Vermont watchman and State journal. [volume] (Montpelier, Vt.) 1836-1883, 1839-12-09
IMPORTANT TO BUSINESS MEN
The annexed decision was made by the Sup
RENE Court at its last session in this county.
ALFRED WAINWRIGHT
LYMAN WEBSTER.

Bennett j. deiluered The opinion Of The Court.
The important question in This is, whether
bills Of an insolyent bank, when paid to satisfy
precedent debt and are at the time and place of
payment in full credit, and the parties the trans
action ave equay ignorant Of such insolvency
1.-THE bills having been offered to he returned are in
point OF law a satisfaction, if previous to such
payment the bank has in fact become insolvent,
and ceased to redeem its bills at its own counter
SO that the bills had ceased to have any currency
in the immediate vicinity of the bank though
this was unknown to either of the parties at the
time of payment
1t is a principle of law, too well established to
need authority, that where a bill OF exchange or
note of a third person is received in payment of
precedent debt, the risk Of The insolvency of the
maker is upon the party from whom the bill or
note is received unless there is an express dgree-
ment between the parlie that the risk of the paper
in this respect, is to he the receivers, is to
be implied from The farts and circumstances of the
caSe and the great question is, whether this prin
ciple is applicable to the of an inco pora-
ted bank. IL it is true that upon the payment of
bank bill in satisfaction of precedent debt, lin
the absence of other facts there is an implied
agreement that the insolvency Of the bank is at
the risk OF the party receiving the bill then it
follows that the authorities applicable to bills of
exchange and promlSory notes, do not apply to
the case under consideration. 1t is true that bv
common consent, bank bills have for the purpos
cS III business DeeH treutcu as money; DUt Tins
conventional regulation, for the convenience of
business, and not legal one. No state is author
lied to coin money, or pass my law whereby any
thing but gold and silver shall be made legal
tender in payment OF "A debt Ii was decided at
the last term of this Court in Rutland County,
that n note payable in bank bills not negotia.
hle. They can not be recognized, in the legal nc
ceptation OF The term, as money but il is wholly
conventional. This conventional UNDERSTANDING
that bank bills IRE to pass as money, is founded
upon the sclyency of the banks, and the suppose.
ton that the bills are equivalent in value ia specie,
and are not nj any time convertible into specie
AT the option ofthe holder. Upon no other ground
do bank bills pass, By common CONSENT ms money,
aud hence there is an implied agreement OF the
parties, at The time the bills are passed, that they
are equivalent TO money, and they are paid by the
one party received by the other on that supposi-
lion aud unless thiSi the case, the party does
not pay what he supposes he pays, nor the other
party receive what he intends to receive. From
this principal OF common consent that bank bills
should pass ms monney, il is the implied under.
standing of the parties that the receiver should
take upon him self the risk of all the failures of
the bank bvt The principal can not be carried
any farther than this conventional arrangement
extends, aud That is, 10 trent them rs money only
SO long as the bank which issues them confines
10 redeem them in specie to the bill holder
When therefore bank stops specie payment, the
bills thereof cease 10y this conventional arrange
ment 10 be the representative OF money, whether
the particular bill holder is apprzed oflhe fact or
not and from that time tho bills isuch bank re-
sumo their legal character of prommissory notes,
and make securities for the payment OF money.
II hey afterwards passed on to II person equally
ignorant Of the failure Of the bank, there can be
no implied agreement from this conventional ar
rangement 10 treat them rs money SO long MS they
are convertible into specie, that the receiver shall
sustain the loss which had then already accrued
to the bill holder. 1t is difficult to SEQ why there
should be distinction between bank bills after
they cease to be by any conventional arrangement
notes. The law is well settled in this and other
states that the payment of debt in forged Of
counterfeit bank bill, is not salsfaclon though
both parties are equally ignorant of the fact. See
2. Johnson, X. 45S, Murkle VS.. Gafeld. where
Chancellor Kent reviews the auhosities with
much ability. The party paying must sustain the