Davidson v. Lanier,
71 U.S. 447 (1866)

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U.S. Supreme Court

Davidson v. Lanier, 71 U.S. 4 Wall. 447 447 (1866)

Davidson v. Lanier

71 U.S. (4 Wall.) 447


1. It is not required that a writ of error be allowed by a judge. It is enough that it is issued and served by copy lodged with the clerk of the court to which it is directed.

2. A mistake in the date of the writ of error is not important, when it is clear that such mistake is a clerical one merely, and when, from the judgment described and the number given to it, the party cannot be misled.

3. A statute declared by its title to be "an act to suppress private^ banking," and making it penal to "erect, establish, institute, or put in operation, or to issue any bills or notes for the purpose of erecting, establishing, or putting in operation any banking institution, association, or concern," covers with its prohibition not only the primary steps in establishing and putting into operation the bank, but also the whole range of its transactions, by which illegitimate currency is imposed on a community,

Page 71 U. S. 448

and contracts made in furtherance of such transactions are as void as those made to give it original operation.

4. A bill of exchange drawn in one state upon a party in another, the known and common purpose of both parties being to carry on a business declared unlawful by statute of the first state, is void as to the drawer in the hands of a party to the bill having notice of its true character.

5. As between the parties, the delivery of negotiable paper, signed and endorsed in blank, authorizes the receiver to fill it up in conformity with the authority given him, but it does not authorize him to do more, nor give him power to fill it up at pleasure. In a suit by the drawee upon such paper against drawer or endorser, the burden of proof that an agreement as to filling up had been violated is on the defendant, but if he can make the proof, it will avail him.

Error to the District Court of the United States for the Northern District of Mississippi, the suit having been by Lanier, curator of the succession of John J. McMahon, of New Orleans, against Davidson, on a bill of exchange drawn, as was alleged, by Davidson and others, and judgment having been given in favor of the plaintiff.

The case, as stated by THE CHIEF JUSTICE, was thus:

A statute of Tennessee, enacted in 1827 and entitled "An act to suppress private banking," made it penal to erect, establish, institute, or put in operation or to issue any bills or notes for the purpose of erecting, establishing, or putting in operation any banking institution, association, or concern.

In January, 1856, this act being in force, several persons, of whom one Richard M. Kirby seems to have been the principal, undertook to establish a banking association or company in Memphis, Tennessee, under cover of a charter granted by the State of Arkansas for a corporation styled "The Cincinnati and Little Rock Slate Company." Their object was to issue bills for circulation as money, and use them in the cotton trade.

About the time of the organization of the company, Kirby visited McMahon, of whose estate the defendant in error is curator, at New Orleans, and exhibited the charter and explained the views of the company, whereupon McMahon agreed to act as its treasurer and financial agent.

In pursuance of this arrangement, circulating notes of the

Page 71 U. S. 449

company, to the amount of twelve thousand dollars, were sent to McMahon, who used them, as far as he could, for currency. He also made advances to the company by accepting and paying bills drawn on him, and in the result, became its creditor in a sum somewhat exceeding eleven thousand dollars.

At the time of the arrangement with McMahon, Davidson, the plaintiff in error, and one J. B. Ellis, were members of the company, but afterwards withdrew. Subsequently, however, upon the request of Kirby, Davidson, with two others, consented to sign, and Ellis consented to endorse several bills of exchange in blank, and among them that on which the suit below was brought. All the bills seem to have been addressed to McMahon as drawee. Shortly before or very soon after this transaction, H. M. True, the secretary and treasurer of the company at Memphis, absconded, taking with him all the cash in his possession.

There was some obscurity, and perhaps some contradiction of evidence in the record, as to the time and purpose of signing and endorsing the blank bills of exchange. Kirby stated that they were signed and endorsed before the absconding of True, to enable himself to protect the circulation of the company. Another witness said that they were signed and endorsed after that event, at the suggestion of Kirby, to relieve McMahon from the consequences of True's theft; but this witness said also that he only knew the object of the bills from a statement by Kirby, made when the other parties were not present, and was not confident as to the time of signing and endorsement.

However these things may have been, it was certain that the bills were sent by Kirby to McMahon, in July, 1856, and were filled up some months later, after vain attempts to obtain payment of the balance due him.

All the bills, when they went into McMahon's hands, seemed to have had engraved on their face the formal parts of a bill of exchange, with the name of the place of date, "Memphis, Tenn.," and the direction to the drawer, "John J. McMahon, New Orleans," and all but one seemed to have

Page 71 U. S. 450

borne the words, "Exchange for $1,000" in the upper left hand corner. In other respects, as to time of date, amount to be paid, and time of payment, they were left blank. The one now in controversy was filled up with the date, "July 15, 1856," with the time of payment, "eight months after date," with the sum to be paid, "eight thousand nine hundred and ninety-two dollars and forty-four cents," and with a stipulation for "eight percent interest from maturity until paid." Thus filled up, the bill sued on read as follows:

"Exchange for $8,992.44."

"MEMPHIS, TENN., July 15, 1856"

"Eight months after date of this, our first of exchange (second unpaid), pay to the order of J. B. Ellis eight thousand nine hundred and ninety-two dollars and forty-four cents, value received, and charge the same to account of your obedient servants, with eight percent interest from maturity until paid."




"TO JOHN J. MCMAHON, New Orleans"

"Endorsed: J. B. ELLIS, Ripley, Miss."


Upon the trial, the court charged the jury that if McMahon's object in advancing his money was to enable the company to put into operation a banking company in violation of the laws of Tennessee, the jury must find for the defendant, and also that if McMahon agreed with Kirby to redeem the circulation, intending thereby to enable the company to go into operation, and the company did go into operation, issuing bank notes in pursuance of that agreement, then the transaction was illegal, and the plaintiff could not recover.

But the following instructions, numbered in the record 5th, 6th, and 7th, were also given by the court:

"5. If, at the time the bills were given, the holder, McMahon, knew that the money would be used for the purpose of carrying on a banking company contrary to the laws of Tennessee, and if the banking company was then in operation,

Page 71 U. S. 451

then the consideration of the bills is not affected by the use made of the proceeds of the bill, and the plaintiff is entitled to recover, unless the defense is sustained on some other ground."

"6. The signing of a bill of exchange in blank, is the giving of the holder an unlimited authority to fill it up at pleasure, and the party so drawing or endorsing is bound by the act of the party filling up the same."

"7. If the bills sued on were signed in blank, and delivered to Kirby to be sent in blank to McMahon, that would authorize him, McMahon, to fill up the bills and insert any rate of interest that was lawful, and the jury should find for the plaintiff, unless the defense is made out and sustained on some other ground."

It was upon these instructions, considered in connection with the evidence, that the questions to be decided in this case arose.

Before arguing the merits, a motion to dismiss the writ of error was made.

The judgment of the district court for $11,312.42 was rendered on the 6th of June, 1860. On the 7th, a writ of error was sued out, and a copy was lodged with the clerk of the court on the same day, and bond for supersedeas given in double the amount of the judgment. A citation was also issued, dated 16 April, which was served on the 14th September, 1860, and the record, with the writ of error and the citation, was returned to the next term of this Court. Another citation and apparently another writ of error, were issued on the 7th of June. Of the last-mentioned writ and citation there seemed to have been no service.

Page 71 U. S. 453

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