To constitute a consideration, it is not necessary that a
benefit should accrue to the promisor. It is sufficient that
something valuable flows from the promisee, and that the promise is
the inducement to the transaction.
A blank endorsement upon a blank piece of paper with intent to
give a person credit is in effect a letter of credit. And if a
promissory note be afterwards written on the paper, the endorser
cannot object that the note was written after the endorsement.
The English statute of frauds requires that the agreement should
be in writing; the statute of Virginia requires only the promise to
be in writing.
Before resort can be had to the endorser of a promissory note in
Virginia, the maker must be sued, if solvent; but his insolvency
renders a suit against him unnecessary.
It is a question to be left to the jury whether a suit against
the maker would have produced the money.
Error to the Circuit Court for the District of Columbia sitting
at Alexandria to reverse a judgment in an action of assumpsit
brought by Patton, as endorsee of a promissory note against
Violett, the endorser. The note was made by Brooke, payable, in 30
days, at the Bank of Alexandria to the order of Violett and by him
endorsed to Patton.
The declaration had two counts. The first was upon the
endorsement, and stated the making of the note by Brooke, for value
received; the assignment by endorsement to Patton (but did not
state that the assignment was for value received), by means
whereof, and of the statute of Virginia, Patton had a right to
demand and receive the money from Brooke; the demand of payment
from Brooke; his refusal and insolvency at the time of demand; and
notice thereof to Violett, whereby he became liable and in
consideration thereof promised to pay, &c.
The other count was for money had and received.
At the trial of the general issue, the defendant below took two
bills of exceptions.
The first was to the following opinions and instructions of the
court to the jury,
viz.:
"That if the jury should be satisfied by the evidence that the
defendant endorsed the note with intent to give a credit for the
amount thereof to Brooke with the plaintiff, and that the body of
the note was filled up by the plaintiff before it was signed by
Brooke, and that the plaintiff, upon the faith of the note so drawn
and endorsed, gave credit to Brooke to the amount thereof, the
circumstance
Page 9 U. S. 143
of such endorsement being made before the body of the note was
filled up by the plaintiff and signed by Brooke, is no bar to the
plaintiff's recovery in this action; although the jury should be
satisfied that no other value was received by the defendant for his
endorsement than the credit thus given by the plaintiff to Brooke.
And further that the endorsement by the defendant with the intent
aforesaid, if proved, authorized Brooke to make the note to the
plaintiff in the form and manner in which it appears upon the face
of it to be made, and that the circumstance that the body of the
note was in the handwriting of the plaintiff was wholly immaterial
to the present issue."
The second bill of exceptions stated that the defendant prayed
the court to instruct the jury that if it should be satisfied by
the evidence that Brooke, at the time the note became payable, or
at any time previous to the commencement of this action, had
property sufficient to pay the debt claimed by the plaintiff, and
that both he and the plaintiff lived in the Town of Alexandria at
the time the note became due, and that plaintiff brought no suit
against Brooke to recover the amount of the note, but suffered him
to leave the District of Columbia without suing him, or if the jury
should be satisfied that the plaintiff and Brooke have, since the
note became due, both lived in the County of Fairfax, in Virginia,
and have continued to reside there until the bringing of the
present suit, and that the plaintiff has not brought suit against
Brooke in Virginia, then the defendant is not liable in this
action. But the court refused to give those instructions as
prayed.
Page 9 U. S. 148
MR. CHIEF JUSTICE MARSHALL delivered the opinion of the Court as
follows:
This case comes on upon two exceptions -- one to the opinion of
the circuit court given to the jury and the other to the refusal of
that court to give an
Page 9 U. S. 149
opinion which was prayed by the counsel for the defendant
below.
The declaration contains two counts -- one upon the endorsement
of a promissory note and the other for money had and received to
the plaintiff's use. The question arising on the first bill of
exceptions is whether the court erred in directing the jury
respecting the liability of the defendant below on the endorsement
which was the foundation of the action.
The endorsement was made before the note was written, and it
appeared that the body of the note was filled up by Patton. The
opinion of the court was that if the jury should be satisfied from
the testimony, that Violett endorsed this paper for the purpose of
giving Brooke a credit with Patton, and that upon the faith of the
note so drawn and endorsed, Patton did credit Brooke to the amount
thereof, the circumstances that the note was made subsequent to the
endorsement, without any consideration from Brooke to Violett, and
was filled up by the plaintiff did not bar the action, and further
that the said Brooke was to be considered as authorized by the said
Violett to make the note to Patton.
This opinion is said to be erroneous because
1. The endorsement was made without consideration.
2. It was made on a blank paper.
3. There was no memorandum of the agreement in writing.
In support of the first point, the counsel for the plaintiff in
error have cited several cases, intending to prove that an
endorsement made without consideration, though it transfers the
paper to the endorsee, creates no liability in the endorser, and
that
Page 9 U. S. 150
a promise in writing, made without consideration, is void.
So far as respects the immediate parties having knowledge of the
fact and so far as relates to an endorsement under the statute of
Virginia, this is correct; but the real question in the cause is
does the testimony prove a sufficient consideration for the promise
created by the endorsement? This is not intended to comprehend any
writing on which an action of debt is given.
To constitute a consideration, it is not absolutely necessary
that a benefit should accrue to the person making the promise. It
is sufficient that something valuable flows from the person to whom
it is made and that the promise is the inducement to the
transaction. In the common case of a letter of credit given by A.
to B., the person who, on the faith of that letter, trusts B. is
admitted to have his remedy against A., although no benefit accrued
to A. as the consideration of his promise. So in the present case,
Patton trusted Brooke on the credit of Violett's name, and Violett
wrote his name for the purpose of giving Brooke that credit with
Patton. It was, in effect and in intention, a letter of credit. The
case shows that this was both the intention and the effect of
Violett's giving his name to Brooke. In conscience and in
substance, then, it is a letter of credit, upon which the money it
was intended to secure was advanced, and although in point of form
the transaction takes the shape, and was intended to take the
shape, of an endorsement, yet so far as respects consideration, the
endorsement has the full operation of an undertaking in the form of
a letter of credit.
It is common in Virginia for two persons to join in a promissory
note, the one being the principal and the other the security.
Although the whole benefit is received by the principal, this
contract has never been considered as a
nudum pactum with
regard to the security. So far as respects consideration, no
Page 9 U. S. 151
difference is perceived in the cases. Violett has signed his
name upon this paper for the purpose of giving Brooke a credit with
Patton, and his signature has obtained that credit. The
consideration is precisely the same whether his name be on the back
or the face of the paper.
2. The second objection is that the endorsement preceded the
making of the note.
This objection certainly comes with a very bad grace from the
mouth of Violett. He endorsed the paper with the intent that the
promissory note should be written on the other side and that he
should be considered as the endorser of that note. It was the shape
he intended to give the transaction, and he is now concluded from
saying or proving that it was not filled up when he endorsed it. It
would be to protect himself from the effect of his promise by
alleging a fraudulent combination between himself and another to
obtain money for that other from a third person. The case of
Russel v. Langstaffe, reported in Douglass, is conclusive
on this point.
3. The third objection is that there was no memorandum of the
agreement in writing.
The argument on this point is founded on the idea that the
statute of frauds in Virginia is copied literally from the statute
of Charles II. This is not the fact. The first section of the act
of Virginia differs from the 4th sec. of the statute of Charles II
in one essential respect. The statute of England enacts that no
action shall be brought in the cases specified "unless the
agreement on which such action shall be brought, or some memorandum
or note thereof shall be in writing," &c. The Virginia act
enacts that no action shall be brought in the specified cases
"unless the promise or agreement on which such action shall be
brought or some memorandum or note thereof shall be in writing,"
&c. The reasoning of the judges in the cases in which they have
decided that the consideration ought to be
Page 9 U. S. 152
in writing turns upon the word "agreement," of which the
consideration forms an integral part. This reasoning does not apply
to the act of Virginia, in which the word "promise" is
introduced.
It was thought proper to notice this difference between the act
of Parliament and the act of Virginia, although the opinion of the
Court is not determined by it. In this case, the assignment does
express a consideration. It is made for value received.
It is unnecessary to decide in this case whether the declaration
ought to have alleged that the endorsement was made on
consideration. With that question the jury had no concern, and the
direction of the court was not affected by it. There being no
demurrer, it could only occur in arrest of judgment. But on a
motion in arrest of judgment, the defendant below could not have
availed himself of this error, if it be one, because there are two
counts in the declaration, one of which is unquestionably good, and
the Court cannot perceive on which the verdict was rendered. By the
act of jeofails in Virginia, there is no error if any one count
will support the judgment.
The second exception is to the refusal of the circuit court to
give the opinion prayed for by the counsel for the defendant
below.
When the error alleged is not that the court has misdirected the
jury, but that the court has refused to give a particular opinion,
the opinion demanded must be so perfectly stated that it becomes
the duty of the court to give it as stated.
In this case, the opinion required by the counsel consists of
two parts. The first is to instruct the jury
"that if they shall be satisfied from the evidence that Richard
Brooke, the maker of the note in this case, had, at the time the
note became due or at any time previous to the commencement of this
suit against the defendant, property sufficient to pay
Page 9 U. S. 153
the debt claimed,"
&c., and the plaintiff brought no suit, then this action is
not maintainable.
This Court conceives that the circuit court ought not to have
given this opinion. Had Richard Brooke possessed property before
the making of the note, and not afterwards, the opinion, in the
terms in which it was required, would have been a direction to find
a verdict for the defendant. So if Richard Brooke had been in
possession of property for a single day, and had the next day
become insolvent the court was asked to say that in such a case,
the endorser could only be made liable by suit against the maker.
Such a direction, in the opinion of this Court, would have been
improper.
The second branch of the opinion the circuit court was required
to give is in these words:
"Or if the jury shall be satisfied that the said plaintiff and
the said Brooke have, since the said note became due, both lived in
the County of Fairfax, in Virginia, and have continued to reside in
the County of Fairfax until the beginning of the present suit, and
the plaintiff hath not brought suit against the said Brooke in
Virginia, then the defendant is not liable in this action."
If the plaintiff had sued Brooke elsewhere than in Virginia, or
if Brooke had become insolvent previous to the making of the note
and had continued to be so, the opinion of the court, if given as
prayed, would have been that still a suit against the maker of the
note was necessary to give a right of action against the
endorser.
This is not understood to be the law of Virginia. It is
understood to be the law that the maker of the note must be sued if
he is solvent, but his insolvency dispenses with the necessity of
suing him. It is not known that any decision of the state courts
requires that this insolvency should be proved by taking the oath
of an insolvent debtor, nor is it believed that this is the only
admissible testimony of
Page 9 U. S. 154
the fact of insolvency. Other testimony may be admitted. It
would therefore have been proper to leave it to the jury to
determine whether it was at any time in the power of the plaintiff
to have made the money due on this note or any part of it from the
maker by suit, and its verdict ought to have been regulated by the
testimony in this respect.
This opinion was not required.
This Court is of opinion that there is no error, and that
the judgment is to be affirmed with costs.
