The Bank of Pittsburgh, Plaintiff In Error v. John Neal and Reuben Neal

• Decision Date: 01 December 1859
• Citation: 16 L.Ed. 323,63 U.S. 96,22 How. 96
• Parties: THE BANK OF PITTSBURGH, PLAINTIFF IN ERROR, v. JOHN S. NEAL AND REUBEN E. NEAL
• Court: U.S. Supreme Court

63 U.S. 96

22 How. 96

16 L.Ed. 323

THE BANK OF PITTSBURGH, PLAINTIFF IN ERROR, v. JOHN S. NEAL AND REUBEN E. NEAL.

December Term, 1859

THIS case was brought up by writ of error from the Circuit Court of the United States for the district of Indiana.

It was an action brought by the bank upon two bills of exchange, one dated on the 18th of August, 1857, at Pittsburgh, drawn by L. O. Reynolds & Son upon J. S. & R. E. Neal, at Madison, Indiana, requesting them to pay, four months after date of this second of exchange, (first unpaid,) to the order of L. O. Reynolds, at the Ohio Life Insurance and Trust Company, at Cincinnati, in the State of Ohio, two thousand one hundred and sixty-eight dollars. Reynolds endorsed this bill to L. Wilmarth & Co., who endorsed it to the bank. The bill was accepted by J. S. & R. E. Neal.

The other bill sued upon was similar in all its circumstances, except that it was dated on the 1st of August, 1857, payable four months after the date of this second of exchange, (first unpaid,) for thirteen hundred and fifty dollars. It was endorsed and accepted like the other.

In order to present a distinet view of the transactions which led to this suit and the nature of the defence, it seems necessary to state particularly all the bills mentioned in the proceedings, designating each bill by a letter, which is the reporter's mark, and used for easy reference.

In June, 1857, J. S. & R. E. Neal, residents of Madison Indiana, for the purpose of raising money, delivered to L. O. Reynolds, of Pittsburgh, the four following bills, viz:

Exchange for $_____.

_____ after _____ of this first of exchange, (second unpaid,) pay to the order of L. O. Reynolds _____ dollars, value received, without any relief from valuation or appraisement laws.

To _____.

Accepted: J. S. & R. E. NEAL.

(This bill we will call A.)

Exchange for $_____.

_____ after _____ of this first of exchange, (second unpaid,) pay to the order of L. O. Reynolds _____ dollars, value received, without any relief from valuation or appraisement laws.

To _____.

Accepted: J. S. & R. E. NEAL.

(This bill we will call B.)

Exchange for $_____.

_____ after _____ of this second of exchange, (first unpaid,) pay to the order of L. O. Reynolds _____ dollars, value received, without any relief from valuation or appraisement laws.

To _____.

Accepted: J. S. & R. E. NEAL.

(This bill we will call C.)

Exchange for $_____.

_____ after _____ of this second of exchange, (first unpaid,) pay to the order of L. O. Reynolds _____ dollars, value received, without any relief from valuation or appraisement laws.

To _____.

Accepted: J. S. & R. E. NEAL.

(This bill we will call D.)

With these bills, instructions were sent to Reynolds to have them filled up for sums not less than $1,500, nor more than $3,000 each, to have them discounted at Pittsburgh, and remit the proceeds to J. S. & R. E. Neal, at Madison, Indiana.

In July, 1857, four other bills like the preceding were sent to Reynolds. These last bills were sent to Reynolds at his request, and intended for his use, as accommodation acceptances of the Neals.

These bills we will call E, F, G, H.

A was filled up by Reynolds as follows: Date, July 1st; amount, $1,965; time, four months; drawers, L. O. Reynolds & Son; drawees, J. S. & R. E. Neal. Thus filled up, it was negotiated by Reynolds to the Mechanics' Bank of Pittsburgh. Reynolds failed to remit the proceeds according to instructions. When the paper matured, the defendants, as acceptors, paid it.

B was filled up as follows: Date, July 10th; time, four months; amount, $2,035; drawers, L. O. Reynolds & Son; drawees, J. S. & R. E. Neal. Thus filled up, it was negotiated by Reynolds to the Merchants and Manufacturers' Bank of Pittsburgh. The proceeds of this bill were remitted by Reynolds to the defendants. Before the commencement of this suit, the Merchants and Manufacturers' Bank, as holder and owner of the bill, recovered judgment on it against the acceptor in the Jefferson Circuit Court of the State of Indiana. C and D were for the present retained by Reynolds in his own possession.

E, being similar to A, was filled up as follows: Date, July 30th; time, four months; amount, $2,450; drawers, L. O. Reynolds & Son; drawees, J. S. & R. E. Neal. Thus filled up, it was negotiated by Reynolds to the Merchants and Manufacturers' Bank of Pittsburgh, Reynolds retaining the proceeds. The holders of this bill brought suit against the defendants, as acceptors, in the Jefferson Circuit Court, Indiana, which action was still pending when the pleas in this case were filed.

F, being similar to B, was filled up by Reynolds as follows: Date, July 24th; time, four months; amount, $2,750; drawers, L. O. Reynolds & Son; drawees, J. S. & R. E. Neal. Thus filled up, it was negotiated by Reynolds to the Citizens' Bank of Pittsburgh, Reynolds retaining the proceeds. John Black & Co. became the holders, and after its maturity, and before the commencement of this suit, they recovered judgment against the acceptors of the bill for its full amount in the Jefferson Circuit Court of Indiana.

Thus the bills A, B, E, F, being the first of exchange, (second unpaid,) are accounted for. What became of G and H, the record did not show. Let us now account for C and D.

C was filled up as follows: Date, August 1st; time, four months; amount, $1,350; drawers and drawees, as above.

D was filled up as follows: Date, August 18th; time, four months; amount, $2,168; same drawers and drawees. These bills were both negotiated to the Bank of Pittsburgh, and were the ones sued on in this case. It will be observed that they were both second of exchange, (first unpaid,) and that the sums of money did not correspond in amount with any of those for which the first of exchange had been filled up, nor in date, time, or place of payment.

There were four counts in the declaration, and eight pleas, which were all demurred to except the plea of the general issue. It is not necessary to state these pleadings, because they were only intended to raise the questions of law which arise from the statement of facts given above. The court overruled the plaintiffs' demurrers, so that judgment went for the defendant; and upon this ruling upon the demurrers, the case was brought up by the plaintiff to this court.

It was argued by Mr. Stanton, upon a brief filed by himself and Mr. Walker, for the plaintiff in error, and by Mr. Thompson, upon a brief filed by himself and Mr. Dunn, for the defendants.

Mr. Stanton's points were the following:

1. That the acceptance of the bills held by the bank for value, binds the acceptors. Whether the bills held by the bank were seconds, or any other number, in any real or imaginary series of bills, they were accepted, and the acceptors bound themselves thereby to pay the holder the sum therein specified. If the acceptor meant to be bound only on one of the set, he should have accepted that one. The holder was not bound to make any inquiry or take any notice of the others.

16 Peters, 205.

Chitty on Bills, 155.

Holdsworth v. Hunter, 10 B. and C., 444.

Story on Bills, sec. 226.

Byles on Bills, 293, 294.

2. The words 'second of exchange, first unpaid,' were directions given by the drawer to the acceptors, to notify them of the series, and put the acceptors on their guard as to the extent of acceptance. But their own acceptance constitutes the contract of the acceptors, and by it they bound themselves to pay the holder of that identical paper the sum specified therein.

Wells v. Whitehead, 15 Wend., 527.

Downes v. Church, 13 Peters, 205.

'The bona fide holder of any one of the set, if accepted, might recover the amount of the acceptor.'

Story on Bills, sec. 226.

Byles on Bills, 310.

Chitty on Bills, 155.

Holdsworth v. Hunter, 10 B. and C., 444.

3. There were no firsts of the bills held by the Bank of Pittsburgh. The agent to whom they were delivered in blank made a distinct bill of each blank; and each being accepted, the acceptors are chargeable to any bona fide holder in whose possession they might come.

The counsel for the defendant in error contended, in the first place, that this bill ought to be denominated a forgery, or at least a fraud, on defendants, falling short of the crime of forgery; and that the plaintiff could not claim the benefit of the rule which estopped the defendant from denying the bill for this reason: that the act of the party giving the credit must be such as is reasonably calculated to deceive—that the party claiming the protection of this principle must, himself, have acted with reasonable circumspection, and must have been subjected to the loss, notwithstanding the use of such reasonable circumspection.

The principle in question is, we think, accurately expressed in a recent case in the English Exchequer, Baker v. Sterne, 25 E. L. and E., 502. Pollock, C. B., citing and illustrating this same case of Young v. Grote, says: 'I should myself prefer to put it thus: that where a man issues a document of that sort, (a bill of exchange or check,) which may be so filled up, the authority is to be judged of, as far as the bulk of mankind is concerned, by that paper itself, and not by some other private instruction. It may, however, be ranged with a class of cases perfectly familiar, which we all know to be applicable to a great many other subjects as well as bills of exchange, namely: that where one man by his negligence has enabled another to practice a fraud on a third party, which the third party has no means of defeating whatever, the consequence of that must be visited upon the individual who enables the other to practice the fraud.'

The same principle, designated as estoppel eo nomine, is defined as follows, by Lord Denman, in Pickard v. Sears, 6 Ad. and Ell., 469; S. C., 33; E. C. L., 115: 'The rule of law is clear, that where one by his words or conduct wilfully causes another to believe in the existence of a certain state of...