Bowen v. Stoddard

Hubbard, J. It is agreed that the face of the bill declared on, and the interest and cost of protest, have been settled, and the only claim of the plaintiffs is for the unpaid damages, which they state to be twenty per cent. The plaintiffs are the payees of the bill and have not been compelled, or called upon by any holder, to pay the damages in consequence of its not being honored by the drawee at maturity. And assuming here that the defendant was chargeable, as the acceptor of the bill, the first question is, whether the acceptor of a bill of exchange is liable for damages in a suit brought against him upon the bill by the indorsee. Damages upon a bill of exchange are the indemnity which the law merchant provides for parties Avho are injured by the dishonor of the bill, and are intended to cover the expense and loss occasioned by the necessity of protesting and redraAVing for reimbursement. But the rates of exchange proving, from unseen causes, so fluctuating and uncertain, liquidated [379] damages have long since been substituted in this Commonwealth, as furnishing a more just measure of indemnity to the suffering party; varying, however, as to their amount, accord ing to the distance or difficulty of communication between the places where the bill is drawn and where payable. But the liability to make good the loss arising from the dishonor of the bill, and the promise to indemnify, are the risk and undertaking of the persons who draw, and of those who negotiate the bill, because it is received by the holder on the faith of the undertaking that it will be accepted and paid by the drawee. But the drawee is not a party to this agreement: and if he does not accept the bill, the holder has no claim upon him. If, however, the bill is accepted, no other agreement exists between the holder and the acceptor, than a simple engagement by the acceptor to pay the face of the bill at maturity. And if he fails to perform his engagement, he is liable, in an action, for the amount of the bill and interest, and the costs of protest for non-payment. But he is not liable for damages. It is no part of his contract to pay them; and the bill, when satisfied by him, is paid at the place where it was made payable, and the party does not require, nor is he, in such case, entitled to the damages for the reéxchange. The holder, on protest for non-payment, may pursue his remedy against the acceptor, drawer and indorsers; but if he follows the acceptor to judgment, he cannot charge him with damages. We know of no case where such a rule has been laid down, nor do we perceive a reason for now establishing one. See Bain v. Ackworth, 1 Rep. Con. Ct. (S. C.) 107. Nor are we aware that any such practice has prevailed among merchants. In cases where drawers have been obliged to take up bibs and pay the damages, because the acceptors suffered them to be protested, when they had funds of the drawers in their hands, and were, as between themselves and the drawers, bound to accept, they may recover such damages of the acceptors ; because the loss is occasioned by their default and neglect. This rests, however, on the relations existing be [380] tween them, and not on the ground that an acceptor, as such, is liable to pay damages by reason of his acceptance. Riggs v. Lindsay, 7 Cranch, 500. It has been argued, that as the master would be compellable to pay damages to the holder in consequence of the non-payment of the bill, and could therefore recover them of his owners, by reason of his right to draw on them, they should now be chargeable with damages, as acceptors, to prevent circuity of action. But this principle does not apply ; for the drawer’s liability is contingent merely, and he may never be charged ; and till the drawer is thus charged, and actually pays the damages, no such claim exists on his part against the acceptor. But we think the defendant is not chargeable as the ac ceptor of this bill, on the ground that there is no such legal relation between the master of a vessel and his owners, that they become, by force of such relation, acceptors of a bill of exchange drawn by him in a foreign port for supplies for the vessel. The rights and duties of a master are well defined, as to his authority to bind his owners for supplies and repairs in a foreign port. His agency, as master, is sufficient to bind them for the payment; and to enable him also to obtain the credit, he may pledge the vessel by bottomry contract, and hypothecate the freight and cargo belonging to the owners; but he cannot draw bills of exchange, and bind them in law as acceptors, from the fact that the bills are drawn, for supplies. The law imposes no such liability upon them, and places no such temptation in the hands of the master to exceed his authority. There was an attempt, at the trial to prove that it was the usage among the merchants of New Bedford and Fairhaven, engaged in the whaling trade, to accept the bills of their masters drawn for supplies furnished abroad. But the evidence fell short of establishing it. The proof reached no farther than this ; that there was such confidence subsisting between the owners and masters, that bills drawn on the owners for supplies are generally accepted ; but that the owners claim the right to refuse [381] them, if from any cause they doubt the integrity of the master in the application of the funds received by him. The practice, it is said, has hitherto been found convenient; but this convenience results from the integrity of the masters, and the honorable character of the owners. Still, if it were more clearly established as a usage, yet it is not such a one as can charge the owners as acceptors; for a usage, to be legal, must be reasonable as well as convenient; and that usage cannot be reasonable, which puts at hazard the property of the owners at the pleasure of the master, by making them responsible as acceptors on bills drawn by him, and which have been negotiated on the assumption that the funds were needed for supplies or repairs; and no evil can flow from rejecting such a usage; because owners, who have confidence in the judgment and discretion, as well as integrity of their shipmasters, can give them, at their pleasure, a limited authority to draw, which will furnish them with credit, and protect them from imposition. In regard to the point, Avhether the sum paid and received was in full of the plaintiffs’ demand, if damages had otherwise been a just item of claim, it is unnecessary to determine; the case being ffeai on the other questions which have been considered. Plaintiffs nonsuit.