The President, Directors and Company of the Bank of the United States, Plaintiffs In Error v. William Hatch, Defendant In Error

• Decision Date: 01 January 1832
• Citation: 8 L.Ed. 387,6 Pet. 250,31 U.S. 250
• Parties: THE PRESIDENT, DIRECTORS AND COMPANY OF THE BANK OF THE UNITED STATES, PLAINTIFFS IN ERROR v. WILLIAM S. HATCH, DEFENDANT IN ERROR
• Court: U.S. Supreme Court

31 U.S. 250

6 Pet. 250

8 L.Ed. 387

THE PRESIDENT, DIRECTORS AND COMPANY OF THE BANK OF

THE UNITED STATES, PLAINTIFFS IN ERROR

v. WILLIAM S. HATCH, DEFENDANT IN ERROR.

January Term, 1832

ERROR to the circuit court of the United States for the district of Ohio.

This action was brought by the plaintiffs in error, in the circuit court of the United States for the district of Ohio, against William S. Hatch, by scire facias upon a judgment obtained against Elijah Pearson, in a suit brought against him and the said William S. Hatch, in which the marshal returned 'not found,' as to William S. Hatch.

The action was upon a bill of exchange, drawn by Elijah Pearson, and indorsed by William S. Hatch. The issue was joined upon the plea of non-assumpsit.

At the trial, the defendant offered in evidence a deposition of one John M. Ferry, to which the counsel of the plaintiffs objected, on the grounds stated in the opinion of the court; which objection was overruled by the court, and the deposition read. To this opinion of the court, the plaintiffs' counsel excepted.

The jury found the following special verdict, to wit: 'and afterwards, to wit, at the December term of said court, in the year last aforesaid, came the parties, by their said attorneys; and thereupon, for trying the issue joined, came a jury, who found that E. Pearson made the bill of exchange, a copy of which is attached to the declaration of the said plaintiffs in the original suit against said Pearson, the drawer of said bill, and that the said bill was regularly indorsed by the present defendant Hatch. They also find that on the 25th day of July in the year 1820, said bill of exchange was duly protested for non-payment, and that on said day last mentioned, and on the succeeding day, the said defendant Hatch was boarding at the house of Henry Bainbridge, in the city of Cincinnati; that on the 26th day of July in the year 1820, the notary public by whom said bill was protested called at the house of said Bainbridge, and inquired for said Hatch, and was informed by a Mr Young that said Hatch was not within; the said notary then left a written notice of said protest with said Young, who was at that time in the house aforesaid, and requested him to deliver said notice to said Hatch; and that in the summer of said year 1820, said Young was a boarder at said house. They also find, that a suit was commenced against said Pearson, the drawer, on said bill of exchange, which suit stood for trial at the September term in the year 1822, of the circuit court of the United States for the district of Ohio. They also find, that previous to the year 1822, one Griffin Yeatman was confined on the jail limits of Hamilton county in said state, on a 'capias ad respondendum,' issued at the instance of, and on a judgment in favour of said Pearson. That said Yeatman was a material witness for the plaintiffs in a number of suits then pending in said court; that one George W. Jones, who was the then agent for plaintiffs, and one William M. Worthington, the then attorney for the plaintiffs, agreed with the said Pearson, that, in consideration, he, the said Pearson, would permit the said Yeatman to leave the said jail limits, and attend said court during the term aforesaid, then the suit then pending in said court against said Pearson, on said bill of exchange, should be continued without judgment until the term of said court next ensuing said September term A. D. 1822. That, in pursuance of this agreement, the said Pearson permitted the said Yeatman to leave said jail limits, and attend said court; and that said suit against said Pearson was continued agreeably to said agreement. Now, therefore, if upon this finding, the court shall be of opinion that the plaintiff is entitled to judgment, then the jury find for the plaintiff, to recover of the defendant the amount of said bill, together with the interest thereon; but if the court shall be of opinion upon the said finding, that the defendant is entitled to a judgment, then, and in that case, the jury find for the defendant.'

Upon this special verdict, the court below gave judgment for the defendant, and the plaintiffs below thereupon prosecuted this writ of error.

The case was argued by Mr Sergeant and Mr Webster for the plaintiffs in error, and by Mr Ewing for the defendant.

For the plaintiffs in error it was contended, 1. That the notice of the non-payment of the bill of exchange was sufficiently proved. 2. That the plaintiffs had not discharged the indorser by the facts set forth in the special verdict.

1. The notice was sufficient. The notary public went to the house in which the indorser was a boarder, in the city of Cincinnati, and inquired if Mr Hatch was within, and was informed by Young, also a boarder in the house, that he was not; and the notary then left a notice of the non-payment of the bill with Young, and requested him to deliver the notice to Mr Hatch.

The law does not require a notice of the non-payment of a bill or note to be in writing; nor that it shall be given if the indorser cannot be found, and no one is at his residence, abode or place of business to receive it. In this case the indorser was not at home, and no agent was left who could receive the notice for him.

But a notice in writing was left at his residence, which is certainly sufficient. Stedman v. Gooch, 1 Esp. 4; Williams v. Bank U. S., 2 Peters, 96, 101. A lodger in a lodging house is in his dwelling, in contemplation of law; and this was the dwelling of Mr Hatch. If left with any one found in the lodging house, or at the house, it was a full compliance with the law.

2. As to the discharge of the indorser.

If the circumstances stated in the special verdict have operated to release the indorser, any delay in prosecuting a suit against the drawer will have the same effect. If a party becomes nonsuit, if he postpones his suit from the absence of testimony, or for any cause however immaterial to the merits of the case, the same effect will follow. The indorser has no right to insist on the institution of a suit, and he cannot therefore claim the benefit of any proceedings in a suit to which he was not a party, and with which he could not interfere. Even a stipulation not to sue the drawer, when it does not bind the indorser, and leaves him free to proceed upon the note or bill on his paying the holder the amount, will not release the indorser.

The agreement found by the special verdict did not operate on the debt. No time was given for its payment: it did not suspend the claim, the right of action, or the obligation: nor did it affect directly or indirectly any one but the drawer. By paying the debt, as the indorser should have done, he would have obtained an immediate right of action against the drawer.

The principles established by this court in the case of M'Lemore v. Powell, 12 Wheat. 554, are: before the parties to a bill or note are fixed by notice, any laches on the part of the holder will discharge the indorsers; after notice, no laches can be imputed, and no diligence is required. So also in Walwyn v. St Quintin, 1 Bos. & Pull. 654, per Eyre, C. J. This is therefore the established law.

In all cases where parties originally liable have been held discharged, either a new security had been given to the holder, or time given to such parties, to the prejudice of the rights of the parties held discharged. The allowance of time for the payment of the debt, must have been binding on all the parties, which was not done in this case. Collot v. Haigh, 3 Camp. 281; English v. Darby, 2 Bos. & Pull. 61; Clarke v. Devlin, 3 Bos. & Pull. 363; Bailey on Bills, 4th ed. 270, 274.

This is not a case of subrogation. The indorser could not have come into court, and having paid the holder of the bill, have prosecuted this suit against the drawer in the name of the holder. He could not, therefore, have been prejudiced by the agreement, as it did not suspend or impair his right of action.

Mr Ewing, for the defendant in error, contended, that the notice was not sufficient to charge the indorser of the bill. Where parties to a note or bill reside in the same town, personal notice is required. 2 Peters, 101. The notice in this case was left with a stranger, and no diligence was used to find the indorser, Hatch, who was only a boarder at the house. If notice left with an agent would be sufficient, this was not done in the case before the court. The keeper of the boarding house might have been a proper person to receive the notice.

The agreement between the plaintiffs in error and the drawer of the bill, discharged the indorser. By the agreement the plaintiffs received a benefit; there was a consideration for it. They obtained the testimony of Yeatman, who was a material witness for them. It prejudiced the drawee of the bill, because it took from him his remedy against Pearson.

The court would have enforced the observance of his agreement. Had the plaintiffs proposed to take judgment, upon proof of this agreement, and its execution by the drawer of the bill, the court would have refused to enter judgment. Had the judgment been taken, upon application during the term, and proof of the facts, it would have been set aside and the cause continued. If these positions are correct, the indorser was discharged. The whole of the principles of the law on this matter have been decided in M'Lemore v. Powell, 12 Wheat. 554.

If Hatch, after the agreement, before the following term of the court, had applied to the plaintiffs and paid off the bill, he had a claim to be subrogated to their rights, which were to proceed with the suit against the drawer; but the plaintiffs had so tied up their hands that no judgment could have been taken at that term. They had thus, in the very words of the court in the case of M'Lemore v. Powell, suspended their own remedy so as to prejudice the rights of the indorser; and he must then be discharged.

Mr Justice STORY delivered the...