Bills of exchange were drawn and dated at Hazelwood, Madison
County, Tennessee, by D. and T., on W. and F. at New Orleans, the
drawers having no funds in the hands of the drawers or authority
from them to draw such bills. W. and F. had written to the cashier
of the Branch Bank of the United States at Nashville informing him
that D. and T. were authorized to make negotiations, by bills on
them, with the bank, and that such bills would be honored, but the
bills on which this suit was instituted by the holder and
endorser,
residing in New Orleans, were not negotiated with the bank. The
bills were refused acceptance by W. and F.; were protested for
nonacceptance on the same day, and notice of the same was given by
the notary to the drawers and endorser by letters put into the post
office, addressed to them at Hazelwood, Madison County, Tennessee,
the notary, as was testified, not knowing of any other residence of
the parties than that designated in the caption of the bill, and
that he made inquiry for further information of persons likely to
know. Evidence was given to show that letters from New Orleans for
Hazelwood, in Madison County, West Tennessee, were sent to
Nashville, and that from that
post office they were sent to Spring Creek Post Office. That D.,
the drawer of the bills and the endorser of the other, was the
postmaster at Spring Creek, Madison County, Tennessee. Hazelwood
was near Spring Creek Post Office. It was also testified that
letters from New Orleans, for the Western District of Tennessee,
came to Nashville for distribution unless there was a river mail,
in which case they would be delivered at Memphis and be distributed
thence. The letters of W. and F. to the cashier of the Branch Bank
of the United States at Nashville were offered in evidence by the
drawers of the bills to show that
they were entitled to regular notice of the protest of the
bills. It was held that the circuit court properly rejected this
evidence, as the letters did not apply to and had no connection
with the bills which were the subject of this suit.
An established exception to the general rule that notice of the
dishonor of a bill must be given to the drawer is where he has no
funds in the hands of the drawee, but of this exception there are
some modifications. If the drawer has made or is making a
consignment to the drawee, and draws before the consignment comes
to hand. If the goods are
in transitu, but the bill of
lading is omitted to be sent to the consignee or the goods were
lost. If the drawer has any funds or property in the hands of the
drawee, or there is a fluctuating balance between them in the
course of their transactions, or a reasonable expectation that the
bill would be paid. Or if the drawee has been in the habit of
accepting the bills of the drawer without regard to the state of
their accounts, this would be deemed equivalent to effects. Or if
there was a running account between them. In all such cases, the
drawer is considered as justified in drawing, so far as his having
a right to draw, that
"the transaction cannot be denominated a fraud, for in such case
it is a fair commercial transaction in which the drawer has a
reasonable expectation that his bill will be honored, and he is
entitled to the same notice as a drawer with funds, or authority to
draw without funds."
But unless he draws under some such circumstances, his drawing
without funds,
Page 35 U. S. 573
property or authority puts the transaction out of the pale of
commercial usage and law, and as he can in no wise suffer by the
want of notice of the dishonor of his drafts, that it is deemed an
useless form.
Notice of the dishonor of bills of exchange must be made out in
two ways: 1, that the bills had been duly protested for
nonacceptance, and due and legal diligence used in giving notice
thereof to the parties on the bills, in which case the legal
presumption of its receipt in time would attach; 2, by proof that
the notice actually came to hand in proper time, though the letter
containing the notice was not properly directed or sent by the most
expeditious or direct
route. The facts of notice and its reception in due time are the
only matters material to the drawer or endorser of a dishonored
bill; the manner or place in which they receive such notice is
immaterial; for all the objects to be answered by its reception, it
is equally available to them. To the bolder it is immaterial
whether the evidence of notice consists in the legal presumption
arising from due diligence, which supplies the place of specific
evidence and is binding on a jury as proof of the fact of its
reception, or it is established by direct evidence or such
circumstance as will in law justify them in drawing the
inference.
Since the case of
Buckner v. Findley &
Van Lear, 2 Pet. 589,
27 U. S. 591,
decided on great consideration, it has been the established
doctrine of this Court that a bill of exchange drawn on one of the
states of this Union on a person in another, is a foreign bill, and
to be treated as such, and that in this respect they are to be
considered as states foreign to each other, though they are
otherwise as to all the purposes of their federal Constitution.
Among these purposes are the establishment of post offices and post
roads. The usage of the officers employed in the various details of
the operations of the department, when acting within the line of
their duty as prescribed by law and regulations, becomes
all-important to a court and jury in deciding on what is legal
diligence in giving notice or what is evidence of its
reception.
It is legal diligence in the holder of a bill if he avails
himself in time of the means of communicating notice which are thus
afforded, but he is not answerable for any defects in the outlines
or details of the regulation of the mails, for the route in which
the letter is carried, the time which elapses from its deposit in
the office and delivery, or the mode of carrying or distributing
the mails; but it is proper that he should give evidence of all
these matters, as well to repel the imputation of laches if the
letter does not come to hand or not in due time as to prove its
regular delivery if there should be any doubt as to the use of
diligence in the direction or deposit of the letter. Such evidence
is uniformly received in cases arising on the notice of dishonored
bills.
It is sufficient proof that bills of exchange were protested for
nonacceptance or nonpayment if the notary testifies he put notice
thereof into the post office, without producing a copy of the
notice or proving its contents.
What will be considered as due diligence in giving notice of the
dishonor of a bill of exchange as between the holder and the drawer
or endorsee of a dishonored bill. The question of their liability
depends not on actual notice, but on reasonable diligence, which is
in all cases tantamount to actual notice, whether given or not.
As the bills on which this suit was brought were foreign bills,
the protests produced at the trial were in themselves evidence of
the demand and protest. The oath of the notary that he put the
notice into the post office on the day of protest is competent and
sufficient in law to prove the fact.
Page 35 U. S. 574
MR. JUSTICE BALDWIN delivered the opinion of the Court.
Samuel Dickins, the defendant, and Jesse Taylor were partners,
transacting business at Hazelwood, Madison County, Tennessee, which
was the residence of Dickins. On 6 December, 1832, Taylor drew a
bill of exchange for $1,448 on Wilcox & Feron, New Orleans, in
favor of Dickins, payable on 1 May, 1834, which Dickins endorsed to
the plaintiff. On the same day, Dickins & Taylor drew two other
bills on the former house in favor of the plaintiff, one for
$2,802, payable 1 May, the other for $1,590, payable 1 April, 1834.
The three bills were dated at Hazelwood, Madison County, Tennessee,
presented to the drawers on 3 June, 1833, for acceptance, which
being refused, they were protested for nonacceptance by a notary
public who, on the same day, gave notice thereof to the drawer and
endorser of the first and the drawers of the other two by letters
put into the post office addressed to them at Hazelwood, aforesaid.
It was testified by the notary that not knowing of any other
residence of the parties than that designated by the caption of the
bill, he forwarded the notices accordingly after inquiring of
persons likely to know.
It appeared that all the bills were drawn without funds or
authority to draw, nor was any evidence offered to show that either
Dickins or Taylor had any reason to think that their bills on
Wilcox & Feron would be honored except two letters from Wilcox
& Feron dated 1 December, 1831, addressed to the cashier of the
Branch Bank of the United States at Nashville. In one they said
"Messrs Dickins & Taylor are authorized in making
negotiations, to value on our house in New Orleans, for say $10,000
in such form and at such time as they may think proper, and same
will be duly honored."
In the other,
"Our friend Colonel Samuel Dickins is authorized in negotiating
with your institution to value on our house in New Orleans at any
time for such sums as he may think proper, and same will be duly
honored by W. & F. "
Page 35 U. S. 575
These letters were in the handwriting of Wilcox & Feron, and
in the possession of Dickins; they were offered to show that he was
entitled to regular notice of the protest of the bills drawn by
Dickins & Taylor, but were rejected by the court as
incompetent.
The plaintiff resided at New Orleans. Jackson is the county town
of Madison County, Tennessee, about fourteen miles from Hazelwood,
the defendant's residence, which is on Spring Creek about half or
three-fourths of a mile from a post office called Spring Creek Post
Office, of which the defendant was postmaster and did his business
there in June, 1833. This was known to plaintiff, who, about and
before 3 June, 1833, directed a letter to defendant at "Hazelwood,
Spring Creek, Madison County, Tennessee," and one to "Colonel
Samuel Dickins, Postmaster, Spring Creek, Madison County,
Tennessee." At the trial the plaintiff offered to prove by the
postmaster at Nashville and his deputy that that place was the
distributing office for letters from New Orleans intended for West
Tennessee, including the County of Madison; that in June, 1833 they
knew defendant was postmaster at Spring Creek; that if in
distributing the mail they had seen a letter addressed to defendant
at Hazelwood, they would have sent it to Spring Creek Post Office.
Also to prove by the post office books at Nashville that on 13
June, 1833, the New Orleans mail arrived at Nashville, and on the
14th, a package was sent to Spring Creek Post Office which had come
to Nashville for distribution and was rated at fifty cents
postage.
To this evidence it was objected by the defendant that inasmuch
as the putting a letter into the post office containing notice of a
protest, properly directed, forms a conclusive legal presumption
that such notice was duly given and received; it was also a legal
presumption that the notice went to the place directed, and no
other, and that the plaintiff was concluded from showing either
that the destination of the letter was changed on its passage or
was in point of fact sent to any other place.
The court overruled the objection and the evidence was
received.
It was also testified that letters from Orleans for the Western
District of Tennessee came to Nashville for distribution unless
there was a river mail, in which case they would be delivered at
Memphis and be distributed thence; other evidence was also given in
relation to the course of the mail and the usage of the post office
at Nashville which is needless to recite. In its charge to the
jury, the court instructed them that the usage of a distributing
office in
Page 35 U. S. 576
conformity to law and the authorized regulations of the
department, and in the discharge of the official duties of the
officers employed, might properly be taken into their consideration
of the question submitted to them, which was whether, from the
usual course of the mail and the usage as proved, the notice of the
protest would necessarily reach Spring Creek Post Office or would
fail to reach it, or be carried to some other office; in the first
case, the court instructed them that the notice was served on the
defendant, but in the other the drawer was discharged unless actual
notice was served.
Several instructions were prayed by the defendant which the view
taken by the Court renders it unnecessary to consider, as they
relate to matters not material to the cause, and if given either
way they could not affect the right of either party. One, however,
deserves particular notice, which was
"That the evidence of the notary was not sufficient proof that a
legal notice was sent, but that he ought to have set out a copy of
the notice or stated its contents in order that the court might
judge whether it was sufficient."
The court refused to give this instruction, but stated that it
might reasonably be inferred from the nature of the notice and from
the fact that notice was given, as stated in the deposition.
Exceptions were taken to the decision of the court on the
questions of evidence and the various matters given in charge to
the jury.
The first question which arises is on overruling the admission
in evidence of the two letters from Wilcox & Feron to the
cashier of the branch bank at Nashville.
It was in full proof that Taylor and Dickins never had a dollar
in the hands of Wilcox & Feron to pay any draft drawn on the
latter, nor any money or other property in their hands to meet the
bills at the time they became due, or any funds in their hands when
presented and protested for nonacceptance. No proof was offered
that Dickins & Taylor, or either of them, had made any
consignments to Wilcox & Feron as an expected or anticipated
fund on which to draw. It was also proved, that Jesse Taylor had
neither funds or property in the hands of the drawees when his bill
in favor of Dickins was presented for acceptance or when it became
due, and that they had received no advice of such bill, and that
the two bills of Dickins & Taylor, drawn in favor of the
plaintiff, one for $2,802 and the other for $1,598, balanced their
account on his books. It is clear, therefore, that this transaction
was not a negotiation within the meaning or intention of these
letters;
Page 35 U. S. 577
they evidently referred to negotiations at the bank or within
the sphere of its operations in the commercial transactions of the
firm; the one referring to Dickins alone was expressly limited to
negotiations with that bank. The remittance of these bills to New
Orleans in payment of an antecedent debt to the plaintiff was in no
sense of the term a negotiation of them, and was so utterly
inconsistent with the evident object of the letters that the most
remote expectation could not have been entertained that they would
have been accepted.
A mercantile house conducting operations at Memphis and New
Orleans would, in the course of its business, lend its credit in
anticipation of consignments, while it would refuse it to pay the
debts due to other persons; these considerations could not escape
the consideration of Dickins & Taylor when they sought to make
Wilcox & Feron their creditor instead of Beall by such a
fraudulent abuse of the letters of credit. Had these bills come to
the hands of an innocent holder in the course of trade with a
knowledge of these letters, the case would have been different; or
if the bank had negotiated them, there would have been a reasonable
expectation that they would have been honored; but Dickins &
Taylor could have entertained no such expectation. The letters were
therefore properly excluded, and the case must be considered as if
they had not existed.
An established exception to the general rule that notice of the
dishonor of a bill must be given to the drawer is where he has no
funds in the hands of the drawee; but of this exception there are
some modifications.
8 U. S. 4 Cranch
154; 1 D. & E. 405; 2 D. & E. 712; 12 E. 175; 20 J.R. 149,
150.
If the drawer has made or is making a consignment to the drawer
and draws before the consignment comes to hand. 12 E. 175.
If the goods are
in transitu, but the bill of lading is
omitted to be sent to the consignee or the goods were lost. 16 E.
43.
If the drawer has any funds or property in the hands of the
drawee or there is a fluctuating balance between them in the course
of their transactions, 15 E. 221, or a reasonable expectation that
the bill would be paid. 4 M. & S. 229, 230. Or if the drawee
has been in the habit of accepting the bills of the drawer without
regard to the state of their accounts, this would be deemed
equivalent to effects. 12 E. 175. Or if there was a running account
between them. 15 E. 221.
In all such cases, the drawer is considered as justified in
drawing,
Page 35 U. S. 578
as so far having a right to draw, that
"the transaction cannot be denominated a fraud, for in such a
case it is a fair commercial transaction, in which the drawer has a
reasonable expectation that his bill will be honored, and he is
entitled to the same notice as a drawer with funds, or authority to
draw without funds."
15 E. 220; 16 E. 44.
But unless he draws under some such circumstances, his drawing
without funds, property, or authority puts the transaction out of
the pale of commercial usage and law, and as he can in no wise
suffer by the want of notice of the dishonor of his drafts, that it
is deemed an useless form. "Notice, therefore, can amount to
nothing, for his situation cannot be changed." In a case where he
has no fair pretense for drawing, there is no person on whom he can
have a legal or equitable demand in consequence of the nonpayment
or nonacceptance of the bill. This is the rule as laid down by this
Court in
French v. Bank of Columbia, 4 Cranch 153, 164
[omitted], on a very able and elaborate review of the then adjudged
cases which is fully supported by those since decided in England
and in the supreme court of New York. The case of the defendant
falls clearly within the rule applicable to bills drawn without
funds, or any
bona fide reasonable or just expectation of
their being honored, and notice of their dishonor was not
necessary. The case requires no opinion whether notice of the
dishonor of Taylor's bill in favor of Dickins was necessary, and we
forbear to express any.
The next question which arises is on the admission of the
evidence of the postmaster at Nashville, and his deputy in relation
to the course of the mail, the usage of the office, and the facts
to which they testify.
We are at a loss to perceive any plausible objection to the
evidence which was received by the court on the assumption that
notice of the dishonor of the bills must be made out by the
plaintiff, which could be done in two ways. 1. That the bills had
been duly protested for nonacceptance, and due and legal diligence
used in giving notice thereof to the parties on the bills, in which
case the legal presumption of its receipt in time would attach. 2.
By proof that the notice actually came to hand in proper time,
though the letter containing the notice was not properly directed
or sent by the most expeditious or direct route. The fact of notice
and its reception in due time are the only matters material to the
drawer or endorser of a dishonored bill; the manner or place in
which he receives
Page 35 U. S. 579
such notice is immaterial, for all the objects to be answered by
its reception, it is equally available to them. To the holder it is
immaterial whether the evidence of notice consists in the legal
presumption arising from due diligence, which supplies the place of
specific evidence and is binding on a jury as proof of the fact of
its reception, or it is established by direct evidence or such
circumstances as will in law justify them in drawing the inference.
27 U. S. 2 Pet.
132.
Since the case of
Buckner v. Findley &
Van Leer, 2 Pet. 589,
27 U. S. 591,
decided on great consideration, it has been the established
doctrine of this Court that a bill of exchange drawn in one of the
states of this union on a person in another is a foreign bill, and
to be treated as such, and that in this respect they are to be
considered as states foreign to each other, though they are
otherwise as to all the purposes of their federal Constitution.
Among these purposes are the establishment of post offices and post
roads, the regulation of which has been delegated to the federal
government and is exercised by their laws and the regulations of
the Post Office Department conformably thereto. On these depend all
the communications between the states by mail, the time of
departure from different places, its route, place, and course of
its arrival and distribution. The usage of the officers employed in
the various details of the operations of the department, when
acting within the line of their duty as prescribed by law and
regulations, become all-important to a court and jury in deciding
on what is legal diligence in giving notice or what is evidence of
its reception.
It is legal diligence in the holder of a bill if he avails
himself in time of the means of communicating notice which are thus
afforded, but he is not answerable for any defects in the outline
or details of the regulation of the mails, for the route in which
the letter is carried, the time which elapses from its deposit in
the office and delivery, or the mode of carrying or distributing
the mails; but it is proper that he should give evidence of all
these matters, as well to repel the imputation of laches if the
letter does not come to hand, or not in due time, as to prove its
regular delivery if there should be any doubt as to the use of
diligence in the direction or deposit of the letter. Such evidence
is uniformly received in cases arising on the notice of dishonored
bills.
The next question arises on the prayer of the defendant to
instruct the jury that proof that the bills were protested and
notice thereof
Page 35 U. S. 580
put into the post office was not sufficient without producing a
copy of the notice or proving its contents.
In
Lindenberger v. Beall, the notary testified that
notice of nonpayment was enclosed in a letter addressed to the
defendant at H., and put into the post office at G.; he had no
recollection of these facts, and only knew them from his notarial
book and the protest made out at the time, from which and his
invariable practice he presumed he had done so. This was held
sufficient proof of such notice, and that it was unnecessary to
give notice to defendant to produce it.
19 U. S. 6 Wheat.
104,
19 U. S. 106. In
Nichols v. Webb, the notary was dead, but on a memorandum
on the margin of the protest it was stated in his handwriting,
"Endorsee duly notified in writing 19 July 1819, the last day of
grace being Sunday the 18th," which was held competent proof of
notice.
21 U. S. 8 Wheat.
326,
21 U. S. 330.
In this case, the protests were produced at the trial, and the oath
of the notary positive as to the fact of notice; this is entirely
equivalent to an entry on his books, proved only by his handwriting
after his death, or his belief arising from the fact of having made
such entry, connected with his uniform usage. It must therefore be
taken as settled law that such is sufficient proof that the notice
required by law was given. It remains to consider whether the
letter containing the notice was so directed and deposited in the
post office at Orleans as to comply with the law.
In cases of this description, the true question is whether due
diligence has been used by the holder of the bill, not whether he
has given or the defendant has received notice; both are immaterial
if reasonable diligence has been used. This consists in giving
notice if, after the usual and proper inquiries are made, it is
practicable to give it, but if, when this is done, the holder or
notary cannot give the notice personally, where the parties reside
in the same place, or does not know where to direct it by mail, the
inquiry is diligence, without giving notice. After inquiring from
other parties to the bill and examining the directory, if the
party's residence cannot be found, 3 Camp. 263; if on calling at
his residence or place where he transacts his business, he is not
to be found or any other person who can receive notice, it may be
left there, or if his house of business or residence is locked up
and on audible knocking no one answers, or the party has changed
his former residence, or removed to the country,
Page 35 U. S. 581
no notice is necessary.
22 U. S. 9 Wheat. 599;
27 U. S. 2 Pet.
102,
27 U. S. 105,
27 U. S. 129; 6
D. & R. 505; 20 J.R. 172, and cases cited.
Where the parties do not reside in the same place, diligence
consists in sending notice by the first mail of the day of protest.
15 U. S. 2
Wheat. 273;
34 U. S. 9 Pet.
45. This is all that is necessary if the letter containing the
notice is properly directed.
17 U. S. 4 Wheat.
438. If the residence of the party appears on the bill, the notice
of protest, &c., must be directed there; 12 East 433; if it
does not so appear, then reasonable diligence must be used in
making inquiry for his residence, and a reasonable time will be
allowed to give notice after ascertaining it; this has been held in
case of notice to an endorsee in April of a protest in October
preceding. Wyghtwick's Ex. 76-77.
When all the facts are ascertained, diligence is a question of
law. Wyghtwick 76;
26 U. S. 1 Pet.
583. If the evidence is doubtful or contradictory, it is for the
jury to decide,
32 U. S. 7 Pet.
290; but in either case it turns on what is the usage of the place,
22 U. S. 9
Wheat. 587, the habits of men of business, the kind and mode of
inquiry usually made in similar cases. 2 Burr. 669; 2 H.Bl. 565; 3
B. & P. 601; 20 J.R. 174.
Thus, a bill drawn by persons residing in Petersburgh, Virginia,
on a house in New York and dated there being protested, a clerk of
the notary made inquiry at the banks and elsewhere, and on being
informed that the drawers resided at Norfolk, directed one notice
to them, there and put another into the post office in New York
directed to them there; it was held sufficient. 1 J.R. 294, 296;
Chapman v. Lippincott & Purcell cited, 13 J.R. 433; 16
J.R. 220; 20 J.R. 174.
If a bill is drawn, dated "Manchester" (or "London"), without
any other direction, notice of protest directed to the drawer at
Manchester was held good on the presumption that it would reach him
if so directed. 1 R. & M. 249-250. Notice directed to the
residence or house of business of the party is sufficient; the
holder is not bound to show that notice is brought home, but only
to employ the usual mode of conveyance, and the rules of diligence
to which he is held ought not to be such as will tend to clog the
circulation of commercial or negotiable paper by impairing the
liability of those who have put it into circulation.
26 U. S. 1 Pet.
583;
27 U. S. 2 Pet.
102,
27 U. S. 129.
If an endorsee lives within a reasonable distance of a post office,
notice to him directed to him at his residence is good, as
where
Page 35 U. S. 582
a note was protested at Cincinnati, the notice was directed to
T.D.C., Campbell County, Kentucky, though defendant lived on the
south side of the Ohio, two miles from Cincinnati, and Covington,
and three miles from Newport, the county town, in all of which
there were post offices, and his residence was well known to the
holder and postmaster. The putting the notice into the post office
at Cincinnati was held sufficient.
27 U. S. 2 Pet.
549.
The clear and conclusive result of these cases is that as
between the holder and the drawer or endorser of a dishonored bill,
the question of their liability depends not on actual notice, but
on seasonable diligence, which is in all cases tantamount to actual
notice, whether given or not. Hence it becomes useless to examine
into the instructions prayed for by the defendant at the trial and
refused by the court in relation to the course of the mail after
leaving New Orleans, or the points submitted to the jury, for they
could in no event avail the defendant if the jury believed the
evidence of the notary. As these were foreign bills, the protests
produced at the trial were in themselves evidence of the demand and
protest.
21 U. S. 8
Wheat. 330. The oath of the notary that he put the notice into the
post office on the day of protest is competent and sufficient in
law to prove the fact; the only question for the jury was his
credibility. The notices were properly directed 1. because
Hazelwood was the residence of the defendant, within a short
distance of a post office; 2. the bills were dated at that place,
and the direction of the notices was to the same place.
As a matter of law then, we are clearly of opinion, that due
diligence was used by the plaintiff when the notices of protest
were put into the post office at New Orleans. His right of action
was then consummated, and it can in nowise be affected by the
course of the mail or the arrangements concerning its route or
distribution. We forbear any notice of the other questions
presented at the trial, lest by doing so we should, by implication,
be deemed to think they could in any event affect the right of the
plaintiff when no laches could be imputed to him or the notary.
The judgment of the circuit court is affirmed with costs and
interest.