By the eleventh section of the Judiciary Act, 1 Stat. 78, no
action can be brought in the federal courts upon a promissory note
or other chose in action by an assignee unless the action could
have been maintained if there had been no assignment. But an
endorsee may sue his own immediate endorser.
Hence, where an action was brought by an endorsee upon checks
which had been endorsed from one person to another in the same
state, and some of the counts of the declaration traced the title
through these endorsements, no recovery could have been had upon
those counts.
But the declaration also contained the common money counts, and
upon the trial these were the only counts which remained, all the
rest having been stricken out. The suit against the maker and also
against all the endorsers except one had been discontinued.
The statute of the state where the trial took place authorized a
suit upon such an instrument as if it were a joint and several
contract.
The dismissal of the suit against all the endorsers except one,
and the striking out of all the counts against him except the
common money counts, freed the judgment against him from all
objection, and therefore when brought up for review upon a writ of
error, it must be affirmed.
Page 54 U. S. 184
The facts are stated in the opinion of the Court.
Page 54 U. S. 186
MR. JUSTICE DANIEL delivered the opinion of the Court.
The questions of law to be decided in this cause, arise upon the
following facts: the defendant in error, the plaintiff in the court
below, described in the pleadings to be a corporation created by
the laws of the State of Tennessee, the stockholders of which are
citizens of Tennessee, declared in assumpsit, in the court below
against the Mississippi & Alabama Railroad Company, averred to
be a corporation created by the laws of Mississippi, and also
against William H. Shelton, Robert G. Crozier, Henry K. Moss,
Samuel M. Puckett, Thomas G. Coffee, the plaintiff in error, and
William H. Washington, averring the said individuals to be all
citizens of the State of Mississippi. The declaration contained
twenty-four counts, twenty-three of which set out respectively
checks drawn by the Mississippi & Alabama Railroad Company, for
different sums of money, payable to some of the individual
defendants in the court below, and endorsed by the payee and
successively by the other defendants, so as at last to become
payable to the plaintiff below, the defendant in error as the last
endorsee.
The last or twenty-fourth count in the declaration was upon an
indebitatus assumpsit for one hundred and fifty thousand
dollars, for money lent and advanced, for the like sum for money
laid out and expended, and for the like sum for money had and
received, laying the damages at three hundred thousand dollars.
The defendants below, Moss, Puckett, Shelton, and Coffee, the
plaintiff in error, appeared to the suit and pleaded jointly the
general issue. Crozier also appeared and pleaded
nonassumpsit. The Mississippi & Alabama Railroad
Company did not appear. Afterwards, upon a suggestion of the death
of Washington and Shelton, the suit was abated as to these parties,
and upon the motion of the plaintiff below, the defendant in
error,
Page 54 U. S. 187
the suit was ordered to be discontinued as to all the defendants
below except the plaintiff in error, and a jury being empanelled
upon the issue joined as to him, found a verdict against him in
damages for the sum of $149,924.97 for which sum together with
costs of suit, a judgment was entered by the circuit court. No
exception appears to have been taken to the forms of proceeding,
nor to any ruling by the court upon the trial, and the questions
for consideration here are raised upon facts as above set
forth.
On behalf of the plaintiff in error it is insisted that upon
none of the twenty-three counts, each of which sets forth a
deduction of title by intermediate endorsements from the payees,
can this action be maintained, because it appears on the face of
those counts that the drafts or checks constituting the claim were
drawn by a corporation situated within the State of Mississippi,
and the members of which corporation were citizens and inhabitants
of that state, in favor of payees who being also citizens of that
state, could not sue upon those drafts in the courts of the United
States, and could not, by endorsement, confer upon others a right
denied by the law to themselves.
By the 11th section of the act of Congress establishing the
judicial courts of the United States it is declared that no
district or circuit court of the United States shall have
cognizance of any suit to recover the contents of any promissory
note or other chose in action, in favor of an assignee, unless a
suit might have been prosecuted in such court to recover the said
contents, if no assignment had been made, except in cases of
foreign bills of exchange. This provision has been expounded by
this Court as early as 1779 in the case of
Turner's
Administrator v. Bank of North America, 4 Dall. 8.
It has received a farther interpretation in the case of
Montalet v.
Murray, 4 Cranch 46; of
Young v.
Bryan, 6 Wheat. 146; of
Mollan v.
Torrance, 9 Wheat. 537; and of
Evans v.
Gee, 11 Pet. 80. These several decisions have
settled the construction of the 11th section of the Judiciary Act,
and the principle they have affirmed is unquestionably fatal to a
right of recovery under the twenty-three first counts, for they
deny jurisdiction in the courts of the United States over cases of
intermediate deduction of title from the payee, where such payee
and the maker of the instrument are citizens of the same state,
with the exception of foreign bills of exchange, and in the case
before us every special count is framed upon a title thus deduced,
and is not within the exception made by the statute. But whilst the
authorities cited have laid down the above doctrine with reference
to intermediate deductions of title from the payee of a note or
check, they have ruled with equal clearness that as between the
Page 54 U. S. 188
immediate endorsee and endorser, being citizens and inhabitants
of different states, the jurisdiction of the federal courts
attaches, as upon a distinct contract between these parties,
independently of the residence of the original and remote parties
to the instrument.
Upon the doctrine thus ruled, the following question recurs for
our decision upon this record,
viz., whether the plaintiff
below, the defendant in error, as a corporation created by and
situated within the State of Tennessee, and the members of which
corporation were citizens of that state, as immediate endorsee of
the plaintiff in error, a citizen and inhabitant of the State of
Mississippi, had the right to a recovery against him, as the
immediate endorser of the notes or checks on which the action was
founded. As to the general principle relative to the jurisdiction
of the federal courts, and as to the right of recovery or of action
as between the immediate endorsee and endorser, we have already
stated that principle as having been conclusively settled; if then
there can be an objection to its application or controlling effect
in the case before us, it must exist as to the manner of that
application in the proceedings in this cause, and not to the rule
itself. Such objection, it has been attempted, on the part of the
plaintiff in error, to maintain. Thus it is disclosed upon the
record, that after the general issue pleaded by all the defendants
except the Mississippi & Alabama Railroad, who were in default,
the action was by order of the circuit court, on the motion of the
plaintiff, discontinued as to all the defendants except the now
plaintiff in error, the last endorser, and as to him also, upon all
the counts except the general
indebitatus assumpsit, upon
which the case was tried and verdict and judgment obtained. It has
been insisted that the proceeding just mentioned, under the order
of the circuit court, was erroneous; that the liability of the
defendants was a joint liability, as set forth in the declaration,
and could not be severed upon motion, and that the discontinuance
as to one of the defendants was a discontinuance as to them all. It
may here be remarked in the first place that however the liability
of the defendants below may have been presented by the declaration,
it is certain that the responsibility of the endorser to his
immediate endorsee, is strictly a several responsibility, and that
so far as the jurisdiction of the federal court is concerned, there
is no right in the endorsee to look beyond that responsibility into
transactions between citizens of the same state. The courts of the
United States therefore could not, upon the face of the pleadings,
take cognizance of questions beyond the several responsibility
arising out of the transaction between the endorsee and his
immediate endorser. We deem it unnecessary, however, to examine
critically, in connection with
Page 54 U. S. 189
the proceedings had in this cause, the doctrine of joint and
several obligations as settled by the common law and the rules of
pleading founded thereon, and are the less disposed to listen to
objections drawn from that source at this stage of the case, as not
an exception has been taken upon the record to any of the
proceedings in the circuit court, which are therefore entitled to
every presumption in their favor, whether of fact or law, which is
not excluded by absolute authority. But the proceedings in this
case should not be tested by the rules of the common law in
relation to joint and several obligations, but should be judged of
by the regulations of a local polity which has been adopted by the
courts of the United States, and in conformity with which the
pleadings in this case have been controlled and modeled.
By the statute of Mississippi,
vide Howard &
Hutchinson's edition, c. 44, 578, s. 9, it is declared that,
"Every joint bond, covenant, bill, or promissory note, shall be
deemed and construed to have the same effect in law as a joint and
several bond, covenant, bill, or promissory note, and it shall be
lawful to sue out process and proceed to judgment against anyone of
the obligors, covenantors, or drawers of such bond, covenant, bill,
or promissory note, in the same manner as if the same were joint
and several."
In the same collection, c. 45, 594, s. 28, it is laid down,
that
"it shall hereafter be lawful for the holder or holders of any
covenant, bond, bill, or promissory note, signed by two or more
persons, to sue any number of the covenantors, obligors, or drawers
thereof in one and the same action."
By these statutory provisions, the rules prescribed under the
common law with respect to suits upon joint and several promises
have been essentially changed, and the same license which concedes
to a party the power of instituting his suit against one or more,
or all the parties to an undertaking, carries with it by necessary
implication the right to prosecute or discontinue it in the same
sense and to the same extent and degree. In accordance with this
conclusion is the interpretation given to the statutes of
Mississippi by the supreme court of that state, as will be seen in
the cases of
Peyton & Halliday v. Scott, 2 How. 870;
Lynch v. Commissioners of the Sinking Fund, 4
id.
377;
Dennison v. Lewis, 6
id. 517;
Prewet v.
Caruthers, 7
id. 304, and that interpretation, by the
state court, of these statutes, has been repeatedly sanctioned as a
rule of proceeding in the Circuit Court of the United States for
the District of Mississippi, by the decisions of this Court, as
will be seen by the cases of
McAfee v.
Doremus, 5 How. 53; of
Bank of the
United States v. Moss, 6 How. 31; and of
United States v.
Girault, 11
Page 54 U. S. 190
How. 22. It follows, then, from the foregoing authorities as an
inevitable conclusion that whether the undertakings set out in the
special counts or in the general
indebitatus assumpsit be
taken as joint or as joint and several, it would have constituted
no valid objection to the proceedings in the circuit court by which
the cause was discontinued, as to all the defendants save the last
or immediate endorser, even had such an objection been directly and
expressly presented and reserved by the pleadings. That
discontinuance deprived him of no right, imposed upon him no burden
or responsibility he was not already bound to sustain -- it merely
left him in the exact position in which his undertaking with the
plaintiff below could be regularly and properly adjudicated. Upon
full consideration, therefore, we think that the judgment of the
circuit court should be, and the same is hereby
Affirmed.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States, for the Southern
District of Mississippi, and was argued by counsel. On
consideration whereof, it is now here ordered, and adjudged, by
this Court that the judgment of said circuit court in this cause be
and the same is hereby affirmed with costs and damages at the rate
of six percentum per annum.