Court Opinion

ID: 8257307
Source: CourtListenerOpinion
Date Created: 2022-10-16 15:33:07.791496+00
Date Added: 2024-06-11T16:43:02.519895
License: Public Domain

Fisher, J.,
delivered the following dissenting opinion.
Declining to concur with the majority of the court in their opinion, I will, as briefly as possible, state the reasons which have brought my mind to a different conclusion. Cummings, the drawer of a bill of exchange, Phipps, the first indorser, and the plaintiff’s intestate, the second indorser, were all sued in a joint action in the State of Tennessee, and a judgment having been recovered against all, and the money paid by the last indorser, the plaintiff’s intestate, the question is, whether this action, founded upon neither the bill of exchange nor upon the judgment, can be maintained. I respond in the negative to this question; and as it is admitted by the majority of the court, that aside from the statute of Tennessee, this position would be correct, let us inquire whether that statute can have any bearing upon the rights of the parties to this controversy. It is said that this statute entered into and became part of the contract of the parties, at the time the bill was drawn and the several indorsements were made. I cannot admit the correctness of this position. Each indorsement was a separate and distinct contract, as it was under the rules of the commercial law; and as evidence of this, the holder of the bill was allowed, and did in this very case recover, his judgment against the last indorser of the bill, in the joint action which was brought against all the parties, drawers and indorsers, in the State of Tennessee. There can be no such thing as a recovery upon a contract, unless a breach of that contract be averred and shown. Here the last indorser undertook to pay, upon certain well-known conditions, the amount of this bill to the Union Bank of Tennessee, without regard to any statute law of that State, and failing to comply with this contract, a right of action accrued to the bank; and this right of action, supposing it to have been well founded, carried with it the right to a judgment to enforce the contract; and the judgment being recovered, the provision of the statute relied on by the majority of the court, for the first time became operative in that controversy. The statute related to the remedy to enforce the contract alone. One provision declared that the holder of the bill should sue all the parties in a joint action, with a view of protecting them against the unnecessary costs of several suits ; and the other provision, the one relied on by the majority of the court, related to the execution to *340enforce the judgment. The statute virtually declares to the holders of bills of exchange, that when the parties fail to perform their contract, a joint action against all is the remedy to recover a judgment; but you shall not have an operative execution against the first or subsequent indorsers until you have exhausted your remedy against the drawer, and so on against the other parties as their names may appear upon the paper. These provisions, relating as they do alone, to the remedy to enforce a violated contract, are no part of the contract itself; for, if they were, the contract as to the indorsers and the holder would not be violated until the remedy against the drawer was exhausted.
The statute proceeds upon the ground, as it is the duty of the government to provide remedies to enforce contracts, and to redress injuries, it may consult what it conceives to be justice in so doing, and mould the remedies accordingly; and that this is virtually what it has .attempted in this instance, by declaring that when the drawer and indorsers of a bill of exchange shall fail to perform their several contracts, of drawer and indorsers, the holder, undertaking to coerce them by legal means to perform such contracts, shall be restricted to a specified manner of proceeding. So far from the contract being made with reference to the statute, the statute does not even begin to operate upon the contract until its violation, and then not until a remedy is sought to compel performance of the contract. The question being thus narrowed down, may be disposed of in few words. We look to the rules of the commercial law, for the purpose of ascertaining the precise nature of the contract, and to the 'statute of Tennessee, for the purpose of ascertaining the remedy to enforce such contract. It was the former law which gave effect and efficacy to the contract, and - the latter which regulated the remedy; and if the duty imposed by the former law had not been disregarded by the contracting parties, the latter law, the statute., would not have been regarded as having any bearing whatever upon the contract.
Hut this point, to my mind, does not require elaboration; and I will, therefore, proceed to consider the main point in the cause, which is, whether the action should not have been brought upon the contract of indorsement ? I am clearly of opinion that the action should have been so brought, for the reason that Phipps was *341liable to Ms indorsee only in virtue of such contract. But, it is said, that the contract was merged in the judgment, and could not, therefore, be the foundation of another action. I disagree with the majority of the court in this position. It is unquestionably true that, as between Phipps and the Union Bank, this position is correct ; for the reason that the judgment settled the rights of the parties to that controversy. But the judgment, not settling the rights as to the co-defendants to the suit, did not merge the contract upon which the suit was brought, except as between the plaintiff and the defendants, for the obvious reason that what was justice, as between Phipps and the Union Bank, may not be justice as between him and his indorsee. The fact that he indorsed the bill, and enabled the indorsee to gain credit upon the faith of such indorsement, may, with the proof of protest and notice, have been sufficient to hold him, Phipps, liable to the Union Bank. But, when the indorsee undertakes to hold.him liable, he has a right to stand upon the substantial terms of the contract, and may make many defences which he could not make against an innocent holder. The question is not what the last indorser paid to the Union Bank, but what he was or is entitled to recover, under the terms of the contract between him and Phipps, the first indorser. It may be true that the bank had a meritorious cause of action against Phipps, and still not true that the plaintiff in this action has any right of action upon the indorsement. Phipps might show a want or failure of consideration, in the contract between him and his indorsee, payment, without taking up the-bill, release, or anything else which would be a defence between these parties, but no defence against the bank, an innocent holder. It is, therefore, manifest, that the judgment in Tennessee did not, and could not in the nature of things, settle any right as to these parties; and this being true, the contract, as to them, is not merged in such judgment.
I am, therefore, clearly of opinion that the action should have been brought upon the indorsement, and not upon an account for the amount of money paid under the judgment in Tennessee. The demurrer, under this view, should have been extended to the declaration, and judgment rendered thereon for the defendant below.
A petition for a reargument was filed, in which counsel cited *342and relied on The Union Bank v. McClung, Ex., &c., 9 Humph. 91; Harvey v. Bacon, 9 Yerg. 308; Tucker v. Prewett, 4 Ib., to show that the Supreme Court of Tennessee had taken a different view of the statute of the State under consideration, from that taken by the majority of the court, but the petition was refused.