Case Name: ABEL OLIVE v. THOMAS NAPIER
Court: Supreme Court of Errors and Appeals of Tennessee
Jurisdiction: Tennessee
Decision Date: 1811
Citations: 1 Cooke 11
Docket Number: 
Parties: ABEL OLIVE v. THOMAS NAPIER.
Judges: Williams, J. concurred.
Reporter: Tennessee Reports
Volume: 3
Pages: 9–15

Head Matter:
Nashville.
1811.
ABEL OLIVE v. THOMAS NAPIER.
) > Writ of Error. J
An action of debt -will not lie by the indorsee of a promissory note, not under seal, against the maker. [Overruled by Anderson v. Crockett, 6 Y. 330, citing 2 Wheat. 385, and 6 Pet. 20.]
Olive brought an action of debt on a promissory note, not under seal, against Napier, which had been executed by Napier to one Travey Carter, and by him assigned to Olive. In the inferior court Napier pleaded nihil debit, upon which issue was taken, and a verdict rendered for Olive. Napier then moved an arrest of judgment, and assigned for cause that an action of debt will not lie on a promissory note, not under seal, by the in-dorsee against the maker. The motion in arrest of judgment was sustained; whereupon Olive prosecuted this writ of error.
The cause was argued in this Court by Overton, for the plaintiff; and by Dickinson and Hayes, for the defendant.

Opinion:
White, J.
Upon looking into the record it appears that the plaintiff as indorsee of a promissory note, not under seal, commenced an action of debt against the defendant, the maker of the note, setting it out substantially in the declaration. The declaration then states the assignment thereof to the plaintiff, and alleges that by virtue of the act of Assembly in such cases made and provided, an action accrued to the plaintiff. To this declaration the defendant pleaded nihil debit, upon which issue was joined, and a verdict rendered for the plaintiff.
The defendant filed reasons in arrest of judgment; the only one of which relied upon is, " that an indorsee of a promissory note, not under seal, cannot support an action of debt against the drawer."
In examining this point it is conceived the counsel have adopted the most convenient mode.
1. To consider whether any act of Assembly of this State gives an action of debt to the indorsee ?
2. If no such action is given by act of Assembly, whether it can be supported upon the principles of the common law ?
The first Act upon this subject is found in Hay. Rev. 75, passed in the year 1762, and commences by reciting, that promissory notes are of great utility; and that there is no method of recovering money specified in such notes by any act of Assembly in force in the province. The Legislature. then proceed to enact, " that where a promissory note is made payable to a person, or order, that the money mentioned in said note shall be construed to be, by virtue thereof, due and payable to such person," &c. It is next enacted, that such notes may be assignable over, in like manner as inland bills of exchange are by the custom of merchants in England. The payee is then given an action for the same, as he might have upon such bills of exchange. In the last place the indorsee is given an action against the drawer, or any indorser, as in cases of Inland Bills of Exchange, &c.
By this statute an action is given, first, to the payee, and then to the indor-see of such note. ' It is not said, in express terms, what kind of action.
Two circumstances induce the belief that assumpsit, and not debt, is the proper action.
1. The indorsee is to have an action against the drawer, or any indorser, as in cases of inland bills of exchange. Here the same kind of action is given to the indorsee against any indorser which is given him against the drawer: and no case is found where the indorsee has supported debt against a remote indorser. At present it is believed that at the time the Act was passed an action of assumpsit was almost the only action used on inland bills of exchange; hence it would seem reasonable to suppose that this was the kind of action intended to be given the indorsee of such a note.
2, The Act also gives, in such an action, damages. Now if debt was the action given, damages would not be the principal matter recovered. The party would in such action recover his debt, and damages for the detention of that debt. In the action of debt the principal sum is recovered in nume-ro, and not in damages. In assumpsit the whole sum is recovered in damages. By supposing assumpsit was the action intended, the Legislature will have expressed their intention correctly; otherwise we must suppose they were ignorant of the meaning of the terms they used. From these considerations it is believed assumpsit, and not debt, was the action given to the indorsee by this act of Assembly.
The next act of Assembly, Haywood's Revisal, 141, makes all bills, bonds, or notes for money, vrith or without seal, whether made payable to order, or for value received or not, negotiable; and authorizes them to be transferred by indorsement, as notes called promissory or negotiable notes had theretofore been; and gives the indorsee or assignee an action on the case in his own name, for the recovery of the money, as suits had theretofore been had and maintained by indorsees or assignees of notes called promissory or negotiable.
If a doubt could be entertained upon the Act of 1762, what kind of action it was intended to give the indorsee, it would seem the language used in the last-mentioned Act ought to remove it. The action on the case, is here given in express words, even on instruments under seal; as suits had been before had and maintained by indorsees on promissory notes.
The last Act upon this subject passed in 1789, Hay. Rev. 174. In this Act the Legislature gave an action of debt to the assignee, where the instru ment assigned lias a seal. As to instruments without seal, this Act did not interfere with them. They are left under the first two acts; and it is believed sufficiently certain that assumpsit, and not debt, is the action intended by them.
The second question, to wit: " Can the indorsee maintain this action by the principles of the common law ? " is next to be considered.
In examining this point the defendant's counsel have cited, and relied upon Gilb. Title debt, 363 ; Chitty on Bills, 169, 170; 1 Cranch, 343 ; 1 Strange, 680; 1 Bos. & Pul. 78 ; Chitty, 220, 221 ; Kid on Bills, 177 ; Loft's Gilb. 154,155 ; Mass. Forms, 121; 3 Dyer, 272 a.; 3 Cranch, 193 ; and the opinion of Judge Overton in the case of-against Rogers, in the late Superior Court at Clarkesville.
No case has been produced in which an indorsee of a promissory note has maintained an action against the maker; and it is thought probable none can be found. Indeed no decision directly upon the point, either way, has been discovered in this examination. And the very circumstance of no case existing is, perhaps, a strong argument to show that it has been the opinion of the profession that such an action as this could not be supported.
In the appendix to the first volume of Craneh's Reports there is a very elaborate examination of the doctrine relating to bills of exchange and promissory notes. Although the principal point which the author examines is different from that presented in this case, yet he has, in a note, collected most of the cases relating to this point. It is believed that the indorsee of a promissory note cannot, upon the principles of the common law, maintain an action of. debt against the drawer; because such privity of contract does not exist between the indorsee and maker as is requisite to the maintenance of the action. The indorsee is no party to the note in its creation; he has no agency in the contract out of which it grows. The utmost extent of the argument in favor of this action is, that when the drawer makes the note payable to the order of the payee he promises to pay any person who may afterwards become an indorsee. To give this argument all the force which those who use it can wish, it is still evident that the indorsee is a stranger and not privy to the consideration paid for that promise; and on that account he cannot support this action. In Milton's case, Hardres's Reports, 485, it is said this action will not lie against the acceptor of a bill of exchange, because his undertaking is collateral. It is certainly true that when a man accepts a bill of exchange his promise to pay the money is direct; yet it must be admitted that this promise is collateral to the consideration upon which the bill is drawn; and that the man who makes this promise did not receive the consideration paid for the bill. And, with great deference to those who think otherwise, it is supposed this is what the Court meant by the expressions they used in that case.
Now although the drawer of a promissory note receives a consideration, yet he does not receive it from the indorser, but from the payee ; and thé indorsee is as much a stranger to the consideration paid the maker of a note as the acceptor of a bill of exchange is to the consideration paid the drawer. The farthest that any adjudged case goes is to show that debt has been maintained by the payee against the maker of a note. In that case they are the parties to the promise, and the consideration which produced that promise ; not so in this case.
My opinion therefore is that the judgment must be arrested.
As to what would be the fate of an action of debt by the indorsee against his immediate indorser, or by the payee against the maker of a note, no opinion is given, as those points do not necessarily come into decision in this case.
Campbell, J.
In deciding this case the reasons assigned in arrest of judgment, together with the pleadings, are alone to be considered. The first reason assigned is abandoned by the counsel for the defendant, and need not therefore be stated: and indeed there does not appear in the record any foundation for, or statement to warrant such a reason.
The second reason assigned and relied upon is that an action of debt will not lie on a promissory note, not under seal, between the indorsee or assignee and maker of the same. The single question therefore to be decided by the Court is, whether or not the assignee of a promissory note, not under seal, can sustain an action of debt on a note against the drawer.
In the course of argument on this case, several authorities have been introduced by the counsel in support of the reason assigned to arrest the judgment. These chiefly relate to the case of an action of debt brought by the payee of a note against the drawer; and on this point the authorities are contradictory. The latest case introduced from the English books decides the point, that an action of debt may, in England, be supported by the payee against the drawer of a note of hand without seal, where there is an apparent consideration on the face of it, and so expressly stated. I Bos. & Pul. 78. But the Court in that case cautiously avoid giving any opinion whether such action would lie if such consideration did not appear; or whether it would be supported in any case, by the assignee against the drawer. In Chitty, 220, 221, it is stated as decided, that an action of debt cannot be brought by the payee of a bill of exchange against the acceptor, for want of privity of contract; though the writer seems to be of a different opinion, on the ground that there is a privity of contract between the payee of a bill of exchange and acceptor. The general doctrine on the subject, which seems to be adopted by most, if not all, the writers that treat of it, is that whenever there is a debt due, or duty created, expressly, or by implication of law, between the parties, there debt will lie; and it seems to be generally added, and perhaps always understood, that there must be a privity of contract between the parties to support debt. -Hence the principal inquiry seems to be, in what cases does privity of contract exist ? Much of the doctrine to be met with in the books on this subject relates to cases pf bills of exchange, and in' consequence of promissory notes, when indorsed over, being assimilated to bills of exchange, the same doctrine has been supposed to apply to both. It is believed, however, the similarity between bills of exchange and promissory notes, though it commences when the note is assigned, is not complete until the bill of exchange is accepted, and also assigned over by the payee. Until such assignment of a bill of exchange, there appears to be this difference between such bill, and a note of hand which has been assigned, that by the assignment of the note, the right to receive the amount thereof is transferred to another, which changes the original contract; which is not the case with the bill, although accepted, until it also is assigned; for, by the acceptance of the bill of exchange the original contract is not altered as regards the payee. And such acceptance may with great plausibility be said, as is stated by Chitty, to be a promise to pay directly to the payee, and not a collateral undertaking as is stated in the decisions there noticed. And it does not clearly appear how it can be considered a collateral undertaking, except in regard to the consideration, which does not pass actually from the payee of the bill to the acceptor, but from the drawer to him ; and therefore in this respect his undertaking may be considered as collateral.
It appears therefore to me, if the doctrine stated by Chitty be correct, that this action would lie by the payee of a bill of exchange against the acceptor; yet it would not prove that the assignee of a note could support the action against the drawer. There has been no case adduced in which this question between the assignee and drawer of a note has been made and decided. There are some dicta of writers that such actions cannot be supported. It seems to me at present, from examining all the authorities on the subject which have come to my knowledge, that, in •order to support this action on a note or simple contract, there must be a debt due, or a duty created or arising, expressly, or by implication of law, from the defendant directly to the plaintiff, and so as to constitute a privity of contract between the parties ; and that the person entitled to such debt, or to whom such duty arises, by simple contract, cannot transfer the same, so as to enable his assignee to support debt thereon. It is not deemed necessary at present to decide how far a consideration must appeal-expressed in such transaction, note, or pleading, in order to support the action. This is my opinion on the subject, supposing it not to be. affected by the acts of Assembly in force in this State.
I will now notice those acts in order to ascertain their effect upon this point.
The first Act was passed in the year 1762, by which after stating there was no remedy, or method of recovering money specified in notes of hand, &c. an action is given to the payee of a note of hand against the drawer as in cases of bills of exchange; and an action is also given to the assignee of such note in like manner as in cases of bills of exchange ; and it is also stated that the party may recover damages and costs of suit, &c.
From the preamble of the Act it is evident the Legislature were of opinion that previously no aation would lie on a note of hand to recover the amount thereof: and when the law is examined it will probably be found that in England a note of hand without seal, before the Act of Parliament giving an action thereon, and making the same' negotiable, was considered only a memorandum of a verbal promise, upon which no action would lie, and which could only be used as evidence of the promise to support an action brought on the verbal undertaking; or for money had and received, as the case might be. While a note was considered in this situation, no better, in fact, than a verbal promise, it will not, it is presumed, be contended that the payee of such note, or the person to whom such verbal promise was made, which was thus reduced to writing, could transfer the same, so as to authorize his assignee to support an action of debt. If this could not be done, does the Act of 1762 give such action to the assignee of a note ? There are no words in the Act to authorize such a conclusion. Although the Act does not expressly name the action, stating only that an action might be maintained on such notes in the same manner as upon bills of exchange, yet the inference to be fairly drawn from that part of the Act, authorizing the plaintiff to recover damages and costs, is very strong, that the framers of the Act had in view an action on the case only, which was the usual action brought on bills of exchange. Hence, it is believed, no argument can be drawn from this Act in support of the action of debt by an assignee against the drawer of a note of hand. When the subsequent Acts of 1786 and 1789 are examined it will be seen that, so far as they go on this subject, they seem to support the idea that, so far as regarded notes of hand without seal, an action on the case was the only action their framers had in view. For the Act of 1786 makes instruments under seal negotiable in the same manner as notes not under seal, and expressly authorizes the assignees of such instruments to maintain their action on the case, as suits had been theretofore maintained by assignees of notes of hand ; thereby implying that an action on the case was the proper and usual action on such notes.
The Act of 1789 repeals the Act of 1786, so far as regards sealed instruments alone, leaving the law', relative to notes of hand, as it stood before.
Hence it would seem that these Acts contain nothing which would sanction the idea that an action of debt could be maintained by the assignee of a note against the draw'er; but the contrary presumption is rather . to be inferred. It may here be observed that, according to the case in 1 Cranch, 343, it has been decided by a Judge of the Supreme Court of the United States, that in Maryland, where it is stated the statute of Anne, from which our Act of 1762 is borrowed, is in force, an action of debt cannot be sustained, by the payee of a note without seal, against the drawer. It is not, however, deemed necessary at present to give an opinion upon that point, as the case before the Court does not require it.
From a view of the whole doctrine on this subject it does not appear that in any one instance an action of debt has been supported by the assignee of a note without seal against the drawer. And as the acts of Assembly in force in this State do not appear to give such action to the assignee, it does not seem to me that this Court is authorized by law to sustain such actions, or render a judgment for the plaintiff on a verdict found in his favor. And however desirous the Court might be to support the kind of action brought by the party in a case such as the present, where he appears in justice and equity entitled to the sum demanded, yet they cannot dispense with the law, and give him a remedy in a different mode from that which it prescribes; and more particularly in a case where there is not even usage or precedent to sanction such a proceeding.
It is, therefore, my opinion that in this case the action of debt cannot be supported ; and that therefore the second reason assigned in arrest of judgment be sustained, and that no judgment be rendered on said verdict.
Williams, J. concurred.