Freeman's Bank v. Ruckman

• Decision Date: 04 September 1860
• Citation: 57 Va. 126
• Parties: THE FREEMAN'S BANK v. RUCKMAN.
• Court: Virginia Supreme Court

57 Va. 126

THE FREEMAN'S BANK v. RUCKMAN.

Supreme Court of Appeals of Virginia.

September 4, 1860

1. A note made in Massachusetts, payable at either of the banking houses in Wheeling, Va., is to have its character determined by the law of Va., and is not a negotiable note.

2. The declaration avers that the payee of a note endorsed and delivered it to the plaintiff; the note not being negotiable but assignable; this is a sufficient averment of its assignment.

3. The declaration averring that the note sued on was made in Boston, and on the same day and year was endorsed and delivered to the plaintiff, a banking corporation under the laws of Massachusetts, upon demurrer, the court will consider the assignment made in Massachusetts, where it might legally be made.

This was an action of debt in the Circuit court of Pocahontas county, brought by The President, Directors and Company of the Freeman's Bank, an institution incorporated by the laws of Massachusetts, endorsers of Emery, Haughton &amp Co., against John H. Ruckman, to recover the sum of $2500. The first count in the declaration sets out that the defendant, on the 13th of January, 1857, at Boston, by his certain promissory note negotiable by the laws of Massachusetts where the contract was made, promised to pay five months after the date thereof, to Emery, Haughton &amp Co., or order, at either of the banking houses in Wheeling Virginia, twenty-five hundred dollars for value received; and that Emery, Haughton & Co. afterwards, viz: on the day and year aforesaid, for value received, endorsed and delivered the said promissory note to the plaintiffs, of which defendant then and there had notice.

The second count after setting out the facts substantially as in the first count, added, that the plaintiffs after the endorsement and delivery of the note and before the same became payable, filed the note in the North Western Bank of Virginia at Wheeling for collection; and when the note became payable, viz: on the 15th day of June, 1857, it was presented at said bank for payment, and not having been paid was then and there duly protested for non-payment; of which the defendant then and there had notice. And the complaint was that the defendant had not paid the said twenty-five hundred dollars or any part thereof.

The defendant appeared and demurred to the declaration, and to each count thereof, and pleaded payment; and the plaintiffs joined in the demurrers, and took issue upon the plea. And thereupon the court sustained the demurrers, and rendered a judgment for the defendant. Whereupon the plaintiffs obtained a writ of error from this court.

Price, for the appellants.

Dennis and Fry, for the appellees.

MONCURE J.

It is a general rule that every contract as to its validity, nature, interpretation and effect, or, as they may be called, the right, in contradistinction to the remedy, is governed by the law of the place where it is made, unless it is to be performed in another place; and then it is governed by the law of the place where it is to be performed. Story's Confl. of Laws §§ 242, 260, 263 & 280. The form of the remedy is governed by the law of the place where the suit is instituted. Id. § 556.

It is often difficult to determine, whether a matter relates to the right or to the remedy, and whether it is governed by the lex loci contractus, or the lex fori, as they are called. Id. § 563; Andrews v. Herriot, note, 4 Cow. R. 528; Leroux v. Brown, 74 Eng. C. L. R. 801. But the question is immaterial in this case, the place of performance and the place of the suit being the same, and the right and the remedy being therefore governed by the same law.

Whether a note is negotiable or not, is a question which relates to its nature and effect. A negotiable note is not of the same nature and effect with a note not negotiable. The rights and obligations of the parties are materially different; especially when the negotiable note is in the hands of a bona fide holder for valuable consideration, without notice of any defence which might affect it in the hands of a prior holder. Story on Bills §§ 14, 15, 17.

In Vidal v. Thompson, 11 Martin's R. 23, (which was much relied on by the counsel of the plaintiffs in error in this case) the court said: " An instrument, as to its form and the formalities attending its execution, must be tested by the laws of the place where it is made; but the laws and usages of the place where the obligation, of which it is evidence, is to be fulfilled must regulate the performance. The question in that case was, as to the meaning and effect of an article of the civil Code of Louisiana; and it seems to be at least doubtful, whether the rule laid down by the court is entirely correct, as a general principle of law. See Story on Bills § 159; Story on Confl. Laws §§ 260, 262, 262 a, and 318 and notes. But whether it be so or not is immaterial to this case, as the negotiability of a note is certainly not a mere matter of form, within the meaning of the distinction stated, but is of the very essence of the contract.

The note in this case being payable in Virginia though made in Massachusetts, its negotiability therefore depends on the law of Virginia, and not on the law of Massachusetts.

It can make no difference, in regard to the note itself, that it may have been (as it probably was) endorsed and delivered to the plaintiffs in Massachusetts and not in Virginia. Its nature and effect and the rights and obligations of the maker must be the same in either case.--Story on Bills, §§ 158, 167, 168, 169; Story's Confl. Laws, §§ 317, 332; Ory v. Winter, 16 Martin's R. 277.

The only law of Virginia making notes negotiable, is that which declares, that " every promissory note or check for money payable in this State, at a particular bank, or at a particular office thereof for discount and deposit, or at the place of business of a savings institution or savings bank, and every inland bill of exchange, payable in this State, shall be deemed negotiable," & c. Code p. 144, § 7.

The note in this case was not payable at a particular bank, or at a particular office thereof for discount and deposit, or at the place of business of a savings institution or savings bank" ; but was payable " at either of the banking houses in Wheeling, Virginia" ; and therefore is not a negotiable note.

But the law of Virginia further declares that " the assignee of any bond, note, or writing, not negotiable, may maintain thereupon any action in his own name which the original obligee or payee might have brought, but shall allow all just discounts, not only against himself, but against the assignor, before the defendant had notice of the assignment." Code p. 583, ch. 144, § 14.

The note in this case is therefore assignable, and an assignee thereof may maintain an action thereon in his own name.

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