Baldwin v. Bank of Newbury
THE Bank of Newbury, a corporation, at the time of the suit and now, established in Vermont, brought an action of assumpsit in the Circuit Court of the United States for the Massachusetts district against Baldwin, upon a promissory note made by him in Massachusetts, where he resided. The following is a copy of the note. It was unindorsed:
BOSTON, Dec. 9, 1853.
Five months after date I promise to pay to the order of O. C. Hale, Esq., Cashier, Thirty-five hundred dollars, payable at either bank in Boston, value received.
J. W. BALDWIN.
After making the note, and pursuant to laws of Massachusetts existing prior to making it, Baldwin obtained a certificate of discharge from his debts, embracing by its terms all contracts to be performed within the State of Massachusetts after the passage of said laws. The Bank of Newbury took no part in these proceedings in insolvency in Massachusetts by which Baldwin obtained his discharge. This discharge he pleaded in bar of the action on this note.
He also pleaded the general issue, and under that plea objected that the note declared on was not competent evidence to support the declaration, and did not sustain the cause of action therein set forth. On this point the case, as agreed on by the parties, was as follows, viz.:
'It is agreed that O. C. Hale was in fact the Cashier of the Bank of Newbury at the time of the making of said note, and in case the court would admit such evidence after objection by the defendant, and not otherwise, and not waiving his objection to the same as incompetent, the defendant admits that said Hale mentioned in said note, in taking said note was acting as the cashier of and agent for the plaintiff corporation. If upon the foregoing facts the plaintiff has made out a legal cause of action in his favor, and the defendant's discharge, &c., is ineffectual as a bar of said action, the defendant is to be defaulted; otherwise the plaintiff is to become nonsuit.'
Two points thus arose and were argued:
1. Whether the contract, being by a citizen of Massachusetts, was discharged by the proceedings in Massachusetts, even though to be performed in that State,-Hale being a citizen, and the Bank of Newbury being a corporation of Vermont, a different State.
2. Whether, if this discharge was not a bar, parol evidence was admissible to show that 'O. C. Hale, Esq.,' described in the note as 'Cashier,' simply, was cashier of the Bank of Newbury, the plaintiff in the suit, and that in taking the note, he acted as the cashier and agent of the corporation.
The court below ruled that the discharge pleaded was no bar, and also that the plaintiff had made out a cause of action, and gave judgment accordingly. On error here the same two questions arose.
Mr. F. A. Brooks, for Baldwin, the plaintiff in error.
1. The first point will be determined by whatever decision is given in Baldwin v. Hale, ante, p. 223, and need not be discussed.
2. The second point has been precisely adjudged in the Circuit Court of the United States for Vermont, in Bank of the United States v. Lyman.  The note in that case was payable to 'Samuel Jaudon, Esq., cashier, or order.' Jaudon was notoriously cashier of that bank, which was there plaintiff. The debt, no one doubted, was due to the bank and was not due to Jaudon. The case, completely, was our case. The Bank of the United States, having the same view of the law that the present plaintiff has, sued on the note without Jaudon's indorsement. The court decided that suit could not be so maintained. Prentiss, J., examined the subject on principle and on authority, both English and American. He begins with Evans v. Cramlington, so far back as Carthew,  affirmed in the Exchequer Chamber, 2 Ventries, 307. He says that the observations of Buller, J., in Fenn v. Harrison,  show, very plainly, that in his opinion no person could be considered as a party to a bill unless his name was upon it, and cites an observation of Lord Abinger,  who, speaking of a case before him of 'written simple agreements,' says that 'cases of bills of exchange are quite different in principle from those that ought to govern this case.' His honor, after affirming that the doctrine enforced by him, he 'may safely say,' prevails in general in this country, though there may have been now and then an occasional departure from it, and that there can be 'little doubt,' when we refer to Van Ness v. Forrest (8 Cranch, 30), 'how the rule of law on the subject is understood in the national court,' thus sums up the subject:
'Upon the whole, it appears to me, that the true rule of law, as deducible from the adjudged cases, American as well as English, is that no person, although in fact a principal or partner, can sue or be sued upon a bill or negotiable note, unless he appear upon its face to be a party to it. A promissory note, according to the expression of very great judges, partakes in some measure of the nature of a specialty, importing a consideration, and creating a debt or duty by its own proper force. Being assignable, and passing by mere indorsement, it is necessary that the parties to it should appear, and be known, by bare inspection of the writing; for it is on the credit of the names appearing upon it that it obtains circulation. It is for these qualities, and on these considerations, that it is distinguished from written, simple contracts in general, and made subject to a different rule.
'The note in question here is a perfect instrument, without ambiguity in form or purpose, and must have operation and effect according to the terms in which it is expressed. It is made payable to 'Samuel Jaudon, Esquire, cashier, or order.' The promise, therefore, is to pay him, or the person to whom he shall order it to be paid; and it would be repugnant to the terms of the instrument to allow the Bank of the United States, or any one else, without his order, to demand and enforce payment of it by suit. The bank is not named in the note at all, either as principal or otherwise; nor can it be inferred, from anything contained in the note, that it was made even in trust or for the benefit of the bank, or that the bank has any interest whatever in it. To admit parol evidence to show that the bank is the real principal, and hold that it may sue upon the note as such, would be to subject negotiable paper to the very uncertainty the law intended to avoid. It would be putting promissory notes upon the footing of other written simple contracts, and prostrate entirely the distinction, which sound policy, as well as the nature and purpose of negotiable securities, demands should be kept up between the two classes of cases.'
The case in the national court  to which Prentiss, J., refers, strongly supports, by implication, our view. There a note was executed to Joseph Forrest, President of the Commercial Company, for merchandise belonging to and sold as the property of the company. On the question, whether an action could be maintained upon the note in the name of Forrest, Marshall, C. J., said:
'The suit is instituted on a promissory note given, not to the company, but to Joseph Forrest, president of the company. Although the original cause of action does not merge in this note, yet a suit is clearly maintainable on the note itself. Such suit can be brought only in the name of Joseph Forrest. It can no more be brought in the name of the company, than if it had been given to a person not a member, for the benefit of the company. The legal title is in Joseph Forrest, who recovers the money in his own name, as a trustee for the company.'
The Commercial Bank v. French (21 Pickering, 486), whether decided rightly or the reverse of rightly, is not at essential variance with the doctrine we maintain; for in that case the note was drawn to no person by name. It was to the Cashier of the Commercial Bank, Boston, or his order. The name of the cashier was not in the note, while that of the bank was so, prominently. It was almost the same thing as if made to the bank by some loose form of name. On the face of the note it belonged to the Commercial Bank. Here no bank at all is specified. An individual is specified by name, and the name is not that of the party suing. 'Cashier' is mere surplusage. Neither was the case in accordance with Massachusetts precedents. In one case in that State,  it was decided that a note payable to the treasurer of a parish might be sued in the name of the treasurer. And in another case in the same State,  that a note indorsed to S. S. Fairfield, Cashier, might be sustained in the name of Fairfield. It is true that these cases do not directly decide that action might not have been brought also in the name of the corporation which the plaintiffs represented; and it is by this suggestion that the judge who gives the opinion in The Commercial Bank v. French, evades their force. But with what regard to law does he evade it, if Marshall, C. J., be right in his declaration, in Van Ness v. Forrest, that suit on such note can be brought only in the name of the person to whom it was given, and 'can no more be brought in the name of the company than if it had been given to a person not a member?'
Mr. Hutchins, contra.
Mr. Justice CLIFFORD, after stating the case, delivered the opinion of the court:
^1 20 Vermont, 676.
^2 Page 5.
^3 3 Term, 757.
^4 Beckham v. Drake, 9 Meeson & Welsby, 78.
^5 Van Ness v. Forrest, 8 Cranch, 30.
^6 Fisher v. Ellis, 3 Pickering, 381.
^7 16 Id., 381.