#### Jonathan Bachellor *versus*Joel Priest *et al.*

A bill of exchange indorsed in blank by the payees and left by them in the hands of the drawer, was transferred to the plaintiff without the knowledge of the indorsers, with the following words written by the drawer under his name, — “ left with Mr. B. (the plaintiff) as collateral.” It was *held,*that this was not an alteration of the bill, and therefore that it did not render it void as against the indorsers.

Where a bill of exchange indorsed in blank by the payees, but made payable to a particular person by the last indorsement, was presented to the drawee for payment, by the last indorser, who was in possession of the bill *bond*Jide, the presentment was held sufficient to charge the preceding indorsers.

*It seems*that a bill of exchange payable in a fixed period from the date, may be presented for acceptance at any time before it becomes due. Thus, a bill drawn at Boston upon a merchant in New York, dated April 23, payable in four months from date, and presented for acceptance on July 13, was held to have been presented in due season.

If the holder of a bill transferred to him as collateral security for indorsing another bill, pays this last bill without due notice of its having been dishonored, such payment is gratuitous, and he cannot recover upon the bill pledged *to*him as collateral security.

Assumpsit on a bill of exchange, dated April 23, 1829, for $2371*74, drawn by John H. Smith, then a merchant in Boston, upon William Chamberlain, a merchant in New York, payable, in four months from date, to Priest & Clapp, a firm trading in Boston, and indorsed by Priest in the name of the firm.

The suit was brought July 14, 1829, upon non-acceptance of the bill by the drawee.

At the trial, before *Wilde*J., the plaintiff read the bill in evidence. Under the signature of the drawer were these words, — “left with Mr. Bachellor as collateral.” The plaintiff read also the deposition of one Westervelt, a notary public, who testified that on July 13, 1829, he went to the counting-house of the drawee in New York, and presented the bill to a gentleman attending there, who said that Chamberlain was out of town and he had no directions concerning it; where*405upon he, the notary, protested it for non-acceptance and put into the post-office that evening a notice to the drawer and indorsers. Also the deposition of one Blatchford, who testified that on August 26, 1829, he presented the bill for payment, to Chamberlain in person, who stated that he could not pay it; whereupon he, the deponent, protested it and sent notices.

On the part of the defendants one Brown, who was a clerk io Smith at the time when the bill was drawn, testified that Smith and the firm of Priest & Clapp being both in want of funds, by agreement between Smith and Priest four promissory notes were made by Priest in the name of the firm, payable to Smith, amounting to the sum for which the draft in suit was given, and were delivered to Smith, who negotiated them and converted them to his own use in the way of his .business. In exchange for these notes the draft in suit was made by Smith and delivered to Priest to be negotiated. Priest indorsed it and made efforts to get it discounted, but not meeting with success, he returned with it about a week afterwards to Smith, and told him he must get another indorser on it or take it back and give up the notes. Smith said if he would give the draft to him, he would get Bachellor’s name upon it and hand it back to Priest, or get Bachellor’s name upon it and get it discounted and deliver over the money to Priest. The draft was accordingly delivered to Smith. Some days afterwards Smith asked the witness to write a draft for the same amount, and of the same date and tenor, except that it should be payable to Smith’s own order; which was *done.*Smith signed and indorsed it, and some time afterwards Bachellor came into Smith’s counting-house and indorsed it. After Bachellor had indorsed it, Smith came to the witness’s desk and said he had agreed to give Bachellor the draft now in suit, as collateral security for the indorsement of his name on the other draft. The witness told Smith, if that was the case, he had better write it upon the draft. Whereupon Smith wrote on it the words, “ left with Mr. Bachellor as collateral,” and delivered it to Bachellor, and took the other draft and negotiated it for his own use by getting it discounted at the North Bank. The defendants were entirely ignorant of this transac*406tion. Priest afterwards came into. Smith’s counting-house and inquired for the draft; and Smith told him that he had de- • stroyed it, as Bachellor could not indorse it. Bachellor was bro.ther-in-law of Smith and was in his store very frequently. Smith afterwards, and before his failure, which was on July 9, 1829, drew three other drafts on Chamberlain, two of which were indorsed by Bachellor and discounted for Smith at some of the banks in Boston, viz. one dated May 7, 1829, for $ 2494-33, payable in three months, one dated May 27, 1829, for *$*1987-23, payable in four months, and one dated June 8, 1829, for $1579*13, payable in three months. The defendants also put into the case the articles of copartnership between them, containing a stipulation that neither of them should subscribe or execute any promise in the name of the firm, unless for the proper debts, business or concerns of the company.

The plaintiff then conceding that the bill in suit was held as collateral security for the indorsement of the other draft, which had been accepted, in order to show a presentment of that draft for payment, read the deposition of one Dunscombe, who testified that on the 26th of August 1829, it was delivered to him by the bank of the Delaware and Hudson Canal Company, and at the request of G. Steele of Boston he presented it to Chamberlain for payment, who replied that he could not pay it then, and that thereupon the witness protested it for nonpayment and sent notices to Boston to Smith, Bachellor and Steele *;*and that the bill was paid the same day by a mercantile house in New York, not a party to the bill. Bachellor lived at Lynn.

It appeared that this bill was indorsed by Smith, Bachellor and lastly by Steele, over whose name was written, “ pay to the order of J. Flewelling Esq. Treasurer.”

One Cobb, of the firm of Freeman, Cobb & Co., testified that this bill was paid, at the request of Bachellor, from their funds, and that Bachellor repaid them. Bachellor, a day or two after the failure of Smith, showed the bill in suit to the witness, and asked him what he had better do with it, and the witness told him he had better send it on to New York for acceptance. He told Bachellor that Chamberlain proposed *ta**407pay fifty per cent, of the drafts before refused, except that in suit, Bachellor to pay the rest, and the witness advised Bachellor to do it. Chamberlain agreed to let Bachellor have half, when the drafts should fall due, but no discharge was to be given and the business was not then closed. The plaintiff put into the case the bills of exchange before mentioned, for $2494-33 and $ 1987-23, which it appeared had been duly accepted, and paid by Bachellor after protest.

The defendants then introduced depositions showing that Chamberlain had been doing a large business for the last six months previous to October 19, 1829, when the witnesses gave their testimony.

Chamberlain deposed that the drafts were drawn upon and accepted by him, as before stated, and that he had made no agreement with the plaintiff respecting the payment of them by which the witness considered himself bound; that when the plaintiff was in New York about the middle of July 1829, the witness verbally promised him to pay one half the amount for which the plaintiff held acceptances of the witness, if the plaintiff would release him from the other half; that he understood from the plaintiff’s manner that he would agree to it, although he did not say so in so many words ; that before the maturity of the drafts the witness found it was out of his power to comply with the proposition ; that at the time of the failure of Smith there were four drafts drawn by him on the witness and accepted by him, which had not then become due, viz. one dated April 23, 1829, at four months, for $2371-74, one dated May 17, 1829, at three months, for $2494-33, both of which were payable to Smith and indorsed by him and by the plaintiff; also one dated May 27, 1829, at four months, for $ 1987-23, payable to Bachellor and by him indorsed; and one dated June 18, 1829, at three months, payable to a brother of Smith, for $ 1519-13 ; that the proposal above mentioned related to the draft for $2494-33 ; that he had paid drafts of Smith upon him as they became due before Smith’s failure, but not since.

The defendants contended that it did not appear, that Priest had authority to bind the firm in this case ; but admitting that he had, the plaintiff, for several reasons, ought not to recover ; *408and 1. because there had been a material' alteration of the bill ■upon which "the suit was brought, without the knowledge or assent of Priest & Clapp, after the indorsement had been made thereon in the name of the firm, by the addition of the words, “ left with Mr. ■ Bachellor as collateral,” by which the indorsers were discharged. 2. Because the draft, for the indorsement upon which the bill in suit was held as collateral security, had never been properly presented for payment, the last indorsee to whose order it was made payable, having made no order or indorsement upon it, or given any direction respecting it. 3. Because the bill in suit was not, under the circumstances of the case, presented in due time and manner, by the plaintiff, for acceptance, and the defendants were exonerated by the laches of the plaintiff, especially as he consented that the draft indorsed by him, and two or three others drawn by Smith on Chamberlain and afterwards indorsed by the plaintiff, should be negotiated and sent on for acceptance, and did not inform Priest & Clapp of any part of the transaction, nor send the draft in suit, for acceptance, until after the failure of Smith. 4. Because due and reasonable diligence had not been used to enforce payment from Chamberlain, of the draft indorsed by Bachellor, in consequence whereof he could have no remedy on the draft in suit, taken as collateral security for the indorsement ; nor had due notice been given to him as indorser. 5. Because the draft in suit being the property of Priest & Clapp at the time when it was passed by Smith to the plaintiff as collateral security, and it. having been delivered to Smith for a special purpose, Bachellor could stand in no better situation than the person from whom he took it, even if he knew nothing more than might be understood from the two drafts and the transaction between him and Smith in respect to them.

The law upon these points was ruled against the defendants, and the jury were directed accordingly, saving the questions for the whole Court.

The defendants contended that the facts amounted to proof, if not of actual, at least of constructive fraud on the part of the plaintiff, or that enough must have been known by him to put him on inquiry and to affect him with the fraud of Smith The question of fraud was submitted to the jury.

*409A verdict was returned for the plaintiff; and the defendants moved for a new trial on account of the rulings of the judge, and because the verdict was against the law and the weight of the evidence.

*Rand,*for the defendants,

insisted that the draft was void as to the defendants, on account of the alleged alteration; which he said was material, for it was *some*evidence that the plaintiff had given a consideration for the draft. *Knill*v. *Williams,*10 East, 431 ; *Homer*v. Wallis, 11 Mass. R. 309 ; *Marshall*v. *Gougler,*10 Serg. & Rawle, 164; *Cowie*v. Halsall, 4 Barn. & Aid. 197; *Mackintosh*v. *Haydon,*Ryan & Moody, 362.

The bill for which the one in suit was pledged as collateral security, was made payable, by a special indorsement, to the order of Flewelling, and not being indorsed by him, it was not duly presented for payment, and the plaintiff paid it in his own wrong. Had the bill been lost, Flewelling might have recovered the amount of it although payment had been made to another person. *Nevins*v. *De Grand,*15 Mass. R. 436; *Sigourney*v. *Lloyd,*8 Barn. & Cressw. 622; *Forster*v. *Clements,*2 Campb. 17 ; ibid. 214.

Due notice was not given to the plaintiff of the non-payment of that draft. He lived in Lynn, but the notice was sent to Boston. On this ground, therefore, the payment was in his own wrong. *Turner*v. *Leech, 4*Barn. & Aid. 451; *Roscow*v. *Hardy,*12 East, 434 ; *Walter*v. *Haynes,*Ryan & Moody, 149.

Under the circumstances of the case the bill in suit was not sent on in due season, for acceptance. Whether the plaintiff supposed that it belonged to the defendants, or that they indorsed it for the accommodation of Smith, it was improper for him to send on three other bills and have them accepted by Chamberlain before this bill was sent on. The acceptance of this would be rendered less probable by the acceptance of the others.

It is manifest that the defendants received no consideration for their indorsement; and as the plaintiff took this bill out of the usual course of business, he cannot have a better title as against the defendants, than his assignor. *Gill*v. *Cubitt,*5 *410Dowl. & Ryl. 336 ; *Snow*v. Leathern, 2 Carr. & Payne, 316 ; *Snow*v. *Peacock,*3 Bing. 414 ; *Downe*v. *Hailing, 2*Carr. & Payne, 14 ; *Scholey*v. *Ramsbottom, 2*Campb. 485 ; *Slater*v. Wesf, 3 Carr. & Payne, 329.

*409*June 17th,*1830

*410*April 6th.*

if. ff. *Fuller*for the plaintiff.

As to the alleged alteration of the bill in suit, he cited Chitty on Bills, (5th edit.) 131 As to the objection that the other bill was not presented for payment, by the proper person, on account of the special indorsement, he said that it having been first indorsed in blank by the payee, any holder might strike out the subsequent indorsement. Paley on Pr. & Agent, 181 ; *Owen*v. *Barrow,*4 Bos. & Pul. 103 ; *Freeman*v. Boynton, 7 Mass. R. 487.

Wilde J.

delivered the opinion of the Court. The principal question submitted to the jury in this case was a question of fraud, which has been decided in favor of the plaintiff; and the evidence reported appears to the Court sufficient to warrant the jury in so deciding.

There was no proof of any fraud practised by the plaintiff, unless the circumstances reported were sufficient to show that he had knowledge of the fraudulent intentions of Smith, and so aided him in carrying them into effect. On this point the burden of proof was on the defendants, and it was supported by very feeble and doubtful testimony. We can perceive nothing suspicious in the circumstances attending the transfer of the bill in suit to the plaintiff. And to infer fraud from such slight circumstances, which may perhaps seem to some minds suspicious, now that we have knowledge of the fraud which was afterwards actually practised by Smith, would ap pear to *us*a rash and unfounded inference. At all events the state of the evidence will not authorize the interposition of the Court on this point, for there would have been a much stronger claim for such interposition if the verdict had been the other way.

It is also considered by the Court, that' the several objections to the action, raised on the trial, were rightfully overruled.

1. The memorandum made on the note by Smith, when he delivered it to the plaintiff, can in no sense be deemed an alteration of the original note. It was a memorandum of a *411collateral agreement between the maker and the indorsee, which did no more affect the liability of the parties to the note, than it would have done had it been made on a separate paper.1

2. So it is no valid objection, that the note given as the consideration for indorsing the note in suit, was not presented by the person to whom it was made payable by the last indorsement. A presentment by any person in possession of a bill *bona,*fide, is sufficient to charge the parties to the bill. Bayley on Bills, (Phil. & Sewall’s edit.) 141.

3. We think also there is no doubt that the bill in suit was presented for acceptance in due season. The bill was payable in four months from the date,, and was presented long before it was payable.2 If the bill had been payable at a certain period after sight, the objection would be deserving of more consideration.3

4. It was further objected, that the bill having been delivered to the plaintiff for a special purpose, viz. as collateral security, and not in the ordinary course of business, the defendants should have been let into the defence set up.

The Court does not know, either judicially or otherwise, whether the bill in question was indorsed in the usual course of business or not. This was a question for the jury, like the other circumstances attending the indorsement. We do not suppose, however, that there is any thing unusual and of a suspicious character, in the indorsing over or pledging a negotiable note or bill as security.

It is not, however, necessary to consider these objections very fully, because there appears, from the depositions referred to by the report, another objection to the evidence on the part of the plaintiff, which requires, we think, that a new trial should be granted.

*412The notice to the plaintiff of the non-acceptance of the bill given as a consideration for the bill in suit, by some mistake, was misdirected, the letter of notice having been directed to Boston, the plaintiff then having his home at Lynn ; and it does not appear that he had any place of business in Boston.

This difficulty may be removed on a new trial, but as the evidence is reported the notice appears to be insufficient, and consequently the plaintiff’s payment of the bill must be considered gratuitous, and so the consideration for the bill sued has failed.1

*New trial granted*

1

 See *Granite Railway Co.*v. *Bacon,*15 Pick. 239; *Wheelock*v. Freeman, 13 Pick. 165.

2

 See *Barker*v. *United States,*1 Paine’s C. C. R. 156; *Bank of Washington*v. *Triplett,*1 Peters’s S. C. R. 25; *Evans*v. *Bridges,*4 Porter’s (Ala.) R. 348; *Townsley*v. *Sumrall,*2 Peters’s S. C. R. 178.

3

 See *Aymar*v. *Beers,*7 Cowen, 705; *Robinson v. Ames,*20 Johns. R. 146 ; *Austin*v. *Rodman,*1 Hawks, 195; *Depau*v. *Browne,*Harper, 259 ; *Fernandez*v. *Lewis,*1. McCord, 322; *Wallace v. Agry, 4 Mason, 336, Gowan v. Jackson,*2 Johns. R. 176; *Goupy*v. *Harden,*7 Taunt. 159

1

**See *Ellsworth*v. Brewer, 11 Pick. 315.