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United States Supreme Court

18 U.S. 277

Mandeville  v.  Welch

ERROR to the Circuit Court for the district of Columbia. This was an action of covenant brought by the plaintiff, James Welch, for the use of Allen Prior, against the defendant Mandeville, one of the firm of Mandeville & Jamesson, for the breach of certain articles of agreement set forth in the declaration. Several pleas were pleaded by the defendant; but as the opinion of this Court turned altogether upon the fourth set of pleadings, on which issue was joined, and at the trial a bill of exceptions taken, it is unnecessary to state the other pleadings.

The fourth plea alleged a release of the cause of action by the plaintiff before the commencement of the present suit. The plaintiff replied, in substance, that Welch being indebted to Allen Prior, in a sum exceeding 8,707 dollars and 9 cents, and Mandeville & Jamesson being indebted to Welch by virtue of the covenant in the declaration mentioned, in the same sum of 8,707 dollars and 9 cents, Welch did, in the year 1799, appropriate, assign, and transfer to Prior, by a good and sufficient assignment in equity, the same debt due by reason of the same covenant, of which appropriation and assignment to the use and benefit of Prior, Mandeville, afterwards, in 1799, had notice; that the present suit was brought for the sole use and benefit of Prior, and Mandeville, at its commencement, had notice thereof, and knew the same suit was depending for the use and benefit of Prior at the date of the pretended release; that the release was obtained without the knowledge, consent, or approbation of Prior, or of his attorney in Court; and that Welch had no authority from Prior or his attorney, to execute the release, which was known to Mandeville at the time of the release; and that the release was made with the intent to defraud Prior, and to deprive him of the benefit of this suit. To this replication there was a rejoinder and issue, upon which the parties went to trial.

At the trial, the plaintiff, to prove that Welch did transfer and assign to Prior, by a good and sufficient assignment in equity, the debt in the replication mentioned, gave in evidence to the jury the articles of agreement in the declaration mentioned, and sundry endorsements of payments thereon, and a memorandum also thereon, dated the 1st of January, 1798, and signed by Welch, stating that there then remained owing to him, on the articles payable at the times therein mentioned, the sum of 8,707 dollars and 9 cents. The plaintiff further offered three bills of exchange drawn by Welch, in favour of Prior, upon Mandeville and Jamesson, dated on the 7th of September, 1799, each for 2,500 dollars, payable to Prior or his order: one on the 24th of November, 1800, another on the same day and month, 1801, and the third on the same day and month, 1803, being the respective times at which certain instalments for like sums would become due on the articles of agreement stated in the declaration. Each of these bills purported to be 'for value received' of Prior, and were directed to be charged 'to account as advised.' The plaintiff farther offered in evidence to the jury an account rendered to Welch by Mandeville & Jamesson, dated the 31st of January, 1798, stating the balance of 8,707 dollars and 9 cents, due to Welch, and payable by instalments in the manner mentioned in the articles of agreement; and proved that this account had been delivered to Prior by Welch.

The defendant then gave in evidence the bill and proceedings in a suit in Chancery in Fairfax county, by Prior, against Welch & Mandeville & Jamesson, (excepting the answers of the latter,) which suit was brought to recover the amount of the three bills of exchange from Mandeville & Jamesson, as debtors of Welch, and was discontinued by the plaintiff, Prior, after the answer of Welch had come in, denying that Prior was owner of the bills, and asserting that Prior held them merely as his agent, and for his use. And the defendant further proved, that Welch had never authorized the present suit to be brought, unless the circumstances above stated would have given Prior authority to institute the same.

The defendant then prayed the Court to instruct the jury, that if from the evidence so given, they should be of opinion, that the sums for which the bills were drawn amounted to less than the sums payable by Mandeville & Jamesson to Welch, under the covenant, and were known to be less by Welch, then Prior is not such an assignee of the covenant as would authorize him to sustain this suit in the name of Welch. Which instruction the Court gave; but further instructed the jury, that if they should be of opinion, from the evidence, that the bills were drawn for the full and valuable consideration expressed on the face of them, paid by Prior to Welch, and if there was no other evidence than what is before stated, they ought to infer from the evidence, that Prior was, and is such an assignee of the right of action upon the covenant as authorized him to sustain this action in the name of Welch's administrator (Welch having died pending the proceedings, and his administrator having been made party to the suit) for the whole debt due by the covenant at the time of Welch's delivering the account above stated to Prior; and further, that the bills were prima facie evidence of such value having been paid by Prion to Welsh. The jury found a verdict for the plaintiff under this instruction; and the cause was brought before this Court by a writ of error, to revise this among other supposed errors assigned upon the record.

     March 3d.

Mr. Swann, and Mr. Taylor, for the plaintiffs in error, argued, 1. That the Court below erred in its instruction to the jury that the words 'value received' were evidence against Mandeville & Jamesson, that money had been actually paid by Prior to Welch, or the bills. They do not claim under the bills, nor under Welch as the drawer. They claim as assignees of the fund on which the bills were drawn: In the case of Evans v. Beatty,a Lord Ellenborough held, that on a guaranty to pay for goods sold to a third person, the declarations of the latter were not evidence to charge the person giving the guaranty; because there might be collusion between the third person and the plaintiff. So in this case, if the defendant proved an assignment to him, Welch's declaration that he had previously assigned to the plaintiff, would not be admissible, and his declaration in writing cannot have any greater effect. 2. It was not the intention of Welch, and of Prior, that the whole covenant should be assigned, nor does the law imply such an assignment. The bills are general, not payable out of any particular fund, and there is no proof of any agreement between Welch and Prior, that the latter should have a lien on the funds in the hands of Mandeville & Jamesson. The legal consequence of the decision of the Court below is, that the drawing of a bill of exchange amounts, per se, to an assignment in law of the funds of the drawer in the hands of the drawee, so as to authorize a suit in the name of the drawer, without his consent, against

5 Esp. N. P. C. 26. the drawee, and when recourse might be had to the former. There is no case to support the idea that the drawing of a bill under any circumstances, will amount to an assignment at law. Cases, indeed, have occurred, where, under peculiar circumstances, a Court of Equity has considered the drawing of a bill as giving to the payee a superior claim or equitable lien. Thus, in the case of Yeates v. Groves,b the creditor surrendered a security he held, under an express agreement that he should be paid out of the money to arise from a particular specified fund, on which the bill was drawn, and the drawer became bankrupt. But the proposition, that the drawing of a bill on a specific fund would, per se, have created such a lien, is repelled by Lord Thurlow. It would be highly impolitic to consider the drawing of a bill, under any circumstances, as amounting to an assignment, or creating a lien, in a Court of law. These questions generally arise on the bankruptcy of the drawer. His general creditors have an interest, and ought to be heard. They cannot be made parties to a suit at law.

1 Vez. Jun. 280. being prima facie evidence of an equivalent advance by Prior, the possession by him of the articles of agreement, and the delivery to him of the account signed by Mandeville & Jamisson, furnish a legal presumption that both were delivered as security for the payment of the advance. He thus acquired a lien on them similar to that acquired by the delivery of title deeds as security for a debt, which lien has always been deemed by Courts of Equity equivalent to a mortgage.c So, also, the deposit of a note or bill, as security for a debt, entitles the creditor to enforce his lien in equity.d But supposing this position not to be correct, still it is contended, that there was here a partial lien or appropriation of the debt due from Mandeville & Jamesson under the articles, to the extent of the sums due on the bills, which is sufficient to authorize Prior to maintain this action. The drawing of a bill of exchange is, in itself, an assignment by the drawer to the payee of the money due from the drawee. The acceptance is not necessary to make the assignment complete, but only to give an action against the drawee in the name of the payee.e In the case of Clark v. Adair, cited by Mr. Justice Buller in Masters v. Miller,f it was determined

Sweas v. Camelford, 1 Vez. Jun. 235. Walwyn v. Sheppard's Assignees, 4 Ves. 119. Jones v. Gibbons, 9 Ves. 411. Ex parte Langston, Rose's Rep. 26. Russel v. Russel, 1 Bro. Ch. Cas. 269.

Ex parte Crossbey, 3 Bro. Ch. Cas. 237. Ex parte Byas, 1 Atk. 148.

Gibson v. Minet, 1 H. Bl. 569. 602. Tatlock v. Harris, 3 T. R. 174.

4 T. R. 343. that an unaccepted bill was such an assignment as entitled the payee to the money. In Yeates v. Groves,g an order to pay out of a particular fund, though not accepted, was considered such a transfer as to prevent the assignee of the party who became bankrupt after drawing the order, from claiming the fund on which the order was drawn.

Mr. Jones and Mr. Lee, contra, insisted, 1. That bills and negotiable notes expressing upon their face 'value received,' are evidence of that fact, both as between the original parties, and against third persons. 2. The facts and circumstances of the case establish by legal inference, that the articles of agreement were wholly assigned in equity. The bills


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