Court Opinion

ID: 4887249
Source: CourtListenerOpinion
Date Created: 2021-09-02 23:44:56.762028+00
Date Added: 2024-06-11T08:06:02.165979
License: Public Domain

Wheeleb, J.
There was in this case no acceptance; consequently the drawer was the only person liable upon the paper, and it may well be questioned whether the statute respecting diligence is applicable. Though the letter of the law (Acts of 1S40, p. 144, sec. i) does seem to require it, yet it can scarcely have been intended to require a suit to be brought against the drawer himself to fix his liability. But considering the case, as it has besen treated in-argument, as one to which the statute is applicable, it is to be observed that the diligence, prescribed as requisite to charge the indorser or drawer of negotiable paper is substituted for the demand and notice required by the law merchant; and it is only necessary that it should he employed where demand and notice were necessary. It has not been and will not be questioned that whatever would have excused the plaintlll' from averring demand and notice will excuse him from flic use of the diligence prescribed by the statute. The inquiry then is whether the plaintiff lias averred sufficient to relieve him from the necessity of proving a demand and notice, as required by the usages and •rules of commercial law, to fix the liability of the drawer of a bill of exchange. The petition alleges that at the time when the bill was drawn, and thence until and at the" time when it was payable., the drawee had in his hands no effects of the drawer, and had received' no consideration for the acceptance or payment, of tins draft. And it is perfectly well settled that where the drawee refuses to accept because lie has no effects of the drawer in his hands, and the latter had no right to draw and no right to expect his bill would bo paid, protest and notice to (he drawer and of .course demand and notice are unnecessary. (3 Kent. Comm., 109; 1 T. R., 405; 10 Pet. R., 572; Chit, on Bills, 350.) Where the. drawee had no effects of the drawer, (here is no necessity to present the hill for payment or acceptance. (Id., 389, 362.) And the Supreme, Court of Alabama have held (2 Ala,. R., N. S., 368,) that if the drawee had no effects of the, drawer in his hands from the time the bill was drawn up to the time, of its maturity, presentment and notice need not he proved, notwithstanding the bill may be, drawn in good faith, aud if duly presented woulhave been honored. But this is considered by Chancellor Kent to he “ contrary to the general rule.” (3 Kent. Comm., 109, n. c.)
The exception to the rule requiring presentment or demand and notice, with its qualifications, is thus stated by Mr. Justice Baldwin, in delivering the opinion of the court in Dickens v. Beal: “An established exception to the general rule, that notice of dishonor of a bill must he given to the drawer is where lie lias no funds in the. hands of the drawee; hut of this exception there are some modifications. (4 Cr. R., 154; 1 D. & E. R., 405; 2 Id., 712; 12 E. R., 175; 20 J. R., 149, 150.) If the drawer has made or is making a consignment to the drawee, and draws before the consignment come to haiid, (12 E. R., 175;) if the goods are in transitu but the hill of lading is omitted to be sent to the consignee, or the goods were lost, (16 E. R., 43;) if the drawer has any property in the hands of the drawee, or there is a fluctuating balance between them in the course of their transactions, (15 E. R., 221,) or a reasonable expectation that the bill would be paid, (4 M. & S. R., 229, 230;) or if the drawee. has been in the. habit of accepting the bills of the drawer, without regard to the state of (heir accounts, this would he deemed equivalant to effects, (12 E. R., 175;) or if there was a running account between them, (15 E. B., 221;) in all such cases the drawer is considered as justified iu drawing; as so far having a right to draw (bat the transact ion cannot he denominated a fraud; for in snch a case, it is a fair commercial transaction, in which the drawer lias a reasonable expectation that liis bill will lie honored, and he is eutitled to the same notice as a drawer with funds or authority to draw without funds.” (15 *251E. R., 220; 16 Id., 44.) “ But unless lie draws under some such circumstances, his drawing without funds, property, or authority puts the transaction out of the pale of commercial usage and law, and he can in nowise suffer by the want of notice of the dishonor of his drafts, it is deemed a useless form. Notice, therefore, can amount to nothin»;, for his situation cannot be changed. In a case where he has no fair pretense for drawing, there is no person on whom lie can have a legal or equitable demand, in consequence of the nonpayment or non-acceptaiice of the hill.” (10 Pet. R., 577, 578.)
Note 107.—Payne v. Patrick, 21 T., 680; Wood v. McMeans, 23 T., 481; Yale v. Ward, 30 T., 17; Lewis v. Parker, 33 T., 121.
From the. instances here given of the. qualifications of the exception to the general rule respecting notice, dispensing with it Whore the drawee has no funds, it is miuiifi st. Hurt, the exist cnee of such facts as constitute a modification of the exception must be peculiarly within the knowledge of the defendant, and the averment ¡mil proof of them must come from him.
If the drawer had made or is making a consignment to the drawee; or if the goods were in irtmsi/u.; or if there was a running account between them; or if the drawer had a reasonable expectation from any other cause that the bill would be paid — these are facts which (lie plaintiff cannot be required'to negative by averment and proof, but which it, is incumbent on the defendant, when the plaintiff shall have shown the. absence of effects in the hands of the drawee, to aver and prove as matter of defense.
The reason of the rule requiring notice of the non-acceptance or non-payment of the bill to be given to the drawer is to enable him forthwith to withdraw from the possession of the drawee such effects as he may have in his hands, and to afford an opportunity to the drawer and indorsers to obtain security from the persons to whom they are entitled to resort for indemnity. (Chit, on Bills, 855., 350; 3 Kent Comm., 105.) But the reason of the rule and the necessity of it cease when there are no effects of the drawer in the hands of the drawee. In this case the drawer, being himself the real debtor, would acquire no right of action against the drawee by paying the bill, nor does he suffer any injury from want of notice of non-acceptance or nonpayment, and therefore the 'laches of the holder can afford him no defense. (Chit, on R., 357.) lie has perpetrated a fraud in drawing upon one who had no effects to answer the call. (2 Stark. Ev., 160, 161.) The plaintiff, having alleged in his petition the absence of effects in the hands of the drawee, has shown a sufficient excuse for not having used the diligence prescribed by the statute. Having averred every fact which it would be necessary for him to prove to entitle him to recover, his petition is sufficient, and the court erred in sustaining the exceptions.
The judgment must therefore be reversed and the cause'remanded.
Judgment reversed.