it in any event.
The deposition of McClenachan stated that before he would take the note of Scott, he informed Jamesson that he intended to deal for it, and inquired whether it was an accommodation note or a note given upon a real transaction. Jamesson told him it was a real transaction note, and not an accommodation note, and that it would be punctually paid. The deponent further stated that the complainants had released to him all claim on account of the note, and of the debt intended to be paid by the note, and that he had also been discharged under the bankrupt act.
These witnesses were objected to by the defendants as interested.