Case Name: M'Evers against Mason, Hodgson & Co.
Court: New York Supreme Court of Judicature
Jurisdiction: New York
Decision Date: 1813-05
Citations: 10 Johns. 207
Docket Number: 
Parties: M'Evers against Mason, Hodgson & Co.
Judges: 
Reporter: Johnson's Reports
Volume: 10
Pages: 209–218

Head Matter:
M'Evers against Mason, Hodgson & Co.
NEWYORK,
May, 1813.
m. & Co., ”liverpool, JVew-fork, consignments^ ^hfyidvanct m anticipation on property, on the receipt dl-Dg and :¡„Z J^YoYnsure" from two thirds to three fourths of the ^eds|”e and Confidently6 assure any thmr^raftí ™v<TYireuin-" stances, will b., at the ™»^e a^sMp- & Co. and c" bdCoCexdl!™°e & Co. for less than two thirds of the mount'of thé shipment, and at the time of purchasing the hill, B. told C. that it Was drawn through the recommendation of P. on account of such shipment, and that the hills of lading, invoice, and order to insure, had been sent to M. 8t Co. The bill was made payable to P., at the request of the drawer, and P. endorsed the hill, before it was delivered to C,, who had no communication with P. nor any information of the letters from the drawees to him; nor did it appear that B., the drawer, had any knowledge of those letters, or made the bill on the credit of them. The bill having been protested for non-acceptance and non-payment, C. brought an action against M. & Co., as acceptors, on their implied acceptance. It was held that, admitting that the plaintiff, as endorsee, could avail himself of such a previous promise to accept, so as to entitle himself to bring an action upon it against the drawers; yet as he did not take the bill on the credit of any such promise, he could not, under the circumstances of the ease, maintain the action.
It seems, that a promise to accept a bill, already drawn, may, under circumstances, amount to an acceptance, so as to render the drawee liable to the holder;, but whether a promise to accept a bill not in esse, will amount to a legal acceptance; and whether it is so assignable that an endorsee of the bill can avail himself of the promise as amounting to an acceptance, and maintain an action, against the drawee ? Quare,
f THIS was an action on the case, brought by the plaintiff against the defendants, who are merchants at Liverpool, in England, as acceptors of a bill of exchange, for 400 pounds sterling, dated Nem-York, 8th of October, 1810, drawn on the defendants by W. JEf. Jephson, payable to T. Proctor or order, in London. The bill was purchased by the plaintiff of the drawer, and was made payable to Proctor, the endorsee, at the request of the x — . , . , . . drawer, and for his accommodation; and was remitted m due course to Liverpool, where it was presented, on the 7th of Decernher, 1810, to the drawers for acceptance, and refused; it was protested for non-acceptaifce, and again, on the 8 th of February, * ® it *ti 1811, protested for non-payment. Proctor, at the time the bill was drawn, and for some time previous, was the agent of the defendants, and resided in the city of New-York, for the purpose of procuring shipments to the defendants, so far as the letters written by them to Proctor constituted him such an agent. The material parts of those letters are as follows: {January 28, 1809.) “As to thy commission, we agree to thy having one per cent, on all consignments thou may procure us of produce from the United States, or Quebec ; and we have no objection, if it meets thy ideas, that this engagement be understood as existing for a term of years. We shall be satisfied with the like commission on such goods as we may procure the consignment of to thee; and we shall embrace every opportunity to recommend thee in that way. As to our terms they are the same as those of other respectable houses here, _ , , , . . and are so well known as almost to render the mention of them unnecessary: we may, however, state that we advance in antici pation on property, on receipt of bills of lading and invoicesf with orders to insure, from 2-3ds to 3-4i/is the probable proceeds, charging 4 per Cent, for sales and del credere ; and on goods purchased here 2 142 per cent., and do not purchase goods without fhe means of reimbursement in the kingdom. From these thou, will be able in thy recommendations of us to know what we are ready to do, and thou may confidently assure any shippers that their drifts, under the above circumstances, will meet honour.”
Again, “We are perfectly satisfied with thy allowing Fishers to draw upon us, on this occasion, though the bills of lading were not in thy possession; and we have accepted the whole of the drafts which have appeared. In making a deviation of this kind, thy own judgment will direct thee, and we have every reliance on it; but, of course, we mutually view the mode as a deviation, which, on a scale of general practice, is best avoided. But on thy having possession of bills of lading and orders to insure, we can’t see that there would be any risk where no extra proportion is drawn -for, or-high value taken for the ground of drawing.”
(June 6, 1810.) “We note thy intention not further to risk thy name on any drafts on us, which we decidedly approve. The subject of advance here brings it to our notice. Our commission, as we have before observed, will not bear any thing out of the regular course. Thy name appearing on bills drawn on us, for an amount beyond which we conceive ourselves covered, places us in a very awkward situation, and embarrasses us in the use of our discretion, in exercising the most important function in the course of our business. If, however, it may have served to gain the trial of us, and establishes our credit, it has not been in vain, and thy zeal and desire to promote tire business which induced thee to it, merit our thanks; but as a fundamental rule, we cannot exceed our funds in accepting; and as thou cannot always form a competent idea of what the funds will be, we could wish thee to avoid having thy name or responsibility on any of the bills,” &c.
(September 7, 1810.) “We do think the times about to arrive here will require more than ordinary caution, and we certainly would wish thee, whenever in thy power, to avoid placing thy responsibility on drafts against consignments; but where thou cannot avoid it, thou should feel sufficient reliance on' the care with which the advance was made, as to satisfy thee that it would not exceed what we -should be in funds to pay. When in despite of these considerations, the occurrence of circumstances which could not reasonably be expected on our part to have been foreseen, thy endorsement should appear on drafts beyond the amount we were covered, we trust our liberality in such case might be depended on, though, with the due exercise of caution, we do not imagine such case would often occur; but to give any specific authority to draw or endorse for us, would, in fact, be giving away the grand power which is to govern us in every respect.”
(October 27, 1810.) “In times more regular than the past have been, the objections to giving thee a power from us to draw or endorse bills would not have been equally strong, though in principle we do not think it a good plan.”
At the time that the plaintiff purchased the bill from Jephson, the drawer had, through the recommendation of Proctor, made a shipment to the defendants, the probable proceeds of which would more than cover the bill, by a third or fourth, and had consigned the same to the defendants, and shown the bills of lading, •invoices, and order for insurance, to Proctor, and had sent the same, by his directions, to the defendants; and the drawer, when the plaintiff purchased the bill, informed the plaintiff that the bill was drawn, through the recommendation of Proctor, on account .of such shipment, for which he, the drawer, had sent the bills of lading and invoices, with orders to insure, to the defendants. On this information the plaintiff purchased the bill of the drawer, at the current rate of exchange.
A verdict was taken for the plaintiff, subject to the opinion of the court, on a case containing the facts above stated.
Colden, for the plaintiff.
There may be a parol acceptance of a bill of exchange, and an acceptance by letter. In Pillans 8r Rose v. Van Mierop & Hopkins, it was held that a promise to accept bills to be drawn at a future day, was tantamount to an acceptance of them. The only difference between that case and the present is, that there the action on the agreement to accept was between the drawer and acceptor: here a third person has taken the bill on the faith of that agreement to accept, and we contend that he is entitled to all the benefit of it. If the promise to accept is equivalent to an acceptance, it is the same as if it were on the bill itself, and the endorsee takes the bill with the advantage of such an acceptance. An acceptance once made is always binding; and it is not necessary to show that the acceptor had funds; nor is it important to the plaintiff how the accounts stood between the drawer and acceptor. There was, in this case, an acceptance of the bill the moment it was drawn. It is true. Lord Mansfield, in Pierson v. Dunlop, qualified the doctrine laid down by him in Pillans v. Van Mierop, by saying that “ the mere answer of a merchant to the drawer of a bill, that6 he will duly honour it,’ is no acceptance, unless accompanied with circumstances which may induce a third person to take the bill by. endorsement.” Here the plaintiff was such third person who took the bill under such circumstances and whose rights are affected. He comes precisely within the exception made by Lord Mansfield to the general rule before laid down. But his lordship again said, in Mason v. Hunt, that “ if one man, to give credit to another, makes an absolute promise to accept his bill, the drawer, or any other person, may show such promise upon the exchange, to get credit, and a third person who shall advance his money upon it, would have nothing to do with the equitable circumstances which might subsist between the drawer and accept- or that “ there was no doubt that an agreement to accept may amount to an acceptance, and may be couched in such words as to put a third person in a better condition than the drawer.”
But it will be said that these decisions of Lord Mansfield have been since overruled, and much reliance will be placed on the opinion of Lord Kenyon, in the case of Johnson v. Collins , and it cannot be denied, if the general principles there laid down are to be deemed the law, that the plaintiff cannot recover. . There has, however, been a growing disposition, of late years, in the English judges, to respect the opinions of Lord Mansfield rather than those of Lord Kenyon. Thus, in Clarke v. Cook, .Lord ' Ellenborough says, “ it has been laid down in so many cases that a promise that a bill when due shall meet, due honour, amounts to an acceptance, and that without sending it for a formal acceptance in writing, that it would be wnsting words to refer to books on the subject.” “ Then does not a promise to accept an existing bill, for I do not wish to consider the case so largely as the doctrine in Pillans v. Van Mierop, though that opinion is supported by great authority, amount to an acceptance ?”
The doctrine of Lord Mansfield, and for which we contend, has been fully recognised, by an American judge, in the case of M‘Kim v. Smith, in the Baltimore county court, tried before Nicholson, Ch. J.
We contend, however, that the present is not properly a case of as bill accepted before it was drawn, but of an acceptance of it when drawn, by the authorized agent of the drawee.
Wells, contra. Parol acceptances, or by letter, or before bills are drawn, were not known in the origin or early history of bills of exchange. These practices have grown up, in late years, from the loose mode of transacting a very important mercantile concern. A bill of exchange must be in writing; and the natural, proper, and safe course is, that the acceptance also should be in writing, and on the bill itself. The English judges have allowed deviations from this course, and have so entangled themselves, by contrary opinions, and precedents, that they are unable, however desirous they may be, to retrace their steps. This court, however, in the present case, cannot feel itself so embarrassed by former decisions, for this is the first time the question has arisen here, but may lay down the simple and safe rule of practice in regard to the acceptance of bills, from which Lord Kenyon, and after him Lord Ellenborough, regretted there had ever been a departure. In Pillans v. Van Mierop, Lord Mansfield was, no doubt, led away, by the equity of the case, in favour of the plaintiff. Yet the general doctrine laid down by him, in that case, it is admitted, has been considerably qualified in subsequent cases. Pierson v. Dunlop was not the case of a promise to accept a bill not drawn, but of one already drawn; and Lord Mansfield puts it on the ground, that the endorsee took the bill on the faith of the drawee’s promise to accept. And Mason v. Hunt was not decided on the promise to accept a bill not drawn; Lord Mansfield merely recognises his former doctrine. What he says, however, Is, in that case, obiter dictum.
But we insist that the general doctrine in Pillans v. Van Mievop has been overruled by Lord Kenyon, in Johnson v. Collins, and by Lord Ellenborough, in Clarke v. Cook. In that case, as well as in Wynne v. Raikes, the promise of acceptance was of a bill already drawn and passed to the plaintiff. Thegeneral rule, then, of Lord Mansfield, it must be conceded, has been narrowed down, at least, to the case of a promise to accept a bill already drawn. And Reawes, who speaks of a parol promise, or by letter, to accept bills drawn for the account of a third person, and in consequence of which he who takes the bill gives credit to the drawer, says only, that the person making the promise is answer able for all damages arising from a breach of the contract, to th© Person to whom the promise was made.
M'Kim v. Smith was a nisi prius decision, and in its circumstances materially different from the present. There Smith had given Brown a receipt for money in his hands, promising to hold it subject to his order, which receipt was shown to the clerk of the plaintiff, who took the draft of Brown on the faith of it.
The acceptance of a bill is founded on the fact, or the presumption of the fact, that the drawee has funds of the drawer in his hands, and by the acceptance he admits he has funds; the promise, therefore, is supported by a legal consideration. But a promise to accept a bill at a future day, has no consideration to support it. It is founded on something future and contingent. There is, then, a locus penilentiOB.
Again, the promise to accept a bill not in existence is made lb the drawee only; it is a mere chose in action not assignable. It forms no part of the - contract between the endorsee and the drawee; and Lord Kenyon, in Johnson v. Collins, adverting to the argument of the plaintiff’s counsel, that the promise to accept raised an implied assumpsii, which was sufficient to support the general money counts, says, “ as to the ether ground, if we were te suffer the plaintiffs to recover on the general counts, we must say that a chose in action is assignable, a doctrine to which I can never subscribe.” But in this case, the promise to accept wass not even made to the drawer, much less to the endorsee. The letters produced as evidence of the promise, are mere instructions by a principal to his agent. It does not appear that these letters were shown to the drawer, much less to the plaintiff. The act of Proctor in endorsing the bill, could not, as has been suggested, amount to an acceptance by the drawee. He had no authority to accept bills for the defendants. They expressly refused to give him such an authority.
J. Jones, jun. in reply,
said that parol acceptances of foreign bills of exchange were coeval with such bills. Lord Ellen-‘ borough, in Clarke v. Cook, does not agree with Lord Kenyon, but instead of overruling, he rather confirms the doctrine of Lord Mansfield. There is no real distinction between accepting a bill already drawn, and one hereafter to be drawn. In both cases, it is a mere promise. The objection raised by the defend-antis counsel, is equally applicable to both. A promise to accept, or an acceptance, must be founded either on the funds or the credit of the drawer with the drawee, to the amount of the bill. A letter of credit is prospective. It is giving credit for a future time.
The conditions prescribed by the defendants, on which the bills were to be drawn, were all fulfilled; they ought, therefore, to be bound by their promise. It was communicated to the plaintiff that a shipment was made by the drawer to the defendants, and the bill was drawn on the basis of that shipment. Enough appears in the case to show that the plaintiff was informed of fhe engagements between the defendants and Proctor, who endorsed the very bill in question. There being an undertaking by the defendants that bills drawn under the circumstances stated, should be accepted, it is proper to consider that the shipment having been made, and the bills of lading, &c. forwarded to the defendants, they accepted the bill as soon as it was drawn. This is the just and legal effect of their promise, Proctor, their agent, was authorized to declare the bill accepted when drawn.
But it makes no difference whether the endorsee knew of the engagement of the drawee or not. Having become interested in the bill, the drawee camrot be allowed to retract his promise to his prejudice. We contend, however, that the evidence is sufficient to show that the plaintiff did rely on the promise of the defendants to accept, and that he took the bill, on the. faith of that engagement.
1 Atk. 613.
Burr Rep. l663.
Cowp. 573,
Doug. 297.
1 East, 98. 108.
4. East, 57. 70.
l East, 115.
4 East, 67.
5 East, 492.
Lex Mer. 454. s. 16. 112.
Molloy, 295. Miarius 17. Stra. 648.
By the French Ordonnance of 1773, tit. 5. art. 2.- the acceptance of bills of exchange was required to be in writing by the drawee. But" Pothier (Traite de Change, c. 3. s. 3. n. 43.) considers this merely as matter of evidence, and that it" would not exclude proof by witnesses.

Opinion:
Kent, Ch. J.
delivered the opinion of the court, The defendants are charged as acceptors of a bill of exchange drawn on the 8th October, 1810, and sold to the plaintiff, and which bill being presented for acceptance, and also for payment, was refused. The evidence of the acceptance is said to exist in certain letters written before the bill was drawn by the defendants, to one Thomas Proctor, as their agent, and the letter on which the principal reliance is placed, bears date the 28th Janizary, 1809, in which they agree to allow to Proctor a commission upon all consignments of produce to them, and state that they advance in anticipation oa property, on the receipt of bills of lading and invoices,with orders to insure, from 2-Ms to 3-4ths the probable proceedsand that he might confidently assure any shippers that them drafts under jjle above circumstances will meet honour."
The bill in question was not purchased by the plaintiff upon the credit of this letter; for it does not appear that he had any notice or information concerning it, oí- any communication with Proctor. He took the bill on being informed that it was drawn on the recommendation of Proctor, founded on a shipment then made and consigned to the defendants. Nor does it appear- that the drawer of the bill made it on the credit of the letter, or that he had any knowledge of it. It was the shipment and consignment, and the recommendation of Proctor founded thereon, that gave him the confidence to draw. This case, then, does not come within any rule, as to anticipated acceptances of bills not m esse at the time, according to the'limitation of that rule as prescribed by Lord Mansfield, in Mason v. Hunt. (Doug. 297.) He there says, that " there is no doubt but an agreement to accept may amount to an acceptance, and it may be couched in such words as to put a third .person in abetter condition than the drawer. If one man, to give credit to another, makes an absolute promise to pay his bill, the drawer, or any other person, may show such promise upon the exchange to get credit; and affhird person, who should advance his money upon it, would havehufhing to do with the equitable circumstances which might subsist between the drawer and acceptor." Nor does the case come withinrae rule as laid down in Pierson v. Dunlop; (Cowp. 571.) for there Lord Mansfield admits " that, as a general rule, the mere answer of a merchant to the drawer of a bill, saying he mill duly honour it, is no acceptance, unless accompanied with circumstances which may induce a third person to take the bill by endorsement, and then the circumstances may amount to ail acceptance, though the answer be contained in a letter to the drawee." (!*.**«*».t
Even to hold such a promise, under these circumstances, an. acceptance, was, according to Lord Kenyon's opinion, carrying the doctrine of implied acceptances to the utmost verge of the law. But in this case there were no circumstances connected with the promise, that gave credit to the bill, and induced the plaintiff to it," because the promise was totally unknown to the plaintiff, and probably to the drawer. Every one will agree that an acceptance by a collateral paper may be good, and if that paper be shown to a third person so as to excite credit,, and to induce him to advance money on the bill, such third person ought not to sui fer- by the confidence excited. Nor is this case analogous to that of M'Kim v. Smith & Steene, (1 Hall's L. J. 486.) for there the defendants had acknowledged such a sum in hand belonging to the drawer, and which they promised to hold subject to his order, and this written promise was produced and shown when the plaintiff,' by his agent, accepted of the draft, and it was accej upon the confidence created by the promise.
The plaintiff, then, is not entitled to recover, even admitting that a promise to accept a bill not in esse will, under certain circumstances, be, by relation and connexion, a legal acceptance of the bill drawn and presented. The case of Pillans & Rose v. Van Mierop & Hopkins, (3 Burr. 1663.) is a leading authority in favour of such an acceptance prospectively, for the suit there was by the drawers themselves against the defendants, as acceptors, and the acceptance was contained in a letter written before the date of the bill, promising to accept such a specified bill when drawn. But that decision was shaken by the case of Johnson v. Collins, (1 East, 98.) in which it was held that a parol promise by a debtor to a creditor, to accept a bill when drawn, was not an acceptance of the bill, when drawn; and in Clarke v. Cook, (4 East, 57.) the court were careful to confine the validity of a collateral promise in writing to accept, to the ease of an existing bill, and in that case, also, the endorsee took the bill after the purport of the letter had been made known to Mm. The cases of Powell v. Monnier, (1 Atk. 611.) and of Wynne v. Raikes, (5 East, 492.) were also cases of promises to accept bills already drawn.
If the party who makes such a promise does not, afterward accept, he ought to be answerable in damages for a breach of contract, to the person to whom the promise is made. This is the doctrine stated in Beawes' Lex Mer. (429. pl. 112.) But such a promise is not assignable, and it seems to be a little diEcult to understand how the endorsee of a- bill subsequently drawn, can charge the drawee with acceptance by virtue of such a preceding promise, wMch is not, of itself,, assignable, and is strictly no part of the negotiable contract. The case of Pillans v. Van Mierop was between the original parties, and though some of the cases look strongly that way, we have met with no adjudged case, except it be that of M'Kim v. Smith, in which it has been decided that the endorsee can avail himself of such a previous promise, as amounting •to an acceptance under the law merchant, of a bill not then drawn.
But it is unnecessary, nor do the court mean to give any opinion on this point, since, even assuming such a right of action in the en~ dorsee, he cannot recover under the circumstances of this cases for the bill was not taken upon the credit of any such promise~
Judgment for the defendants.