Hamilton v. Myrick

Ringo, C. J., delivered the opinion of the Court: ■ The plea of set-off certainly fails to disclose any contract between Hamilton and the defendant Myrick; and the writing therein described is not such an instrument as is recognized by the law merchant, as negotiable according to the custom of merchants; nor is it such a contract in writing as may be assigned by virtue of the provisions of any statute in force in this State,^ either at the date of the writing, or at the time when the assignment thereof is alleged to have been made. It is not within the law merchant, or to be governed by the principles thereof, because every hill of exchange, draft,or check, according to the custom of merchants, must be for money only, and be paj'able at all events, not depending on any contingency, either with regard to any event, or with regard to the fund out of which payment is to be made, or the- parties by or to whom the payment is to be made. And the writing described in-the plea, requires the sum of money therein mentioned to be paid only out of a particular fund, and upon a future contingency, which might never happen. The adjudications establishing this principle are numerous, and of the most unquestionable authority; and it is believed that few if any decisions contrary thereto can be found. All paper of this character is designed to foster credit, and encourage trade; and hence it is, that the law has attached to it certain properties not given to any other species of security; and although no set form of words is required in the creation of such instruments, yet they must have some essential qualities, without which they are not considered within the operation and protection of the law merchant. The essential qualities of every such instrument are, that it be payable at all events, not depending on any contingency, nor payable out of a particular fund; and that it be for the payment of money only, not for the performance of any other act, or in the alternative. When so made, it carries with it a personal and certain credit given to the drawer, not confided to credit upon any particular thing or fund. It rests upon the general credit of the drawer, the endorser, or person who negotiates it; and he, to whom such instrument is made payable or endorsed, lakes it,upon no particular event or contingency, except the failure of the general personal.credit of the persons drawing or negotiating the same. In this case, Hamilton did not make the instrument in question upon his own personal general credit, that in all events he would be liable, should Messrs. Brander, McKenna & Wright not pay it out of the money received on his account from the Insurance office, when collected; but both Hamilton, the drawer, and Poor, to whom or to whose order the money is required to be paid, looked only at the fund drawn upon, and not to the general personal credit of the drawer. Consequently, the instrument in' question was not drawn or negotiable according to ihe law, usage, and custom of merchants, and the endorsement thereof by Poor to Myrick, did not confer upon the latter any legal right to the instrument, so as to enable him to demand or receive payment thereof, or maintain any action at law thereupon, in his own name, against the drawer. See Dawkes vs. Lord De Loraine, 3 Wils. 207; Cook vs. Satterlee, 6 Cowen, 108; Carlos vs. Fancourt, 5 T. R. 482; Colehan vs. Cooke, Willes, 397; Chitty on Bills, 154. These principles are not, as we conceive, in any manner changed or affected by any thing contained in the 13th section of chapter 20 Rev. St. Ark., 151, which declares, that “The term ‘bill of exchange,’ as used in this act, shall be so construed as to include all drafts or orders drawn by one person on another, for the payment of a sum of money therein specified;” because it is only declaratory o.f the law as it stood previously, and was inserted under the apprehension that such drafts and orders as are not in strictness embraced by the term “ bill of exchange,” might otherwise be considered as not within the provisions of that statute, as the language used applies in express terms to bills of exchange only. Nor is the instrument in question embraced by the old statute of assignments, (Ark. Dig., 74,) nor any of the provisions contained in chapter 11 of the Rev. St. Ark., 107; because it is not a contract or agreement in writing, for the payment of either money or property, but simply an order to a third party, to pay to the payee, or his order, .a specified sum of money, out of a particular and specified fund of the drawer, which it was contemplated would, at some subsequent period, be collected by the drawees. It contains no stipulation whatever for the payment of the sum of money therein mentioned, by the drawer or any other person, to the payee or any other person whatever, and therefore it is not such an obligation as is assignable by virtue of any of the provisions of either of the statutes aforesaid, and cannot, by reason of the endorsement and assignment thereof by the payee to Myrick, create any legal debt or obligation in favor of the latter against the drawer; and for this reason, the plea must be adjudged insufficient in law to entitle the defendant, Myrick, to have the amount of money in said order mentioned set-off against the demand of the plaintiff. Having thus disposed of this question, it becomes unnecessary for us to consider or determine the other questions presented by the record. Judgment reversed, and case remanded, with instructions to sustain the demurrer to the plea of set-off, and for further proceedings.