White v. Camp

Hawkins, Justice: The action in the Court below is of assumpsit, by Thomas U. White, the plaintiff in error, endorsee, against John G. Camp, maker of the following promissory note: “$127 97-100. Sandusky City, Sept. 6, 1839. “ Due on demand to William T. Reese or order, for value receiv- “ ed, one hundred and twenty-seven 97-100 dollars. “ JOHN G. CAMP. (Endorsed) — “ W. T. Reese.”' The declaration contains a count upon the note, money counts, and account stated. The defendant, Camp, put in three pleas: 1st, Non assumpsits — 97 — 2d, That the promissory note sued upon was given and made without any lawful or valuable consideration, and was obtained by the payee, Reese, by fraud, misrepresentation, concealment, covin, and deceit, and that the said note was, and is void, &c. 3d, That the endorsement or assignment of the note was made without any lawful or valuable consideration, and in fraud of the rights and interest of the defendant, to deceiv.e and defraud him in the premises. Accompanying the pleas, there was a notice to plaintiff that, under the general issue pleaded, the defendant would prove that said William T. Reese, one Thomas Neill, Isaac A. Mills, and defendant, owned as tenants in common, a certain tract of land in Sandusky, Erie county, in the State of Ohio, and attempted to make division of said lands; and said note was given for the supposed difference due siaid'Reese in said division; that since then, one Owen Follet, of whom said Reese purchased, has instituted proceedings to get said Reese’s share of land, said Reese never having paid him the purchase money ; and that the attempted division of said land, on which said note was predicated, is nullified and voif, in consequence thereof; and that the same was, therefore, given without any consideration; or if there was any consideration, it has totally failed. That said Reese had since been declared a bankrupt; that the endorsement of the note to plaintiff was fraudulently made, by collusion, with knowledge and notice by plaintiff of the facts as before stated ; that Reese was largely indebted to him, the'defendant, at the time of the transfer of the note, and before, for defendant’s blank endorsements, given to him for specified purposes, which Reese did not comply with, but made use of the s.ame, by getting them discounted, and misapplied the proceeds, not as he engaged appropriating it, to pay for said land to Follet, and so release it, so as to effectuate said division; all of which the defendant alledges plaintiff had notice of, and that defendant would rely on said facts, in bar of the action.. Appended to this notice was an affidavit, in which the defendant denies, on oath, the consideration of said note declared on ,• and also saith, that if the consideration was legal and valid, the same has to-tally failed. He further denies, on oath, the consideration of said assignment or endorsement of the note, and that he believed the facts, as set fotth in the notice, are true. The plaintiff replied by similiter to the first plea, and takes issue' on the second and third. The parties waived a trial by jury, and put themselves upon the — 98 — judgment of the Court. By the bill of exceptions, it is shown, that the plaintiff offered in evidence in support of his declaration the note sued upon, and satisfactorily proved the signature of the endorser, Reese; and thereupon.Camp, the defendant, after exhibiting his affidavit, made under the statute-, asked the Court to determine Upon the pleadings, that- the plaintiff to recover must prove the consideration for which the .note was given by Camp to Reese, under the second ploa,.and notice of special matter; and under the third plea and notice as aforesaid, must prove the consideration'of the assignment or endorsement by Reese to plaintiff; and the Court so determined; and'gave judgment accordingly for defendant. , , To that opinion the plaintiff excepted; .and thereupon a writ of error issued. * . . The counsel for the plaintiff in error assigns the following errors; ‘First. The Court erred in determining that, upon the second plea, and affidavit, and notice, it was'necessary for the .plaintiff to prove the consideration of the note,-before hecquld recover. , Second-. The Court erreft in determining,- that up.on .third plea, affidavit and notice, it was incumbent upon plaintiff to prove consideration of the endorsement or assignment, from Reese to him. Third. That upon the pleadings and.evidence in the cause; plaintiff was entitled to judgment. The defendant, in the Court below, lias attempted to avail himself of the provisions of the statutes of Florida, as to the proof of the-execution and consideration of bonds, bills, notes, et. ceterct, contained in the twenty-fourth and thirty-fourth sections of the act, in relation to judicial proceedings, passed November 23d; 1829., Dhval’s Compi-lador 95 and' 96. < Section-24, after stating that all promissory notes, and other writings, not under seal, shall’have the same force and effect as bonds and instruments under seal, says that s It “ shall not be necessary “ for the plaintiff to prove the execution of any bond, note, or 'other “ instrument of writing, purporting to have’ been, signed by the defendant, nor the consideration for1 which the same was given, un- “ less the same shall be denied by plea, put in and filed as aforesaid, “ (i. e. on' oath,) and filed before the cause is called upon the ap- “ pearance docket.” Section 34th declares,: “ That.the assignée or endorsee may bring “ suit in his own name; nor shall "it be necessary fdr the assigned or “ endorsee of any instrument, assignable by law, to set-forth in the — 99 — “ declaration the consideration upon which such assignment or en- “ dorsement was made; nor to prove such consideration, unless the “ same shall be impeached, by the defendant, under oath.” The instruments “ assignable by law,” referred to in this, and the thirty-third section of the same act, are bonds, notes, covenants, deeds, bills of exchange, or other writings, whereby money is promised or secured to be paid; and the assignment of these instruments vests in the assignee or endorsee, the same rights, powers and capacities, as are possessed by the assignor or endorser. > The subjects arising for the consideration of the Court in the cause before us, involve the discussion of the inquiry, whether the statutes cited can be legally applied to the present case ; and between what parties to suits in promissory notes, their aid is to be invoked in the defence of those actions. • Statutes of the character of those under review, while in some degree they bear the impress of a remedial character, are entitled to a fair construction as to those in whose favor they are enacted, so far as is requisite to carry out the intention of the Legislature, when that intention, by legal rules of construction, can be ascertained. Ordinarily, remedial statutes seem intended to supply any defects or imperfections in common law, where the remedy is deemed imperfect, or too narrow, to subserve the ends of justice, when they become what are termed enlarging statutes; but those under consideration cannot be embraced in that class, as they do not amplify or add to the remedy, as known at the common law; but being in derogation of it, should be construed strictly, for it is laid down that a statute, which takes away a common law remedy, ought never to have an equitable construction. The statutes before us certainly affect the remedy hitherto possessed by the plaintiff, in suits on promissory notes, by throwing the onusprobandi upon him, by the defendant’s taking the oath, as prescribed by the statutes. They are in direct derogation of the old rules of the common law, as to the defence of actions, and the principles oí evidence, as to suits brought upon the above instruments. Chancellor Kent says, that statutes are to be construed “ in refe- “ rencé to the principles of the common law, for it is not to be sup- “ posed, that the Legislature intended any innovation of the common “ law, further than the case absolutely required.” 1 Kent Com. 464. And Lord Tenderden remarks that, “ there is always danger “in giving effect to what is called the equity of a statute ; it is much — 100 — “better and safer to rely on, and abide by the plain words, although the Legislature might'.have provided for other cases, had “their attention been' directed towards them.” 6 B. & C. 475. From a review of the. statutes cited, and being in pari materia, they should be construed together: the effect is clearly this — that upon the oath being taken, in compliance with the requisitions of. the statute* and by proper parties, the onus of proof is thrown upon the plaintiff, and he is bound to prove the consideration of the'instrument:, upon which suit is1 brought. The 24th. section of the act cited is silent, as to the partiesibetween whom the consideration can be gone into; and in accordance with the views herein before expressed,» we are of' opinion that it can only be applied between such parties as- the 'consideration could have been entered into at common law. . It .is possible that this section may have been intended to have had a more extended operation — if so, there is. a casus omissus, and' this cannot be supplied ,by a Court of law, for that would'be the assumption of legislative powers by the Judiciary, and we are bound to take the laws, as the-.Legislature haye enacted them. The 34th section of the act is sufficiently explicit,' and clearly relates to suit brought by the assignee or endorsee.of the instruments therein set forth, against the assignor or endorser, .and-seems to have an eye to the-privity existing between parties; at least, to notes and bills of exchange. • , ■ . ' Tó give any other construction to these statutes', would produce-results, which the Legislature could never have intended or anticipated — if otherwise, there would be no safety in thé receiving or- purchasing any of the instruments set out in the statute, particularly bills of exchange and promissory notes; These being assignable by endorsement or delivery, circulating from hand to'hand, in accordance with the liberal and comprehensive notions of commercial policy, and entering into every day transactions of life, every consideration* demands, that.no restraint should be placed upon their free circulation, by the enforcement of a principle of defence, not set forth in the plain words of .the act, and- in restraint, of the remedy at common law. The question-now arises, can the consideration of the note in suit be gone into between White, the endorsee, and Camp, the itíaker of the note, by the common law. t ■ ■ ' The total, or partial want, or failure of consideration, or the illegality. of consideration, may be insisted upon ás a defence or a bar between any of the intermediate or original parties to the contract. — 101 — It may be insisted upon by the maker against'the payee, and by the payee and his endorser, and cannot be inquired into between the endorsee and the maker. 208 Story on Prom. Notes. Braman vs. Hess, 13 John. R. 52. The holder of a negotiable instrument, taken before due, is prima facia rightful owner of it, and he need not prove consideration, except circumstances of suspicion appear; arid to render it void in the hands of an innocent endorsee, there must be a knowledge of the want, failure, or illegality of consideration. 4 Hill, 442. 6 Wendell, 615. The defendant in the Court below, though he pleaded illegality, want and failure of consideration, et cetera, adduced no proof that the plaintiff took the instrument sued upon, under suspicious circumstances, or with knowledge of the defects alledged ; and the rule now is, that the endorsee, when plaintiff; need not prove a tona fide consideration paid by himself, until some suspicion is cast upon his title. 1 Moody & Robinson, 366. So far as the evidence in the Court below is concerned, White is clearly a bonafi.de holder, for a valuable consideration, without notice — and in accordance with the law, as to notes payable on demand, a holder before the note was due. The presumption of law is, that when a bill or note is endorsed in blank, that it was endorsed on the day of its date, or at least before it was due. If the defendant alledges, that it was endorsed after it was due, the burthen of proof is on him to shew it. 137 Bailey on Bills. Pinkerton vs. Bailey, 8 Wendell R. 600. When a promissory note, payable on demand, is endorsed within a reasonable, time after its date, the endorsee has all the rights of an endorsee receiving á negotiable instrument before it comes due. If not endorsed in a reasonable time, it is considered as overdue, and dishonored, and the endorsee will be subject to any defence, which would have been available against his endorser. 135 Bailey on Bills. 4 Mass. 370. What is considered reasonable time, is not precisely settled, but depends upon the circumstances of each particular case ; but the presumption -is, that it was transferred within a reasonable time, unless the contrary is proved. 137 Bailey on Bills.. The Court, upon a view of the case, is of opinion, that the affidavit of Camp should have been treated as a nullity ,• that the Court erred in receiving it; and that the cause should have been tried solely upon common law principles. But even if the affidavit should have — 102 — been received, it is not such a one as the statute required. It should have been drawn in issuable terms, and confined to a single allegation — not in the alternative or double — but should have been so constructed, rendering it analagous to the old English rule of notice, as to have apprized the party plaintiff, what facts he would be required to prove upon the trial. It first denies the consideration of the note ; and if it was valid and legal, it has totally failed, while the facts as set forth in the notice, would seem to make out a case of original consideration of the note. In conclusion, we think the errors well taken. The judgment in the Court below must be reversed — the cause remanded to the Court below — and venire de novo awarded. Douglas, Chief Justice: At common law, promissory notes and bills of exchange were negotiable; they imported a consideration ; if endorsed before they fell due, the consideration could not be gone into, except between the original parties, unless there were some suspicious circumstances attending the transaction; and if there was nothing to shew the time when the endorsement was made, it was presumed to have been made before they fell due. If endorsed after they become due, the endorsee took th,em, subject to all the equities that existed between the original parties thereto. The first clause of the 34th sec. of our judicial act, Duval’s Comp. 96, makes, any bond, note, covenant, deed, bill of exchange, or other writing, whereby money is promised, or secured to be paid, transferable by assignment or endorsement. It is proper to remark here, that this act was passed in the year 1828, and that the Legislature, at the same session, repealed the act which had before introduced into the Territory of Florida the common law of England. This judicial act, therefore, was the only law in force in Florida, touching these several classes of instruments, until the common law was again introduced in the year 1829. Hence, the reason why notes and bills of exchange are found in this category. Many of these instruments, although made negotiable by assignment or endorsement, did not, at common law, import a consideration ; and without that law,, a doubt might well have been entertained, even in regard to those which did. To remedy this inconvenience, and carry out the views of the Legislature as to all, which it is presumed, was to increase the quantity of negotiable paper, in a — 103 — new country, where there were few mercantile transactions, and the circulating medium was scarce, the 24th sec. of the same act declared, that all promissory notes, and other instruments of writing, not under seal, should have the same force and effect, as bonds and instruments under seal. The full effect of this provision upon these instruments, has never., (so far as I am aware,) been judicially determined. It certainly has not been supposed, by the legal profession, to give them such an effect, that an action of covenant could be maintained upon any one of them. But they import a' consideration,, and without some further provision, the plaintiff could not, in any case, have been required to prove such .consideration, unless it had been impeached by jproof on the part of the defendant. The last clause of the 34th sec. above cited, therefore declared, that the assignee or endorsee of any such instrument, might bring suit in his own name; and that it should not be necessary for the as-signee or endorsee of any instrument, assignable by law, to set forth in the declaration, the consideration upon which such assignment or endorsement was made; nor to prove such consideration, unless the same should be impeached by the defendant under oath. And the 2d clause of the 24th section also declared, that it should not be necessary for the plaintiff to prove the execution of any bond, note, or other instrument of writing, purporting to have been signed by the defendant, or the consideration for which the same was given, unless the same shall be denied by plea, put in on oath. What is the converse of these propositions ? Why, that ii such plea is put in on oath, in the one case, or the consideration in the other is impeached under oath, the plaintiff must prove the. execution and consideration in the one case, and the assignment, or endorsement, and consideration thereof in the other — in all cases where the rule would apply to such instruments, so endorsed, at common law— for notwithstanding the Legislature had repealed that law, it cannot be supposed that they legislated, without any regard to its wise and equitable provisions. The object of the Legislature was, as before remarked, to increase the quantity oí negotiable paper; but tbgse provisions of the statute would, in a, great measure, have defeated their own object, if such plea or impeachment required this proof from the plaintiff in any case, except between the immediate parties to the instrument, or — 104 — where the plaintiff had taken it after it had become due, or under such other suspicious circumstances, as should have put him on inquiry. We are warranted, therefore, I think, in the conclusion, that these provisions of this statute only apply, as between the immediate parties to the'transaction, or such others as have taken these instruments after due, or have not acted in good faith, or with due circumspection in cases attended with suspicion; and this, as I understand it, is all that the opinion, délivered yesterday by Judge Hawkins, in this case intended to assert on the subject.