Albertson v. Halloway ex rel. Halliburton

By the Court. Starnes, J. delivering the opinion. [1.] We believe that the rule, that a plea of failure of consideration cannot be used as a defence to a specialty, applies to no other instruments, save such as were known to the Common Law as specialties; as deeds, bonds and instruments exe•■euted with like solemnities of sealing and delivery. It has been common for Courts to say that such defence cannot be set up to an instrument under seal. But we think that these words were used, or should have been used, with reference to such instruments as were executed with the ceremonies -necessary to specialties at Common Law. The rule which forbids the plea of failure of consideration to -a speciality, had its origin at a time when the Common Law attached the utmost importance to the ceremonies necessary to •the execution of every such instrument; and the ceremonies ■were performed by acts formal, significant and solemn. In process of time, as the execution of such instruments became añore frequent, and was brought more into relation with the diversified business of society, the method of these ceremonies was much relaxed in its formality, but still, something that was considered equivalent thereto, was required. Such is still the requirement of the Common Law. Let us see what is this requirement, as to specialties. A speciality is a writing, sealed and delivered, containing some ■agreement. (1 P. Wm. 13. Willes, 189.) “Sealing and [380] delivery is still the criterion of a specialty.” (2 Serg. & R. 503.) A seal may be represented by almost anything purporting to be a seal; and delivery may be manifested by almost anything which affords evidence that a delivery was intended. But still the requirement is, that in specialties the solemnities of sealing and delivery, as known to the Common Law, shall be represented by something intended to have that effect. Now, the elementary Common Law reason why the consideration of a speciality could not be denied was, that “ the solemnity and deliberation with which, on account of the ceremonies to be' observed, a specialty is presumed to be entered into, attach to it an importance and a character which do not belong to a simple contract.” (Ch. on Con. 4.) Hence, it has been held, that in general, no consideration is requisite to render a specialty obligatory, unless it be impeached for fraud or illegality, and that it cannot be defeated by proof of either partial or total failure of consideration. (Plow. 308. 2 Black. Com. 446. Ch. on Con. 5. Fallows vs. Taylor, 7 T. R. 475, 477.) All the cases which I have seen, (and they are many, both in England and the United States) where this rule has been maintained, apply to such instruments as were specialties at Common Law. And when Courts and Commentators apply the rule to “ instruments under seal,” it will be found that they are really speaking of such as were specialties at Common Law. Instruments under seal, at Common Law, were always such as were intended to be accompanied with other solemnities and ceremonies, necessary to give them effect; and hence, by a figure of speech, quite common, the class has been designated by one of its characteristics, viz: sealing. But we can conceive, that in process of time the exigences of trade and commerce, or mercantile usage, or the customs of a people, among whom the credit system prevailed to a great extent, might have rendered common, as an evidence of contract, an instrument possessing but one of these characteristics of the specialty at Common Law, in which either the solemnity [381] of sealing or that of formal delivery, was dispensed with. In. such case, there seems to' be no'reason why such instrument should not be binding on its maker — not as a specialty is binding, but only as evidence of the contract, according to its terms. Let us suppose, then, that in the multiplicity of the concerns of advancing trade and commerce, a debtor found it expedient to negotiate with his creditor, informally and without delivery, in the presence of witnesses, an instrument signed by him and under his seal, having such terms as were not appropriate or common to instruments, known as sealed instruments, or specialties at Common Law-^the terms of the instrument being a promise to pay. a sum of money, absolutely and at all events, to the creditor, or any one who might hold the same, on a day specified, in consideration of some advantage or benefit, to him, the maker. Such an instrument would certainly be a good promise to pay by the maker; but it-would be purposely wanting in one of the Common Law characteristics of a specialty. It would not be a bond or obligation, in the sensiPthat Lord Coke says that word “is usually taken in the Common Law” ; for that is an instrument containing a penalty, with condition to pay a sum of money. (Co. Litt. 172. Bac. Abr. Oblig. A.) It would not be a bill obligatory, which might be sometimes under seal; and is, according to Coke, “most commonly taken for a single bond”. It could be neither of these, inasmuch as it would be, in terms, a promise to pay a sum of money for a valuable consideration, absolutely and at all events, on a day fixed, (which is the characteristic of a promissory note. Bayley on Bills, 1 Story on Prom. N. §12,) and it would not have been formally delivered. This is just the sort of instrument which is in common use, and known as a promissory note, under seal. A seal is affixed to it, perhaps, with reference to the Statute of Limitations; but from its very terms, the instrument is intended to be negotiated, especially when payable to bearer, without the solemnity practiced at Common Law, in the execution of specialties, [382] and especially without any solemnity as to delivery. Of course, it must be delivered; that is to say, it must pass from the maker, in order to have effect: but it is not passed to the payee, as the specialty at Common Law was passed to the grantee or the obligee, with that formal ceremony or its equivalent, necessary to give effect to the latter instrument. It is somewhat difficult to classify this instrument, (a note under seal) for it is not a promissory note, as that is never under seal, we are told. (2 Bouv. Dic. 579.) It seems wrong to place it with agreements by parol; and all contracts, it is said, must be either agreements by specialty, or agreements by parol. Rann and another vs. Hughs, (7 D. & E. 350.) This is certainly true in the light of the Common Law. Still, as we have shown, it is quite as difficult to place such an instrument among specialties. It would seem, therefore, that that which is called a promissory note under seal, is, in the eye of the Common Law, anomalous. It is a sort of spurious offspring from the specialty and the promissory note, whose legal status it is not easy to define. With reference to the Statute of Limitations, we believe that such an instrument has been sometimes called a specialty, and subject only to the Statutory bar applicable to such instruments. .Whether it was rightly called a specialty or not, the decision was correct, for the Statute (our act of 1839) applies the bar of 20 years, not to specialties, but to “bonds or instruments under seal.” Perhaps the view we have taken, will be strengthened by a consideration of our legislation on the subject, and the unvaried practice of our Courts. The Judiciary Act of 1799 (Sec. 25th) makes promissory notes and other liquidated demands, of equal dignity with bonds and other specialties. The latter, then, in our State, because of the “solemnity and deliberation” with which they are executed, are of no higher consideration than promissory notes. Yet we know that the rule we have been considering, has not been applied to ordinary promissory notes, but that it has been the immemorial practice, in our State, to allow pleas of total failure of consideration (and of partial [383] failure, since the Act of 1836) to suits on such notes. Must not this have been upon the principle, that the rule we have been considering was applicable to such instruments as possessed the Common Law incidents of specialties, and to none others ? On the whole, it would seem that a promissory note, under seal, intended to be negotiated and put into circulation from hand to hand, without formal delivery, has not the characteristics of a specialty at Common Law, and that a failure in the consideration of the same may be pleaded. But whether we are right in this view or not, we feel very sure that the note sued on, in this case, cannot be classed with specialties at Common Law, and must be regarded as anomalous. In its terms, it is a joint and several promise to pay by two, purporting to be over the hand and seal of the makers, and signed and sealed by one — the other signing only, and as security. Now, it is doubtful whether or not, as to one of these defendants, this is a sealed instrument. Eor we are told by some eminent Courts, that “although in the body of the writing, it is said that the parties have put their hands and seals ; yet, it is not a specialty, unless it be actually sealed and delivered.” (2 Serg. & R. 503.) And so, it was not at Common Law. Whether this be the law, in our State or not, need not be decided. Suffice it to say, that this instrument, in its form, tenor and mode of execution, deviates from all rules established by Common Law principles, as applicable to specialties, and, in character, was unknown to the Common Law. The rigid Common Law rule, therefore, which forbids that the consideration of a specialty should be denied, cannot appropriately he held applicable to it. Judgment reversed.