Court Opinion

ID: 5513645
Source: CourtListenerOpinion
Date Created: 2022-01-10 04:26:31.77962+00
Date Added: 2024-06-11T08:34:13.806768
License: Public Domain

Br the-Court.*
The-verdict in this case was taken subject to the opinion of this court upon the facts. There is no room to question that Stansbury’s name was used by Chapman as a mere matter of convenience, and the plaintiffs were apprised of it. That the plaintiffs were bona fide holders of the promissory notes was urged on the argument, but the facts of the case do not warrant the position. They knew of, and assented to the agreement of the 6th of October; they must have been aware of Chapman’s object in employing them to procure for him the notes; and though on the day they came to maturity, he pledged them as a security for an antecedent debt due to the plaintiffs, yet he had possession of them long after that time, and tendered them to the defendants in fulfilment of the contract of the 6th of October. The plaintiffs stand in no more favorable situation, as respects this suit, than Chapman himself would occupy as plaintiff.
Viewing the situation of the plaintiffs in this light, only two questions are presented for determination : 1. Was there a failure of the consideration for the notes ? and 2. Had Chapman a right to rescind the contract by reason of the agreement of the 5th of December, between the defendants and the house of Wainwright and Shiels; or by reason of the delay of the defendants to execute the contract of the 6th October within a reasonable time 1 If there be a total failure of consideration for a note, that fact may be given in evidence under the general issue, when the suit is by the payee, or any other person not having the rights of a bom fide holder against the maker; but where the failure of consideration is only-partial, the defendant cannot set it up, unless he has given notice thereof. Spalding v. Vander Cook, 2 Wendell, 431. Burton v. Stewart, 3 id. 236. 4 Wendell, 483. What was the consideration for the notes on which this ac*594tion is brought ? The two bills of exchange. Were they of any va]uej a(, the time' they were given as the consideration for the notes ? That they were of no value, will hardly be affirmed. Without deciding the question whether the defendants could have resorted to Chapman, when Wainwright and Sliiels refused to accept the bills, they had a perfect right to enforce the payment of them against the endorser, Eli Wainwright. His failure does not establish the fact that bills against him for <£1000 were, subsequent to that event, valueless. But if it should be considered that the drawer and endorser were not only bankrupt, but wholly unable to make any dividend among his creditors, and the persons on whom the bills were drawn should have refused to accept, it is doubted whether the purchaser of the bills in market, who has given his note therefor, can resist a recovery on such note by the payee, or a bom fide\ holder, on the ground that the bills were no consideration for the note. Where a member of a firm had drawn bills, endorsed them in his own name, and raised money on them, which was paid into the firm, it has been decided that the firm cannot be made liable, either on the bills, although it was alleged that they were drawn on its account for its use, and by the authority- of the other partners, or for the money received on the discount, and paid to the firm. In Emly v. Lye, 15 East, 7, Lord El'lenborough said : “ If the bills had been void, as if, for instance, they had been forgeries, that might have been a different case that is, the firm might have been liable for the money raised on the void bills, “because,” as he observes, “ then no consideration would have passed to the person discounting; but here a good consideration was given for the discount., namely, the responsibility of the drawer of the bills.” In the case under consideration the bills were not void ; the responsibility of the endorser, if there was none in the drawer, constituted a good consideration. There is no pretence for the defendants to say that the notes are without any consideration. It is unnecessary to determine the effect of a partial failure of consideration • for, if there was a partial failure, the state of the pleadings would not allow the defendants to avail themselves of that fact; no notice of such defence having been given.
*595The next enquiry is. whether the contract of the 6th October, 1825, was rescinded. If Chapman had the right to rescind, he must be considered as having done so. If the defendants had done any act in relation to the bills that put it out of their power to fulfil the contract, Chapman had a right to treat it as abandoned by them. If the agreement of the 5th of December, rendered the bills in the hands of Chapman of less value to Mm than they would have had without that agreement, then he had a right to say the defendants had violated their contract with him, and put it out of their power to execute it according to its spirit, and the intent of the parties. Assuming that the contract, between T. Swan and the house of Wainwright and Shiels was valid, and operated to discharge E. Wainwright from all responsibility as endorser of the bills, would the bills have been of less value to Chapman, in consequence of that contract t The whole effect to be attributed to this contract, is the discharge of E. W. as endorser. Would this circumstance have impaired the value of the bills in any respect in the hands of Chapman 1 If it would ; if the bills would not have been of the same value to him after this agreement as before, then he had a right to say these defendants have dis-enabled themselves from fulfilling their engagement, and he might consider himself released from performing on his part. In only two respects can Chapman complain of the effect of the agreement of the 5th of December. It affected, he may allege, his claim upon E. W. as endorser of the bills, and his claims on the house of Wainwright and Shiels, To ascertain whether it did the former, it will be necessary to consider the circumstances under which E. Wainwright’s endorsement was made. Chapman, as we have seen, it is to be regarded as the drawer of the bills. E. W. endorsed them under an expectation, founded, as we may well suppose, on Chapman’s representation, that there were or would be funds in the hands of the drawees to pay them. If they were mistaken in this expectation, however it may have arisen, and there were no funds, E. Wainwright is to be regarded in no other light than as an accommodation endorser, and as such he could never have been responsible to Chapman. But *596suppose there were funds, how stands the case then ? The case of Emly v. Lye, shews that E. Wainright can never he considered as identical with the firm of Wainwright and Shiels; and if not, he is then nothing more than an accommodation endorser. But if the firm was to be considered as hound by the endorsement, the case w'ould not be altered. The company refuse to accept the bills; they cannot, therefore, hold Chapman’s funds for the purpose of paying them ; and he has a right to those funds which is not in any manner impaired by discharging the firm from their liability as endorsers. I am unable to discover in what respect the bills would not have been of the same value and legal effect to Chapman, as holder, after as before the contract made by the defendants with Wainwright and Shiels. The facts do not warrant the position of the counsel for the plaintiffs, that the bills were an appropriation of the funds in the possession of Wainwright and Shiels. There is no designation of a particular fund in the bills ; and without such designation or reference to some fund, a bill is not a draft on it, so as to create an equitable lien or, operate as a transfer, 1 Paige’s Ch. R. 579; but if such was adjudged to be the case, it would not support the inference that Chapman’s rights to that fund had been impaired by the agreement, by which E. W. was discharged from the responsibility of his endorsement; the firm is not affected by that agreement. Was there an unreasonable delay on the part of the defendants, in complying with the contract of the 6th October, 18251 It must have been known to the parties at the time they made it that the bills were in Europe, and there was no great delay in procuring a return of them. They were received at New York in January, or early in February, and shortly after tendered to Chapman, in fulfilment of the contract, and he had no sufficient excuse for refusing to receive them. The view taken of this case supersedes the necessity of examining the question raised on the argument, as to the validity of the contract of the 5th December, it being assumed in. this opinion that it operated to release E. W. from his responsibility as endorser of the bills.
Nonsuit ordered,

 This case was argued in May term, 1830. Mr. Justice Marcy was pres, cnt, and heard the argument. Having written an opinion in the case, it was adopted by his associates, and is published as the opinion of the court, although previous to the May term he had resigned his seat on the bench. The same remark applies to other opinions published as of this term, designated as per curiam opinions.