Case Name: Bay against Freazer
Court: South Carolina Court of Common Pleas
Jurisdiction: South Carolina
Decision Date: 1789-06-12
Citations: 1 Bay 66
Docket Number: 
Parties: Bay against Freazer.
Judges: 
Reporter: South Carolina Law Reports
Volume: 1
Pages: 66–73

Head Matter:
Bay against Freazer.
June 12, 1789.
An indorsement oji the Lack of a "bond, making* its contents payable to order 9 and for 'value received, is a good bill of exchange, within the custom of merchants, so as to charge the indorser; though the bond is not in its nature ne-gó tiable.
i Domat. 06.
THIS cause came on to be tried before Waties and Drayton, Justices, and a special jury of merchants.
Thomas Elliott, deceased, of Combahee, in some transact tion with the defendant Freazer, gave him a bond for 200/. sterling; Freazer, on a purchase of negroes, negotiated this bond over to John Hall, and upon the back pf it made this indorsement, viz.
“ Pay the within contents to John Hall or order, value “ received, (Signed) John Freazer.
“12th July, 1785.”
Hall afterwards gave this bond in payment to Bay, the plaintiff in this action. Elliott soon after becoming insolvent, an application was made to the defendant for payment, who refused.
The declaration contained three counts. First, Upon an implied warranty on the part of Freazer, to pay this bond in case of the insolvency of obligor, with an averment, that Hall was the assignee of defendant, and that the plain~ tiff was the assignee of Hall, and that as such he had a right of action upon this implied undertaking.
2. That defendant drew a bill of exchange on the 12th July, 1785, in favour of John Hall or order for 200/. That Hall afterwards indorsed it to the plaintiff, who as indorsee had a right to recover according to the law and custom of merchants.
3. The third count was for money had and received.
Pinckney and Pringle, in support of the first count,
argued, that there is an implied undertaking, by every obligee-of a bond, who passes it away to a third person, for a valuable consideration, in case of failure on part of the obligor, to repay or make good the money to the assignee or any subsequent fair holder. That in this instance, the obligee may be considered as the seller of the bond, and the as-signee as the purchaser j and in every sale for a valuable
1 Domat. 57 2 Black. 452,
1 Domat. 55, 57.
2 Wood, 285.
Doug. 20.
Consideration, there is an implied engagement from the seller to the purchaser, to secure and warrant the thing sold; or, on failure of the consideration, or thing so sold, to repay back to the purchaser the value thereof. What was the thing sold in this transaction ? Not the paper and wax of the bond. They were intrinsically worth nothing, further than being evidence of a debt. The money was the thing sold. What was to be secured in this contract ? Not the mere possession of the paper and wax, but the payment of the. money mentioned in the hand. Natural justice speaks for itself, and requires it, and no artificial reasonings can ever do away this obligation. But supposing this contract should be considered as an exchange, (and every contract where money is not paid down may be considered in that light,) still the same principles as in cases of sales will govern it. For it is laid down, that things given in exchange, are considered as things sold; and, therefore, come under the same rule. What was the case here ? It may be said that Hall gave the defendant negroes, in exchange for Fliiotfs bond : and that the defendant gave the same bond, in exchange for negroes. It is evident, then, that the parties were under mutual obligations. On the part of Hall he was bound to warrant the negroes. Freezer on his part was equally bound to warrant the payment of the money. Besides, it is a well established rule in law, that the receiving a sound price for any commodity, raises a warranty against all defects or faults, known or unknown to the seller ; for as men lay qut their money, or give valuable effects to get something equally valuable in return, it is not reasonable, if the thing turns out good for nothing, that the seller should keep the money for the thing, which apparently had a value, when in fact it had none, so as to throw the loss upon the buyer. And as to an innocent purchaser, it is the same thing to him whether the seller knew it, or not, since in either case he receives an equal injury. It is true, that in the one case, the seller ought to pay damages for a fraud, whereas in the other he ought only to make the party whole. For these reasons, the law has, wisely raised this warranty to prevent men from imposing hardships on each other.
1 Bac. 536. 5 Co. 77. Carth. 519.
1 Domat. p. 79,
That the assignee of an assignee, the executors and administrators of an assignee, are all comprised within the word “ assignstherefore the plaintiff can well maintain this action as the assignee of Hall, who was the assignee of Freazer, the defendant, upon this implied warrantry under the first count in the declaration.
2. If any doubt, however, could arise upon the doctrine urged in support of the first count, yet under the second, the defendant is clearly liable. This, bill is for value received, and it is payable to order: one part shews a full consideration, or value to have been paid for it. The other gives it currency, and makes it negotiable, within the custom of merchants.
3. Under the last count in the declaration for money had and received, it is settled, that wherever a man ought not ex equo et bono to retain money, as for money paid by mistake, or upon a consideration which fails, assumpsit will lie to recover back.
Rutledge and Parker, contra,
contended that the plaintiff could not l-ecover under the first count in this declaration, because in this case the law did not raise any such covenant of warranty as was insisted on. They admitted, that in case of sales of moveables and effects, a doctrine of the kind urged on behalf of the plaintiff might apply. All the authorities quoted in support of that warranty, related to tire sales of goods and effects only. Choses in action or debts are governed by other rules ; for upon a transfer or assignment of debts, the kind of obligation raised by law, is not that of the solvency of the debtor, but that of the debt being really and bona Jide due from such debtor. A right only is warranted by the transfer, and not a guaranty of payment of the money, in case of the insolvency of the obligor. At any rate, an assignment cannot be construed to anaount to more than a collateral under taking to pay in case the obli-gor does not. But in this case no proof of insolvency of Elliott has been given j and, therefore, upon their own principles, the plaintiff’s counsel cannot surely expect to recover. Upon this
Nulla bonareturned by the sheriff on an execution S^iUIlSt 3. tie** feudant, is evidenceofin-to'^jiuy*0 S°
Pringle produced evidence of nulla bona having been returned on various executions lodged in the sheriff’s office against Elliott, which the court admitted to go to the jury? ... . _ , , J } as prima facie testimony of Elliott s insolvency.
The counsel for the defendant then urged, that this was a chose in action, and consequently, from its nature, not assignable over, so as to enable an assignee' to sue and recover in his own name. That even if Elliott had been alive, the present plaintiff could not have sued him, otherwise than in the name of Freazer the obligee.
2. They next argued, that under the second count, the plaintiff was not entitled to a recovery, because the pretended bill of exchange, mentioned in this count, is void for uncertainty and informality. To give it the utmost efficacy, it amounts to no more than a common assignment of the right of the debt, on the back of a bond. It has not the requisite of a bill of exchange. It is not directed to any person ; nor is any sum mentioned to be paid, or by whom. The drawer cannot be charged; he is not answerable, until a demand is first made on the drawee, and a protest for non-payment, or non-acceptance, duly made and entered. In this case, no protest can be made, because the notary cannot tell to whom to present the bill for payment. It is altogether out of the usual course of trade, not conformable to the law of merchants, and, therefore, not recoverable under it. Another reason: the bond itself, oh which this memorandum, (or bill, as it is called,) is indorsed, is not in itself negotiable. And no indorsment can give it negotiability. No legal construction can make it otherwise than a common assignment of a right to a debt.
3. As to the last count for money had and received, there is no privity of contract between the plaintiff and defendant. If money has been paid to Freazer, it was paid by Hall. If it has been unjustly detained by him, it was detained from Hall, and not from the plaintiff. Freazer and the plaintiff had no transactions together; and if so, nó in« jury can be done by detaining money, which the plaintiff could have no claim upon him to refund. Therefore, the equitable principle mentioned by die plaintiff’s counsel cannot apply. 2 Ld» Raym. 1241, 2. And also, Alexander (s? Owen’s case, in Durnf. is? East, were relied on.
Pinckney and Pringle, in reply.
Nothing has been advanced to do away the force of what has been already said in support of the first count. For, whatever can apply to the sales of moveables and effects, will go as forcibly to the sales of debts. Every man who transfers a bond, or other debt, must be under an impression, at the time he passes it, that such debt is either good or bad. If he deems it good, then he must present it as such; and if it turns out otherwise, he is bound by his representations : and he shall not afterwards be permitted to come into a court of justice and take advantage of his own misapprehensions, by saying that he was mistaken when he represented it as good. If he knew the debt to be bad, and passed it off as a good one, then it is an absolute fraud; so that, in either case, the rules of justice will equally hold against the person assigning.
2. The law of bills of exchange requires no express set of words to constitute a bill. It is sufficient that it be in writing; that the sum to be paid be sufficiently certain; that it be for value received; and payable to order. Cunn. on Bills, 22. 3 Bac. 606. 1 Salk. 128. 2 Ld. Raym. 1397. The bill in question has all these essential requisites ; first, it is in writing, signed by the defendant. 2. The sum is sufficiently certain, because the bill is drawn on the back of the bond for 200/. The words are “ pay the contents.” What are the contents ? The amount of the bond, 200/. The mind of man cannot possibly form any other idea of it. The rule then “ id certum estquod certum reddi potest f will apply, Whatever can be made certain, by a plain reference, carries with it as much precision and certainty, as if expressed in positive terms. The sum mentioned is 200/. The words “ within contents” have a very plain and obvious reference to that sum; sufficiently so, to establish the certain ly of it. 3. The bill is expressed for value received,, which shews that a full consideration was given for this 200/. 4. It is made payable to order, a circumstance in itself suffi~ cient to shew, that the party intended to give it currency, and make it negotiable. So far then it has all the requisites of a bill of exchange. With respect to the address or direction of the bill, it is equally as clear as the sum to be paid. Who was to pay, or in other words, who had got the effects originally into his hands ? Elliott, the obligor. The direction therefore must have been to him to pay, and to none else, because he only was the debtor or person bound to pay. But it is said he was not called upon in the proper manner, either by an application for the money, or by suit at law. To this there is a plain answer. He was notoriously a bankrupt on record, not by common reputation or calculation only, but by the return of the sheriff, and the evidence of other officers of the court. It would therefore have been a waste of time and money to have pm-sued him further. It may be compared to drawing a bill upon one who has no funds of the drawer in his hands, or to a declared bankrupt after he has given up all his effects. The great objection, however, in this case, (and the one upon which the defendant principally rests,) appears to be, that this bill was drawn upon a bond not negotiable, and not being originally so, no indorsement can give it negotiability. Here is the rock upon which he has split in this case. It was never contended that the bond was negotiable under this count, or that the plaintiff could recover upon the bond, in a negotiable quality. It was only urged, that notwithstanding this bond might not have been originally negotiable in itself, still the defendant might make himself liable by a negotiable order upon it, as between himself and any subsequent indorsee. Such indorsee, it is true, cannot recover in his own name against the obligor of the bond ; but it is insisted that he legally may against the indorsee upon this new undertaking, when he gave it currency or threw it into circulation. The words, “ pay the contents to J. H. or order, for value receivedf certainly made a new undertaking, and changed the nature of the contract entirely. Instead of being a debt on the obligation against the obligor, or against the assignor by the assignee, upon an implied warranty, it became a new debt by the custom of merchants, so as to charge the defendant upon his indorsement. For every in-dorsement is in the nature of a new bill. It creates a new undertaking, independent of the original one. Salk. 125* 133. An assignment of a bill, payable to J.S. or bearer, is not a good assignment, to charge the drawer with an action on the bill, but it is a good bill between the indorser and indorsee; and an indorser is liable on an action for the money, for every indorsement is in nature of a new bill. Salk. 125. 133. Show. 125. 3 Lev. 299. So that, admitting to the fullest extent of the word, that the bond is not a negotiable paper, still the indorsement of Freazer, the defendant, on it, makes it a bill of exchange., within the custom of merchants, and makes him clearly liable on that new undertaking alone.
3. The count for money had and received is the most general and extensive which can be framed. It comprehends and embraces almost every possible case, where a person is under any kind of obligation, in justice or equity, to pay money, to whomsoever he may be, who is entitled to receive it. Wherever a right is transferred, all the incidents attached to it go with it; so that whatever obligation the defendant was under to Hall, the plaintiff 'Bay acquired by virtue of Hall’s transfer to him, as he stood exactly in his (Hall’s) place. This right forms the essence of every assignment or indorsement, of one individual to another. The plaintiff, then, being in the situation of Hall, natural justice requires, that if the defendant got a sound and good property from Hall, he should give the value, or a good consideration for it: but if this consideration should fail, the same principles of justice require, that he should restore back what he had got, or pay its value to the plaintiff, the indorsee of Hall. In Afoses and f/f Far lane's case, 2 Burr. 1009, 10. this doctrine is very fully laicf down, where Lord Mansfield says, the courts extend these kind of actions, so as to reach the justice of every case. In one word, he says, in all cases where the defendant is obliged, by the ties of natural justice, to refund or make good the money, this action for money had and received will lie.

Opinion:
The Court
were of opinion, that under the second count in the declaration, and the authorities and reasons urged in support of it, the plaintiff was entitled to a verdict. Every indorsement, they said, was a new undertaking, and gave negotiability when payable to order, and for value received, although the paper itself, on which the indorsement was made, was not originally negotiable. That this bill was sufficiently certain by reference, to bring it within the law of merchants. As to the first and last counts in the declaration, they expressly declared, that they did not mean to give any opinion on them, but would reserve themselves upon those points, until a case should occur where it would he necessary.
The Jury found a verdict agreeable to the opinion of the cóurt, but did not allow interest.