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
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
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."
Page 74 U. S. 448
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
Page 74 U. S. 449
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.
Page 74 U. S. 450
MR. JUSTICE FIELD, after stating the case, delivered the opinion
of the Court as follows:
The defendants claim that they are entitled to have the amounts
they deposited, at the Farmers' Bank in Alexandria, credited to
them on the bonds in suit, and allowed as a setoff to the demand of
the plaintiff. They make this claim upon these grounds: that by the
provision in the bonds making them payable at the Farmers' Bank,
the parties contracted that the bonds should be deposited there for
collection either before or at maturity; that the bank was thereby
constituted, whether the instruments were or were not deposited
with it, the agent of the plaintiff for their collection; and that
as such agent it could receive in payment, equally with gold and
silver, the notes of any banks, whether circulating at par or below
par, and discharge the obligors.
We do not state these grounds in the precise language of
counsel, but we state them substantially.
It is undoubtedly true that the designation of the place of
payment in the bonds imported a stipulation that their holder
should have them at the bank, when due, to receive payment, and
that the obligors would produce there the
Page 74 U. S. 451
funds to pay them. It was inserted for the mutual convenience of
the parties. And it is the general usage in such cases for the
holder of the instrument to lodge it with the bank for collection,
and the party bound for its payment can call there and take it up.
If the instrument be not there lodged, and the obligor is there at
its maturity 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.
When the instrument is lodged with the bank for collection, the
bank becomes the agent of the payee or obligee to receive payment.
The agency extends no further, and 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. In the case
at bar, only one bond was deposited with the Farmers' Bank. That
institution therefore was only agent of the payee for its
collection. It had no authority to receive payment of the other
bonds for him or on his account. Whatever it may have received from
the obligors to be applied on the other bonds, it received as their
agent, not as the agent of the obligee. If the notes have
depreciated since in its possession, the loss must be adjusted
between the bank and the depositors; it cannot fall upon the holder
of the bonds.
But even as agent of the payee of the first bond, the bank was
not authorized to receive in its payment depreciated notes of the
banks of Virginia. The fact that those notes constituted the
principal currency in which the ordinary transactions of business
were conducted in Alexandria, cannot alter the law. The notes were
not a legal tender for the debt, nor could they have been sold for
the amount due in legal currency. 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.
Notes not thus current at their par value, nor redeemable
Page 74 U. S. 452
on presentation, are not a good tender to principal or agent,
whether they are objected to at the time or not.
In Ontario Bank v. Lightbody,
] it was held that the payment of a check in
the bill of a bank which had previously suspended was not a
satisfaction of the debt, though the suspension was unknown by
either of the parties, and the bill was current at the time, the
court observing that the bills of banks could only be considered
and treated as money so long as they are redeemed by the bank in
That the power of a collecting agent by the general law is
limited to receiving for the debt of his principal that which the
law declares to be a legal tender, or which is by common consent
considered and treated as money, and passes as such at par, is
established by all the authorities. The only condition they impose
upon the principal, if anything else is received by his agent, is,
that he shall inform the debtor that he refuses to sanction the
unauthorized transaction within a reasonable period after it is
brought to his knowledge. [Footnote
The objection that the bonds did not draw interest pending the
civil war is not tenable. The defendant Ward, who purchased the
land, was the principal debtor, and he resided within the lines of
the Union forces, and the bonds were there payable. It is not
necessary to consider here whether 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. That rule can only apply when the
money is to be paid to the belligerent directly. When an agent
appointed to receive the money resides within the same jurisdiction
with the debtor, the latter cannot justify his refusal to pay the
demand, and, of course, the interest which it bears. It does not
follow that the agent, if he receive
Page 74 U. S. 453
the money, will violate the law by remitting it to his alien
principal. "The rule," says Mr. Justice Washington in Conn v.
"can never apply in cases where the creditor, although a subject
of the enemy, remains in the country of the debtor, or has a known
agent there authorized to receive the debt, because the payment to
such creditor or his agent could in no respect be construed into a
violation of the duties imposed by a state of war upon the debtor.
The payment in such cases is not made to an enemy, and it is no
objection that the agent may possibly remit the money to his
principal. If he should do so, the offense is imputable to him, and
not to the person paying him the money. [Footnote 3
Nor can the rule apply when one of several joint debtors resides
within the same country with the creditor, or with the known agent
of the creditor. It was so held in Paul v. Christie.
Here the principal debtor resided, and the agent of the creditor
for the collection of the first bond was situated within the
federal lines and jurisdiction. No rule respecting intercourse with
the enemy could apply as between Marbury, the cashier of the bank
at Alexandria, and Ward, the principal debtor residing at the same
The principal debtor being within the Union lines could have
protected himself against the running of interest on the other two
bonds, by attending on their maturity at the bank, where they were
made payable, with the funds necessary to pay them. If the creditor
within the Confederate lines had not in that event an agent present
to receive payment and surrender the bonds, he would have lost the
right to claim subsequent interest.
13 Wendell 105.
Story on Promissory Notes § 115, 389; Graydon v.
13 Ia. 256; Ward v. Evans,
2 Lord Raymond
930; Howard v. Chapman,
4 Carrington & Payne 508.
1 Peters C.C. 496; Denniston v. Imbrie,
4 Harris & McHenry 161.