Yeaton v. the Bank of Alexandria
Decision Date | 01 February 1809 |
Citation | 3 L.Ed. 33,5 Cranch 49,9 U.S. 49 |
Parties | YEATON v. THE BANK OF ALEXANDRIA |
Court | U.S. Supreme Court |
The question in this case is, whether the endorsor of a note negotiable in the bank of Alexandria, if such endorsement be for accommodation, may be sued by the bank, before a suit shall be instituted against the maker, if the maker be solvent.
In Virginia, the endorsor of a promissory note was not, when the town of Alexandria was separated from that state, liable to the holder by any express statute. He was only liable under the implied contract created by his endorsement. This implied contract, by the general understanding of the country, was, that he would pay the debt, if by due diligence it could not be obtained from the maker. This condition, however, was not expressed. Yet it was just, because, it was consistent with general usage, and, therefore, was the real understanding with which such an endorsement was made and received.
But in banks, this is probably not the usage; and if it be not, then the same reason does not exist for annexing such a condition to the contract created by endorsement. If banks are understood to receive notes made negotiable with them, as subject to the law which governs inland bills of exchange, then it would seem reasonable, in the case of notes actually negotiated with them, to imply, from the act of endorsement, an undertaking conformable to that usage. If, then, the case showed that such was the usage of the bank, and such the understanding under which notes were discounted, this court is not prepared to say that the undertaking created by the endorsement would not be so fashioned as to give effect to the real intention of the parties.
But the incorporating act removes any doubt which might otherwise exist on this point.
The 20th section of that act declares, 'that whenever any person or persons indebted to the said bank on bonds, bills, or notes, given or endorsed by them, with an express consent, in writing, that they may be negotiable at the said bank, and shall refuse or neglect to make...
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