Gerard v. La Coste

COMMON PLEAS, Philadelphia


June Term, 1787.

GERARD verʃus LA COSTE et al.


HIS cafe came before the Court on a fpecial verdict, and, after argument, the following judgment was pronounced by the president.

SHIPPEN,Preʃident–This action is brought againft the acceptors of an inland Bill of Exchange, made payable to Baƒs and Soyer and indorfed by them, aƒter the Acceptance to the Plaintiff for a valuable confideration. The Bill is payable to Baƒs and Soyer, without the ufual words ‘‘ or order ’’ ‘‘ or affigns,’’ or any other words of negotiability. The queftion is, whether this is a Bill of Exchange, which, by the law merchant, is indorfable over, fo as to enable the indorfee to maintain an action on it againft the acceptors, in his own name.

The Court has taken fome time to confider the cafe, not fo much from their own doubts, as becaufe it is faid eminent Lawyers, as well as Judges, in America, have entertained different opinions concerning it. There is certainly no precife form of words neceffary to conftitute a Bill of Exchange, yet from the earliest time to the prefent, merchants have agreed upon nearly the fame form, which contains few or nor fuperfluous words, terms of negotiability ufually appearing to make a part of it. It is indeed generally for the benefit to trade that Bills of Exchange, efpecially foreign ones, fhould be affignable ; but when they are fo, it muft appear to be a part of the contract, and the power to affign muft be contained in the Bill


itfelf The drawer is the lawgiver, and directs the payment as he pleafes ; the receiver knows the term, acquiefces in them, and muft conform.

There have doubtlefs been many draughts made payable to the party himfelf, without more, generally perhaps to prevent their negotiability:–Whether thefe draughts can properly be called Bills of Exchange, even between the parties themfelves, feems to have been left in fome doubt by the modern Judges. Certainly there are draughts, in the nature of Bills of Exchange, which are not ftrictly fuch, as thofe iffuing out of a contingent fund ; thefe, (fay the Judges in 2 Black. Rep. 1140.) do not operate as Bills of Exchange, but, when accepted, are binding between the parties. The queftion, however, here, is not whether this would be a good Bill of Exchange, between the drawer, payee, and acceptor, but whether it is indorfable.

Marius's Advice is an old book of good authority ; in page 141 he mentions exprefsly fuch a Bill of Exchange as the prefent, and the effect of it, and he fays, that the Bill not being payable to a man or his Aʃʃigns or Order, and affignment of it will not avail, but the money muft be paid to the man himfelf. In 1 Salkeld 125, it is faid, that it is by force of the words, ‘‘ or order’’ in the Bill itfelt, that authority is given to the party to affign it by indorfement.– In 3 Salk. 67 it is ruled, that where a Bill is drawn payable to a man, ‘‘ an order,’’ it is within the cuftom of merchants ; and fuch a Bill may be negotiated and affigned by cuftom and the Contract oƒ the Parties. And in 1 Salk. 133 it is exprefly faid by the Court, that the words ‘‘ or to his order,’’ give the authority to affign the Bill by indorfement, and that without thofe words the Drawer was not anfwerable to the indorfee, although the Idorʃer might.

An argument of fome plaufibility is drawn in favor of the Plaintiff from the fimilarity of Promiffory Notes to Bills of Exchange. The ftatute of 3 & 4 of Ann appears to have two objects ; – one to enable the perfon to whom the Note is made payable, to fue the drawer upon the Note as an inftrument (which he could not do before the Act) and the other to enable the Indorʃee to maintain an action in his own name againft the drawer. The words in this Act which defcribe the Note on which an action will lie for the Payee, are faid to be the fame as thofe on which the action will lie for the indorfee, namely, that if fhall be a Note payable to any perfon, or his Order; and it appearing by adjudged cafes, that an action will lie for the Payee although the words ‘‘or order ’’ are not in the note, it follows (it is contended) that an action will alfo lie for the Indorʃee, without thofe words. If the Letter of the Act was ftrictly adhered to, certainly neither the Payee, nor Indorʃee, could fupport an action on a Note, which did not contain fuch words on negotiability as are mentioned in the Act ; yet the conftruction of the Judges has been, that the original payee may fupport an action or a Note not made affignable in terms.The foundation of this conftruction does not fully appear in the cafes, but it was probably though confonant to the Spirit"


of the Act, as the words ‘‘ or order’’ could have no effect, and might be fuppofed immaterial, in a fuit brought by the payee himfelf againft the maker of the Note. But to extend this conftruction to the cafe of an Indorʃement without any authority to make it appearing on the face of the Note, would have been to violate not only the Letter but the Spirit of the Act. Confequently no fuch cafe any where appears On the contrary, wherever the Judges fpeak of the effect of an indorfement, they always fuppofe the Not itfelf to have been originally made indorfable. The cafe of Moore verʃus Manning in Com. Rep. 311. was the cafe of a Promiffory Note originally payable to one and his Order ; it was affigned without the words ‘‘ or order ’’ in the indorfment ; the queftion was, whether the affignee could affign it again ; The Chief Juftice, at firft, inclined that he could not, but it was afterwards refolved by the whole Court, that if the Bill was originally affignable, ‘‘ as it will be (fay the Court) if it be payable to one and his Order, ’’ then to whomfoever it is affigned, he had all the intereft in the Bill, and may affign it as he pleafes. Here the whole ftrefs of the determination is laid upon what were the original terms of the Bill, if it was made payable to one and his Order, it was affignable, even by an indorfee without the word “order ” in the indorfment ; it follows, therefore, that if the Bill was not originally payable to order, it was not affignable at all. The fame point is determined, for the fame reafons, in the cafe of Edie & Laird v. the Eaƒt India Company, in 1 Black. R. 295, where Lord Maniʃield fays ‘‘ the main foundation is to ‘‘ confider what the Bill was in its origin ; if in its original creation ‘‘ it was a negotiable drauget, it carries the power to affign it.’’ In a fimilar cafe, cited in Butler's niʃs prius 390 the Court held, that as the Note was in its original creation indorʃable, it would be fo in the hands of the indorfee, though not fo expreffed in the indorfment.

Thefe cafes leave no room to doubt what have been the fentiments of the Courts in England upon the fubject. To make Bills, or Notes, affignable, the power to affign them muft appear in the inftruments themfelves ; and then, the cuftom of merchants, in the cafe of Bills of Exchange, and the Act of Parliament, in the cafe of Notes, operating upon the Contract oƒ the Parties, will make them affignable.

In the cafe before us, no fuch contract appears in the Bill. The acceptance was an engagement to pay according to the terms of the Bill to Baʃs & Soyer ; a ʃubʃequent indorfment, not authorized by the Bill, cannot vary or enlarge that engagement, fo as to fubject the acceptor, by the eh law merchants, to an action at the fuit of the indorfee.

Judgment for the Defendant.