1. Where a bill of exchange was drawn by a party in Chicago upon
a firm in St. Louis, and verbally accepted by a member of the firm
then present in Chicago,
held that the validity of such
acceptance was to be determined by the law of Illinois.
2. In Illinois, a parol acceptance of a bill of exchange is
valid, and a parol promise to accept it is an acceptance
thereof.
3. Matters bearing upon the execution, interpretation, and
validity of a contract are determined by the law of the place where
it is made. Matters connected with its performance are regulated by
the law prevailing at the place of performance. Matters respecting
the remedy depend upon the law of the place where the suit is
brought.
This was an action of assumpsit against William H. Scudder and
others, constituting the firm of Henry Ames & Co., to recover
the amount of a bill of exchange. Process was served only upon
Scudder, who pleaded
non-assumpsit and several special
pleas.
The statute of Illinois on which one of the pleas is based
provides that no action shall be brought whereby to charge the
defendant upon any special promise to answer for the debt, default,
or miscarriage of another person
"unless the promise or agreement upon which such action shall be
brought, or some memorandum or note thereof, shall be in writing,
and signed by the party to be charged therewith, or some other
person thereunto by him specially authorized."
The Missouri statute provides:
"SECTION 1. No person within this state shall be charged as an
acceptor of a bill of exchange unless his acceptance shall be in
writing, signed by himself or his lawful agent."
"SEC. 2. If such acceptance be written on a paper other than the
bill, it shall not bind the acceptor except in favor of a person to
whom such acceptance shall have been shown and who, upon the faith
thereof, shall have received the bill for a valuable
consideration."
"SEC. 3. An unconditional promise in writing to accept a bill
before drawn shall be deemed an actual acceptance in favor of every
person to whom such written promise shall have been shown and who,
upon the faith thereof, shall have received the bill for a valuable
consideration. "
Page 91 U. S. 407
"SEC. 4. Every holder of a bill presenting the same for
acceptance may require that the acceptance be written on the bill,
and a refusal to comply with such request shall be deemed a refusal
to accept, and the bill may be protested for nonacceptance."
"SEC. 5. The preceding sections shall not be construed to impair
the right of any person to whom a promise to accept a bill may have
been made and who, on the faith of such promise, shall have drawn
or negotiated the bill, to recover damages of the party making such
promise, on his refusal to accept such bill."
The parties went to trial and the bank offered evidence tending
to establish that for over a year prior to the seventh day of July,
1871, the firm of Henry Ames & Co. were engaged in business at
St. Louis, Mo., and that Leland & Harbach, commission merchants
in Chicago, had from time to time bought lots of pork for said
firm, on commission; that on the seventh day of July, 1871, the
defendant Scudder, a member of said firm, came to Chicago at the
request of Leland & Harbach, who were then in an embarrassed
condition owing to speculations in grain; that on the same day,
John L. Hancock delivered to Leland & Harbach 500 barrels of
pork, which they had bought of him for Ames & Co., by their
request and direction, at $16.25 per barrel, in May, to be
delivered in July, of which purchase said Ames & Co. had been
duly advised; that in payment of said pork, Leland & Harbach
gave Hancock their check on the Union national Bank of Chicago for
$8,031; and that the charges for inspection and commissions made
the total cost of the pork $8,125.
That Leland & Harbach on the same day shipped the pork to
Ames & Co. at St. Louis, Mo., who received and sold it, and
that at the time the bill was drawn, Scudder, who was then present
in the office of Leland & Harbach, consented to the receipt of
said pork and verbally authorized them to draw on Ames & Co.
for the amount due therefor.
That a bill of exchange in words and figures following:
"
$8,125.00 CHICAGO, July 7, 1871"
"Pay to the order of Union national Bank eight thousand one
hundred and twenty-five dollars, value received, and charge to
account of"
"LELAND & HARBACH"
"To Messrs. Henry Ames & Co., St. Louis, Mo. "
Page 91 U. S. 408
-- was on said seventh day of July, 1871, presented for discount
at the Union national Bank by Leland & Harbach's clerk, and the
vice-president of the bank declined to give Leland & Harbach
credit for the bill without a bill of lading or other security.
That the clerk then returned to Leland & Harbach's office and
stated the bank's objections, Scudder being present, and, in the
presence and hearing of said defendant, Scudder, the clerk was told
by Leland or Harbach to return to the bank and tell the
vice-president that Scudder, one of the firm of Ames & Co., was
then in Chicago and had authorized the drawing of said draft, and
that it was drawn against 500 barrels of pork that day bought by
Leland & Harbach for Henry Ames & Co. and duly shipped to
them. That the clerk returned and made the statement as directed,
and the vice-president, upon the faith of such statement that the
bill was authorized by defendants, discounted said bill, the
proceeds were passed to Leland & Harbach's credit, and the
check given by them to Hancock in payment of said pork was paid out
of the proceeds of said draft.
The bank then offered in evidence the said bill of exchange with
a notarial certificate of protest, showing that the bill was
presented to Henry Ames & Co. for payment July 8, 1871, and
duly protested for nonpayment.
It was admitted that said Ames & Co. had never paid said
bill.
The court charged the jury. To the following parts thereof
Scudder excepted:
"If you find from the evidence that Mr. Scudder, one of the
defendants, authorized the drawing of the draft in question and
authorized the clerk, George H. Harbach, to so state to the
vice-president of the bank, and that the said draft was discounted
by the bank upon the faith of such statement, such conduct on the
part of Mr. Scudder may be considered by you as evidence of an
implied promise by the defendants to pay the draft, and it is not
necessary for that purpose that Mr. Scudder should have expressly
sent word to the bank if such statements were made in his hearing
and presence, and no objections made to them by him -- that is to
say if he stood by and allowed either Leland or Harbach to send
such word to the bank without dissenting therefrom. If you find by
a fair preponderance of the testimony that Mr. Scudder knew the
pork had been delivered to Leland & Harbach at the time the
draft was
Page 91 U. S. 409
drawn, and acquiesced in the drawing of the draft, and
acquiesced in the word sent to the bank that he had authorized it,
you may from such facts find an implied promise by the defendants
to pay the draft. It was not necessary that Scudder should go to
the bank and state that he had authorized the draft if you are
satisfied that he allowed such statements to be made by the
messenger."
"It being an admitted fact that the defendants have the proceeds
of the pork against which this draft was drawn, such fact may also
be considered by you as an additional circumstance tending to show
a promise on the part of the defendants to pay the draft."
"The real issue in this case is whether Mr. Scudder authorized
the drawing of the draft in question and expressly or impliedly
promised to pay it."
The jury found a verdict in favor of the bank, and the court,
overruling a motion for a new trial, rendered judgment. Scudder
sued out this writ of error.
MR. JUSTICE HUNT delivered the opinion of the Court.
It is not necessary to examine the question whether a denial of
the motion to set aside the summons can be presented as a ground of
error on this hearing. The facts are so clearly against the motion,
that the question does not arise.
Nor does it become necessary to examine the question of pleading
which is so elaborately spread out in the record. The
Page 91 U. S. 410
only serious question in the case is presented upon the
objection to the admission of evidence and to the charge of the
judge.
Upon the merits, the case is this: the plaintiff below sought to
recover from the firm of Henry Ames & Co., of St. Louis, Mo.,
the amount of a bill of exchange, of which the following is a copy,
viz.:
"
$8,125.00 CHICAGO, July 7, 1871"
"Pay to the order of Union national Bank eight thousand one
hundred and twenty-five dollars, value received, and charge to
account of"
"LELAND & HARBACH"
"To Messrs. Henry Ames & Co., St. Louis, Mo."
By the direction of Ames & Co., Leland & Harbach had
bought for them, and on the seventh day of July, 1871, shipped to
them at St. Louis, 500 barrels of pork, and gave their check on the
Union bank to Hancock, the seller of the same, for $8,000.
Leland & Harbach then drew the bill in question and sent the
same by their clerk to the Union Bank (the plaintiff below) to be
placed to their credit. The bank declined to receive the bill
unless accompanied by the bill of lading or other security. The
clerk returned and reported accordingly to Leland & Harbach.
One of the firm then directed the clerk to return to the bank and
say that Mr. Scudder, one of the firm of Ames & Co. (the
drawees), was then in Chicago, and had authorized the drawing of
the draft; that it was drawn against 500 barrels of pork that day
bought by Leland & Harbach for them and duly shipped to them.
The clerk returned to the bank and made this statement to its
vice-president, who thereupon, on the faith of the statement that
the bill was authorized by the defendants, discounted the same, and
the proceeds were placed to the credit of Leland & Harbach. Out
of the proceed, the check given to Hancock for the pork was paid by
the bank.
The direction to inform the bank that Mr. Scudder was in Chicago
and had authorized the drawing of the draft was made in the
presence and in the hearing of Scudder and without objection by
him.
The point was raised in various forms upon the admission of
evidence and by the charge of the judge whether, upon this
Page 91 U. S. 411
state of facts, the firm of Ames & Co., the defendants, were
liable to the bank for the amount of the bill. The jury, under the
charge of the judge, held them to be liable, and it is from the
judgment entered upon that verdict that the present writ of error
is brought.
The question is discussed in the appellant's brief, and
properly, as if the direction to the clerk had been given by
Scudder in person. The jury were authorized to consider the
direction in his name, in his presence and hearing, without
objection by him, as made by himself.
The objection relied on is that the transaction amounted at most
to a parol promise to accept a bill of exchange then in existence.
It is insisted that such a promise does not bind the
defendants.
The suit to recover upon the alleged acceptance, or upon the
refusal to accept, being in the State of Illinois and the contract
having been made in that state, the judgment is to be given
according to the law of that state. The law of the expected place
of performance, should there be a difference, yields to the
lex
fori and the
lex loci contractus.
In Wheaton on Conflict of Laws, sec. 401 p, the rule is thus
laid down:
"Obligations, in respect to the mode of their solemnization, are
subject to the rule
locus regit actum; in respect to their
interpretation, to the
lex loci contractus; in respect to
the mode of their performance, to the law of the place of their
performance. But the
lex fori determines when and how such
laws, when foreign, are to be adopted, and, in all cases not
specified above, supplies the applicatory law."
Miller v.
Tiffany, 1 Wall. 310;
Chapman v.
Robertson, 6 Paige 634;
Andrews v.
Pond, 13 Pet. 78;
Lamesse v.
Baker, 3 Wheat. 147;
Adams v. Robertson,
37 Ill. 59;
Ferguson v. Fuffe, 8 C. & F. 121;
Bain
v. Whitehaven & Furness Junction Ry. Co., 3 H.L.Cas. 1;
Scott v. Pilkinton, 15 Abb.Pr. 280; Story, Confl.Laws,
203;
23 U. S. 10
Wheat. 383.
The rule is often laid down that the law of the place of
performance governs the contract.
Mr. Parsons, in his "Treatise on Notes and Bills," uses this
language:
"If a note or bill be made payable in a particular
Page 91 U. S. 412
place, it is to be treated as if made there, without reference
to the place at which it is written or signed or dated."
P. 324.
For the purposes of payment and the incidents of payment, this
is a sound proposition. Thus the bill in question is directed to
parties residing in St. Louis, Mo., and contains no statement
whether it is payable on time or at sight. It is in law a sight
draft. Whether a sight draft is payable immediately upon
presentation, or whether days of grace are allowed, and to what
extent, is differently held in different states. The law of
Missouri, where this draft is payable, determines that question in
the present instance.
The time, manner, and circumstances of presentation for
acceptance or protest, the rate of interest when this is not
specified in the bill (
Young v. Harris, 14 B.Mon. 556;
Parry v. Ainsworth, 22 Barb. 118), are points connected
with the payment of the bill, and are also instances to illustrate
the meaning of the rule, that the place of performance governs the
bill.
The same author, however, lays down the rule that the place of
making the contract governs as to the formalities necessary to the
validity of the contract. P. 317. Thus, whether a contract shall be
in writing or may be made by parol is a formality to be determined
by the law of the place where it is made. If valid there, the
contract is binding, although the law of the place of performance
may require the contract to be in writing.
Dacosta v.
Hatch, 4 Zab. 319.
So when a note was endorsed in New York, although drawn and made
payable in France, the endorsee may recover against the payee and
endorser upon a failure to accept, although by the laws of France
such suit cannot be maintained until after default in payment.
Aymar v. Shelden, 12 Wend. 439.
So if a note payable in New York be given in the State of
Illinois for money there lent, reserving ten percent interest,
which is legal in that state, the note is valid although but seven
percent interest is allowed by the laws of the former state.
Miller v.
Tiffany, 1 Wall. 310;
Depeau v.
Humphry, 20 How. 1;
Chapman v. Robertson,
6 Paige 634; Andrews v. Pond, 13 Pet. 65.
Matters bearing upon the execution, the interpretation, and
Page 91 U. S. 413
the validity of a contract are determined by the law of the
place where the contract is made. Matters connected with its
performance are regulated by the law prevailing at the place of
performance. Matters respecting the remedy, such as the bringing of
suits, admissibility of evidence, statutes of limitation, depend
upon the law of the place where the suit is brought.
A careful examination of the well considered decisions of this
country and of England will sustain these positions.
There is no statute of the state of Illinois that requires an
acceptance of a bill of exchange to be in writing or that prohibits
a parol promise to accept a bill of exchange; on the contrary, a
parol acceptance and a parol promise to accept are valid in that
state, and the decisions of its highest court hold that a parol
promise to accept a bill is an acceptance thereof. If this be so,
no question of jurisdiction or of conflict of laws arises. The
contract to accept was not only made in Illinois, but the bill was
then and there actually accepted in Illinois as perfectly as if Mr.
Scudder had written an acceptance across its face and signed
thereto the name of his firm. The contract to accept the bill was
not to be performed in Missouri. It had already, by the promise,
been performed in Illinois. The contract to pay was indeed to be
performed in Missouri, but that was a different contract from that
of acceptance.
Nelson v. First Nat. Bank, 48 Ill. 39;
Mason v. Dousay, 35
id. 424;
Jones v.
Bank, 34
id. 319.
Unless forbidden by statute, it is the rule of law generally
that a promise to accept an existing bill is an acceptance thereof,
whether the promise be in writing or by parol.
Wynne v.
Raikes, 5 East 514;
Bank of Ireland v. Archer, 11 M.
& W. 383;
How v. Loring, 24 Pick. 254;
Ward v.
Allen, 2 Met. 53;
Bank v. Woodruff, 34 Vt. 92;
Spalding v. Andrews, 12 Wright 411;
Williams v.
Winans, 2 Green (N.J.), 309;
Storer v. Logan, 9 Mass.
56; Byles on Bills, sec. 149;
Barney v. Withington, 37
N.Y. 112.
See the Illinois cases cited
supra.
Says Lord Ellenborough in the first of these cases,
"A promise to accept an existing bill is an acceptance. A
promise to pay it is also an acceptance. A promise, therefore, to
do the one or the other --
i.e., to accept or certainly
pay -- cannot be less than an acceptance. "
Page 91 U. S. 414
In
Williams v. Winans, Hornblower, C.J., says,
"The first question is whether a parol acceptance of a bill will
bind the acceptor, and of this there is at this day no room to
doubt. The defendant was informed of the sale, and that his son had
drawn an order on him for $125; to which he answered, it was all
right. He afterwards found the interest partly paid and the
evidence of payment endorsed upon it in the handwriting of the
defendant. These circumstances were proper and legal evidence from
which the jury might infer an acceptance."
It is a sound principle of morality which is sustained by well
considered decisions that one who promises another either in
writing or by parol that he will accept a particular bill of
exchange, and thereby induces him to advance his money upon such
bill in reliance upon his promise, shall be held to make good his
promise. The party advances his money upon an original promise,
upon a valuable consideration, and the promisor is upon principle
bound to carry out his undertaking. Whether it shall be held to be
an acceptance, or whether he shall be subjected in damages for a
breach of his promise to accept or whether he shall be held to be
estopped from impeaching his word is a matter of form merely. The
result in either event is to compel the promisor to pay the amount
of the bill with interest.
Townley v.
Sumdel, 2 Pet. 170;
Boyce v.
Edwards, 4 Pet. 111;
Goodrich v. Gordon,
15 Johns. 6;
Scott v. Pilkinton, 15 Abb.Pr. 280;
Ontario Bank v. Worthington, 12 Wend. 593;
Bissell v.
Lewis, 4 Mich. 450;
Williams v. Winans, supra.
These principles settle the present case against the
appellants.
It certainly does not aid their case that after assuring the
bank, through the message of Leland & Harbach, that the draft
was drawn against produce that day shipped to the drawees, and that
it was drawn by the authority of the firm (while in fact the
produce was shipped to and received and sold by them), and that the
bank in reliance upon this assurance discounted the bill, Mr.
Scudder should at once have telegraphed his firm in St. Louis to
delay payment of the draft, and by a subsequent telegram should
have directed them not to pay it.
The judgment must be affirmed.
