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United States Supreme Court

71 U.S. 447

Davidson  v.  Lanier

ERROR to the District Court of the United States for the Northern District of Mississippi; the suit having been by Lanier, curator of the succession of John J. McMahon, of New Orleans, against Davidson, on a bill of exchange drawn, as was alleged, by Davidson and others, and judgment having been given in favor of the plaintiff.

The case, as stated by the Chief Justice, was thus:

A statute of Tennessee, enacted in 1827, and entitled 'An act to suppress private banking,' made it penal to erect, establish, institute, or put in operation or to issue any bills or notes for the purpose of erecting, establishing, or putting in operation, any banking institution, association, or concern.

In January, 1856, this act being in force, several persons, of whom one Richard M. Kirby seems to have been the principal, undertook to establish a banking association or company in Memphis, Tennessee, under cover of a charter granted by the State of Arkansas for a corporation styled 'The Cincinnati and Little Rock Slate Company.' Their object was to issue bills for circulation as money, and use them in the cotton trade.

About the time of the organization of the company, Kirby visited McMahon, of whose estate the defendant in error is curator, at New Orleans, and exhibited the charter and explained the views of the company, whereupon McMahon agreed to act as its treasurer and financial agent.

In pursuance of this arrangement, circulating notes of the company, to the amount of twelve thousand dollars, were sent to McMahon, who used them, as far as he could, for currency. He also made advances to the company by accepting and paying bills drawn on him; and, in the result, became its creditor in a sum somewhat exceeding eleven thousand dollars.

At the time of the arrangement with McMahon, Davidson, the plaintiff in error, and one J. B. Ellis, were members of the company, but afterwards withdrew. Subsequently, however, upon the request of Kirby, Davidson, with two others, consented to sign, and Ellis consented to indorse several bills of exchange in blank, and among them that on which the suit below was brought. All the bills seem to have been addressed to McMahon as drawee. Shortly before, or very soon after this transaction, H. M. True, the secretary and treasurer of the company at Memphis, absconded, taking with him all the cash in his possession.

There was some obscurity, and, perhaps, some contradiction of evidence in the record, as to the time and purpose of signing and indorsing the blank bills of exchange. Kirby stated that they were signed and indorsed before the absconding of True, to enable himself to protect the circulation of the company. Another witness said that they were signed and indorsed after that event, at the suggestion of Kirby, to relieve McMahon from the consequences of True's theft; but this witness said, also, that he only knew the object of the bills from a statement by Kirby, made when the other parties were not present, and was not confident as to the time of signing and indorsement.

However these things may have been, it was certain that the bills were sent by Kirby to McMahon, in July, 1856, and were filled up some months later, after vain attempts to obtain payment of the balance due him.

All the bills, when they went into McMahon's hands, seemed to have had engraved on their face the formal parts of a bill of exchange, with the name of the place of date, 'Memphis, Tenn.,' and the direction to the drawer, 'John J. McMahon, New Orleans;' and all but one seemed to have borne the words, 'Exchange for $1000,' in the upper left hand corner. In other respects, as to time of date, amount to be paid, and time of payment, they were left blank. The one now in controversy was filled up with the date, 'July 15th, 1856;' with the time of payment, 'eight months after date;' with the sum to be paid, 'eight thousand nine hundred and ninety-two dollars and forty-four cents;' and with a stipulation for 'eight per cent. interest from maturity until paid.' Thus filled up, the bill sued on read as follows:

'Exchange for $8992.44.

'MEMPHIS, TENN., July 15th, 1856.

'Eight months after date of this, our first of exchange (second unpaid), pay to the order of J. B. Ellis eight thousand nine hundred and ninety-two dollars and forty-four cents, value received, and charge the same to account of your obedient servants, with eight per cent. interest from maturity until paid.

'JAS. R. FERGUSON,

J. LOCKE,

THOMAS J. DAVIDSON.

'TO JOHN J. MCMAHON, New Orleans.'

Indorsed: 'J. B. ELLIS, Ripley, Miss. RICHARD M. KIRBY.'

Upon the trial, the court charged the jury, that if McMahon's object in advancing his money was to enable the company to put into operation a banking company in violation of the laws of Tennessee, the jury must find for the defendant; and, also, that if McMahon agreed with Kirby to redeem the circulation, intending thereby to enable the company to go into operation, and the company did go into operation, issuing bank notes in pursuance of that agreement, then the transaction was illegal, and the plaintiff could not recover.

But the following instructions, numbered in the record 5th, 6th, and 7th, were also given by the court:

5. 'If, at the time the bills were given, the holder, McMahon, knew that the money would be used for the purpose of carrying on a banking company contrary to the laws of Tennessee, and if the banking company was then in operation, then the consideration of the bills is not affected by the use made of the proceeds of the bill, and the plaintiff is entitled to recover, unless the defence is sustained on some other ground.'

6. 'The signing of a bill of exchange in blank, is the giving of the holder an unlimited authority to fill it up at pleasure, and the party so drawing or indorsing is bound by the act of the party filling up the same.'

7. 'If the bills sued on were signed in blank, and delivered to Kirby to be sent in blank to McMahon, that would authorize him, McMahon, to fill up the bills and insert any rate of interest that was lawful, and the jury should find for the plaintiff, unless the defence is made out and sustained on some other ground.'

It was upon these instructions, considered in connection with the evidence, that the questions to be decided in this case arose.

Before arguing the merits, a motion to dismiss the writ of error was made.

The judgment of the District Court for $11,312.42 was rendered on the 6th of June, 1860. On the 7th a writ of error was sued out, and a copy was lodged with the clerk of the court on the same day, and bond for supersedeas given in double the amount of the judgment. A citation was also issued, dated 16th April, which was served on the 14th September, 1860, and the record, with the writ of error and the citation, was returned to the next term of this court. Another citation and apparently another writ of error, were issued on the 7th of June. Of the last-mentioned writ and citation there seemed to have been no service.


The case was submitted in behalf of the plaintiff in error on the record. Mr. Brent for the defendant in error:


I. Motion to dismiss. The grounds are: because it does not appear that the writ of error was 'allowed' by the judge, which it ought to be. [1]

Because the citation returned here as the original, which was served on the 14th September, 1860, is on its face tested 16th April, 1860; nearly two months prior to the judgment, which it professes to bring up.

This citation, when served, gave notice to the defendant in error to appear and answer a writ filed at its date (16th April, 1860). No such writ had then been filed in this case, nor indeed had the judgment been rendered.

It may be here stated that on the 16th April, 1860, when this citation bears date, there was a judgment in same court dated 5th December, 1859, being the judgment in another case (No. 52), between the same parties, brought up to this court in immediate sequence to this, and in principle just like it, and it is properly described in this citation.

The appeal bond returned in this case was designed to be a supersedeas, from the amount of its penalty, &c. In such a case, the judge signing the citation is required to 'take good and sufficient security that the plaintiff in error shall prosecute his suit with effect,' &c. But here it does not appear that the judge approved the bond or exercised any judgment touching the security. He was an attesting witness, but as such he merely authenticates the signatures.

In the case of a supersedeas appeal bond, where it does not appear to have been taken or approved by the judge, the writ of error must be dismissed. [2]

II. On the merits, or matters presented by the four instructions.

As respects the fifth and immediately preceding, or fourth instruction, the defence rested on the statute of Tennessee.

The case shows that McMahon (on whose estate Lanier is curator), residing in New Orleans, agreed to accept the drafts of a banking house in Memphis, Tennessee, and that this action is brought for the money paid in New Orleans by McMahon. The place of performance of McMahon's contract, therefore, was Louisiana, and its validity is to be tested by the laws of Louisiana, and not of Tennessee. [3] If this be so, the whole defence of the plaintiff in error was inadmissible.

But the law of Tennessee manifestly intended to punish only the parties engaged in the institution of an unincorporated association and in issuing its currency; it did not intend to prohibit the recovery of money paid in good faith by a non-resident of that State upon the security of bills of exchange drawn on him by individuals, and which he honored for their accommodation. The contract to pay for money advanced upon personal security is valid, although the occasion for this contract arose out of the illegal act. [4]

As respects the sixth and seventh instructions, the ground of the assignment of error probably is that they were too broad. We think them obviously right.

The CHIEF JUSTICE delivered the opinion of the court, and after stating the case went on thus:

NotesEdit

^1  Yeaton v. Lenox, 7 Peters, 221.

^2  Boyce v. Grundy, 6 Peters, 777; Judiciary Act, § 22.

^3  Bell v. Bruen, 1 Howard 169; Cox v. United States, 6 Peters, 172.

^4  Catts v. Phalen, 2 Howard, 376; Slaughter v. Groves, 15 Peters, 449.

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).