Case ID: miss_14/html/0044-01.html
Source: Caselaw Access Project
Author: {"author": "■ Mr. Justice Clayton", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William Hemphill vs. The Bank of Alabama.
    He who signs a bill or note in blank and delivers it to another, makes that person his agent, and authorizes him to fill it up with an indefinite amount.
    But if such agent he limited in his authority, and fill up the note with an amount exceeding his limit, the note will, in the hands of a person who has received it with a knowledge that the authority was limited, be void as to the excess.
    A defendant cannot, under the plea of nqn assumpsit merely, avail himself of the defence that the note on .which he is sued has been changed from the note the execution of which he authorized ; such defence is admissible only when the pleadings are under oath.
    Whether an action can be maintained in the courts of Mississippi by the bearer on a note payable to bearer ; which note was made in the state of Alabama where a statute provides that no one can maintain an action as the bearer of a promissory note 1 Query ?
    
    Where a defence is based upon the provisions of a statute of another state, in order to make the defence available, the statute must be produced and proved.
    By pleading to the merits, the defendant waives any objection that may exist as to the character in which the plaintiff has brought the suit.
    In error from the circuit court of Lowndes county, Hon. Hendley S. Bennett, judge.
    The President, Directors and Company of the Bank of Alabama sued William Hemphill on the following note, namely:
    
      September 30, 1837, Marengo county, Ala.
    
    Twenty-four months after date, we John M. C. Walker as principal, Wm. Hemphill, and Ivey Smith as securities jointly and severally promise to pay Andrew Armstrong, Esq. Cashier or bearer, four hundred and forty if0 dollars, for value received, negotiable and payable at the Branch Bank of the State of Alabama at Mobile.
    John M. C. Walker,
    Wm. Hemphill,
    Ivey Smith.
    
      • In the declaration the plaintiffs averred that Armstrong had assigned and delivered the note to them, and that they were the lawful holders and bearers.
    The defendant plead non assumpsit; when a trial was had and a verdict rendered for the plaintiffs. The defendant moved, in arrest of judgment, because the plaintiffs could not maintain the action; which being overruled the defendant moved for a new trial; and that motion also being refused, he embodied the testimony in a bill of exceptions.
    From that it appears that all the testimony before the jury besides the note sued on, was the following statement by William Garrett, admitted by consent, as evidence.
    “ Sometime in the summer of 1837, John M. C. Walker, then and from that to the present time residing in Green county Alabama, was applied to for his name to. be used by and for the benefit of Prince & Garrett at the Branch of the Bank of the State of Alabama, at Mobile. On such application Walker gave me his name in blank on three several pieces of paper, or in three several places on the same sheet, leaving space for the purpose of writing above his name three notes. I then procured William Hemphill, the defendant in this suit, and Ivey Smith, to sign the three blanks obtained from Walker, both of whom then resided in Green county, Alabama, where Hemphill, the defendant, continued to reside until December, 1840. One of the blanks above described, according to my best recollection and belief, was discounted by the said Branch Bank, in the fall of 1837, for six hundred dollars, or thereabouts, and the proceeds passed to the credit of Prince & Garrett, at said Branch Bank, of which Mr. Prince, one of the partners of the firm of Prince & Garrett was at the time a director.
    “ It was supposed that the note discounted for six hundred dollars and many others discounted by the bank about the same time and in the same manner, could not by law be collected under the relief or extension law, as it is usually called, passed by the legislature of Alabama, at the special session in June, 1837, which required that the discount should be made on three several notes to bp due in one, two, and three years. Consequently the remaining two blanks above alluded to, were placed in the bank and there filled up by one of the clerks of the same, for an amount which, when the interest was deducted and the proceeds placed to the credit of Prince & Garrett, would enable them to check out the six hundred dollar note, formerly, and as it was believed, irregularly discounted. One of the two blanks, last alluded to, was filled up for two hundred and twenty dollars, or thereabouts, and made to fall due about a year before the maturity of the note sued on in this case, for four hundred and forty dollars, which I have examined, and believe to be one of the blanks obtained from Walker as before stated.
    “After the discount for the six hundred dollars was obtained and Walker advised of it, he demanded that Prince & Garrett should pay the money over to him, which they did. At the time I procured the blanks from Walker I promised him to protect and pay them at maturity provided they or any one of them should be used for the benefit of Prince & Garrett. At the time the notes were discounted Walker was generally believed to be good for a much larger sum than six hundred dollars, and so continued to be regarded until about the first of the year 1842; he is now insolvent. I know of no understanding between Walker and Hemphill, (the defendant,) that either of the blanks above alluded to was to be used for Walker’s benefit, but believe that both Hemphill and Smith signed the blanks for the purpose and with the view of benefiting Prince & Garrett ; when Walker claimed and received the benefit of the use of his blanks I considered my promise to protect them at an end especially as he was then and for a long time after the maturity of the paper, amply able to protect them himself, as was his duty to do. Hemphill signed the three blanks above alluded to, consenting that the same should be filled up and used at Said Branch Bank for the use and benefit of Prince & Garrett.
    William Garrett.”
    The defendant prosecutes this writ of errror.
    
      
      'jEvans, for plaintiff in error.
    1. Hemphill signed the blanks as surety for Prince & Garrett; they were for their use; their agency and power were limited; they applied them to a different use and made Hemp-hill, instead of their surety, become the surety of Walker. This transcended their authority and does not bind Hemphill.
    2. Prom Garrett’s testimony it is manifest the discount in the bank was really for the benefit of Walker, who obtained the money thus procured from Prince & Garrett. This was a fraud on Hemphill; and the bank became a party to it and is affected by it, as her discount of the first note was illegal and void. And that being the case the discount of the other two being to take up a void note, would itself be void and import no liability on the makers of the notes; and was beyond the authority, express or implied, given by Hemphill. An illegal act can never be cured by matter ex post facto.
    
    3. Under the statute of Alabama, passed 30th June, 1837, no obligation nor liability against Hemphill in favor of plaintiff could arise from the note sued on. The bank is set forth in the declaration as bearers of' the note sued on ; as assignees by delivery of Andrew Armstrong. The words of the statute arc “ that from and after the 1st July, 1837, all bonds, bills, or notes which shall be made payable to any person or persons, or bearer, or to any corporation or bearer, shall have the effect of creating an obligation or liability in favor of the corporation, or person or persons only to whom any such bond, or note may be expressly made payable, and no one but such corporation or such person or persons or their indorsers, or personal representatives shall have a right to maintain in his own name an action on any such bond, bill, or note.” See a decision of the supreme court of Alabama, under this statute, which is decisive of the case under consideration. Clark Sp Welborn v. Field &p Morgan, 1 Ala. Rep., new series, 468. It will be perceived that this statute operates on the obligation, the liability. It is analogous to our Miss, statute of 1840, which prohibits banks from transferring their bills receivable, notes, &c. &c. It prevents any cause of action from springing out of the assignment in favor of the assignee. If no cause of action could spring out of a transfer in favor of the bearer in Alabama, none can be recognized in our courts.
    There are variances between the note given in evidence and the note declared on, which I will pass over without comment.
    
      Adam Y. Smith, for defendant in error.
    1. Before Hemphill can avail himself of the defence, that Prince and Garrett transcended his authority to them, and that the note sued on is not his, he must plead that fact under oath, according to the act of 1824.
    2. The facts in the case, even if the pleadings had authorized the defence attempted, do not sustain it. It is apparent, from Garrett’s testimony, that the blanks were used for the benefit of Prince & Garrett, for whose use they were intended.
    3. Even had the blanks been used for a different purpose from that designed by the sureties, a bona fide holder, for a valuable consideration, without any notice of that fact, would be entitled to recover on them. 17 Johns. R. 176; 1 Bos. & Pull. 648; 4 Cow. 567.
    4. That Prince was a director in the bank at the time, even if he was aware of the terms and conditions on which the blanks were given, which nowhere appears, would not operate as notice to the bank. The knowledge of one director, not disclosed, is not the knowledge of the bank.
    5. It is contended that a statute of Alabama prohibits the suit in the name of bearer; that point was not made below; and it is a sufficient answer to it to state that if there be such a statute, it was not produced and proved on the trial.
   ■ Mr. Justice Clayton

delivered the opinion of the court.

This was an action of assumpsit brought by the bank, as bearer of a promissory note against Hemphill, as indorser. There were not regular indorsements from the payee to the holder. The plea was non assumpsit, not supported by affidavit. There was a verdict and judgment for the plaintiff below. A new trial was asked for and refused, to which a bill of exceptions was'filed, embodying the testimony, and the cause brought by rvrit of error to this court.

The defence attempted to be set up on this part of the case, is, that the note was indorsed in blank, and was afterwards filled up, and used for a purpose different from that which was intended. The law in regard to such defence is settled by this court in Johnson v. Blasdale et al. 1 S. & M. 17. But it is insisted that the defendant has not placed himself by his plea in a situation in which he can resort to this defence, because he has not denied the execution of the instrument by plea under oath, as required by the statute. This is unquestionably true. In Green v. Robinson, 3 How. 121, it was decided that by pleading in chief, the defendants admitted the execution of the note.

It is further urged by the plaintiff in error, that by a statute of Alabama, in which state this note was executed, no one can maintain an action as the bearer of a promissory note. See Clark et al. v. Field et al. 1 Ala. R., new series, 468; and that the same consequence attaches to. it here. If this question were properly made, it would present a point of much nicety and difficulty.

Two writers in the American Jurist take opposite sides of this point, and discuss it with ability. Vol. 9, p. 42; vol. 11, p. 101. Frequent cases of kindred character have arisen in the English courts. In one of the most recent, Trimbrey v. Vignier, 1 Bing. 162; 27 En. Com. Law, 340, the rule is thus stated: “ The interpretation of the contract must be governed by the law of the country, where the contract is made — the mode of suing, and the time within which suit must be brought, must be governed by the law of the country where the action is brought.” “ The question, therefore, is, whether the law of France, by which the indorsement in blank does not operate as a transfer of the note, is a rule which governs .and regulates the interpretation of the contract, or only relates to the mode of instituting and conducting the suit; for, in the former case it must be adopted by our courts, in the latter it may be altogether disregarded, and the suit commenced in the name of the present plaintiff.” “We think the French law on the point above-mentioned is the law by which the contract is governed, and not the law which regulates the mode of suing.”

The supreme court of the United States, in a case decided about the same time, laid down the rule differently. They say, “ an instrument may be negotiable in one state, which may yet be incapable of negotiability by the laws of another; and the remedy must be in the courts of the latter on such instruments, according to its own laws.” Bank of the United States v. Donnally, 8 Peters, 372.

The decisions in the state courts seem not to harmonize. Judge Story, in his Conflict of Laws, (p. 222 - 474, second edition,) collects the cases, but makes no effort to reconcile them.

But we are not bound to decide the point from the shape in which it is presented, and we therefore leave it open. The statute of Alabama was not produced and proven in the court below, and the objection is now made that we cannot notice it without such proof. This objection is valid. Martin, Aiken et al. v. Martin, Pleasants & Co. 1 S. & M. 177.

We think, also, that by pleading to the merits of the action, without calling in question the character in which the party brought the suit, the objection, if any, is waived. Lanin et al. v. Trigg et al. H. & H. 595, decided by this court. This would not exclude proof that in truth the holder was not the owner of the note.

The judgment is afñrmed.