Opinion
APRIL TERM, 1798.
Ingersoll and Lewis, for the plaintiffs. E. Tilghman and Dallas, for the defendants.
THIS was an action brought by the Indorsees of a Bill of Exchange, drawn by M`Clenachan and Moore, upon George Barclay, of London, in favor of the defendants, and by them indorsed in blank, to Arthur Crammond, Co. who, likewise, indorsed and discounted them with their bankers, the present plaintiffs, under the following circumstances. The defendants, having opened a commercial correspondence with Arthur Crammond Co. of London, remitted the bill of exchange in question, to be passed to their credit, in their general account with those gentlemen. The bill was noted on the face of it for non-acceptance. It was afterwards, on the 4th of August, 1796, paid in short, on account of Arthur Crammond Co. with their blank indorsement, to the banking house of the plaintiffs; but, on the 19th of the same month, the amount was carried out to the credit of Arthur Crammond Co. as if it had been then discounted by the plaintiffs; and it was said by a witness examined under a commission, that, after this discount, the money had been duly paid upon the drafts of Arthur Crammond Co.
The Counsel for the defendants stated, that they proposed to shew by evidence, that the bill of exchange was remitted on account of the defendants; and that Arthur Crammond Co. were in very great pecuniary embarrassments, at the time of the alledged discount of the bill of exchange, and had soon afterwards become bankrupt. From these premises, from the nature of the previous deposit, and, above all, from the dishonored state of the bill, when it was deposited and discounted, (which was enough to have prompted an enquiry into the real circumstances of the case) it was intended to argue, that the plaintiffs knew that the bill was, in fact, the property of the defendants; and that the eventual discount was colourable and collusive, for the mere purpose of recovering the damages, or of securing a pre-existing balance due to the plaintiffs from Arthur Crammond Co. who were on the eve of a public failure. 3. T. Rep. 80. If the plaintiffs did know the facts, they cannot be entitled to any more benefit from the possession of the bills than Arthur Crammond Co. themselves.
The Counsel for the plaintiffs (who had, indeed, anticipated the defence in their opening) insisted, that the general, unrestricted, nature of the indorsement, had empowered Arthur Crammond Co. to pass the bill to whomsoever they pleased; and that whatever might be the imputation on them for a breach of trust, it could not affect the plaintiffs, who had paid a valuable consideration for the bill; and who ought not to be charged with collusion and fraud upon strained inferences, and flight presumptions. Their knowledge of the transactions between the defendants and Arthur Crammond Co. has not been proved; and it would be a violation of the most important commercial principles, of the most authoritative adjudications, to permit such a defence to be made, against the claim of an indorsee. The distinction between restricted indorsements, and indorsements which leave the bill to a free negociation, has been fully established; 2 Burr. 1216. 1226. 7. and an indorsee in the latter case, cannot be affected even by letters accompanying the bill. Rep. temp. Hardw. Nor does the reason of the case in 3. T. Rep. 80. (where the note was negociated after the term of payment had elapsed) apply to a protest for non-acceptance. Bills are often so protested, and yet are eventually paid. The strongest presumption arising upon a protest for non-acceptance, is, that the drawee has not effects of the drawer in his hands, at the time of presenting the bill; but when a note has been protested for non-payment, the fair presumption is, that the drawer is either unable to pay it, or has a legal excuse for not paying it; and the purchaser of the note, under such circumstances, has a reasonable warning, and must take it at his peril.
The defence cannot be admitted. There is no rule more perfectly established, there is none which ought to be held more sacred in commercial transactions, than that the blank indorsement of a bill of exchange passes all the interest in the bill, to every indorsee, in succession, discharged from any obligation, which might subsist between the original parties, but which does not appear upon the face of the instrument itself.
Though I can easily suppose cases of hardship may arise, and though I am disposed, indeed, to think that strong equitable circumstances now exist in favor of the defendants; yet, the rule of law is so well established, and, upon general principles, is so beneficial, that I cannot persuade myself, in any degree, to dispense with its operation. I am, therefore, of opinion, that the evidence, in support of the defence proposed, ought not to be admitted.
Verdict for the plaintiffs.