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but, that under such circumstances, the giver of the bill must take his remedy by an action against the person to whom it was given. Morgan v. Richardson, 1 Campb. 40. (n). From other reports of this case, 3 Smith, 487, (n), 7 East, 482,(n), it seems to have been held, that the defendant could not avail himself of this defence, after the payment of money into court. But, as to this point, see Barber v. Backhouse, Peuke, 61. ante, p. 104. And, in Tye v. Gwynne, 2 Campb. 346, Lord Ellenborough said, that, although money was paid into court in Morgan v. Richardson, that circumstance formed no ingredient in the opinion he then expressed. So, where in an action by the drawer and payee of a bill, against the acceptor, the latter proposed to shew, that the bill had been accepted for the price of a quantity of cheese, sold by the plaintiff to the defendant, which was of a bad quality, and that, therefore, the consideration had in a great measure failed, Lord Ellenborough said, that he should adhere to his opinion in Morgan v. Richardson. Tye v. Gwynne, 2 Campb. 346. S. P. Fleming v. Simpson, 1 Campb. 40. (n). And, where the defence was, that a note had been given to the plaintiff
, for disclosing an improvement in machinery, which appeared to be of less value than was anticipated, it was held, that the plaintiff might recover the whole sum on the note. Day v. Nir, 9 B. Moore, 159. So, where the defendant had contracted with the plaintiff for a lease, and was let into possession, and accepted a bill, drawn by the plaintiff, for the consideration money, it was held, that the defendant was liable upon the bill, and must take his remedy on the agreement for the non-execution of the lease. Moggridge v. Jones, 14 East, 486. 3 Campb. 38. S. C. Archer v. Bamford, 3 Stark.
So where a promissory note, payable on demand with interest till paid, was given in part consideration for the share of a ship purchased by the maker from the payee, without the observance of the provisions of the ship registry acts, and was indorsed by the payee, first to J.L. who on presentment and refusal of payment obliterated his name and returned it, and afterwards to J. G. P. who indorsed it upwards of two years and a half after its date, with J. L.'s name obliterated, to the plaintiff, for a full and valuable consideration without notice; it was held, that though the contract of sale was void, yet as the maker had recognized it by paying one year's interest on the note, and as there was a presumption, that he had received the subsequent earnings to the amount of his share, of the ship in question, and therefore there was a consideration pro tanto, the plaintiff, notwithstanding he had laken the note without enquiry, was entitled to recover the whole amount in an action against the maker. Gascoyne v. Smith, M'Clel. 8 Young, 338. See Carmalt v. Haggarty, (Scotch), 2 Shaw, 199. Thomson on Bills, 148.
The only case in opposition to the doctrine that the plaintiff shall recover the whole amount of the bill, where the partial failure of consideration is in respect of unliquidated damages, appears to be that of Ledger v. Ewer, Peake, 216. The defendant in that case, in consideration of being admitted into partnership with the plaintiff, had accepted a bill for 1001., drawn upon him by the plaintiff. It appeared that the plaintiff having got possession of a shop, but having no business and little money, had prevailed on the defendant to enter into this engagement, which the defendant's friends disapproving of, was broken off. Lord Kenyon left it to the Jury to consider whether this was not a gross fraud on the part of the plaintiff; but if they should be of a contrary opinion, and think that the plaintiff was entitled to recover any thing, they would then take into their consideration the damages which he had really sustained by the nonperformance of the contract, and that they were not obliged to give the whole sum, for which the bill was given, in damages.
Want of consideration—in cases of fraud.] If a bill or note is obtained by fraud, the party so taking it cannot recover upon it. Thus where the plaintiff had distrained goods of the defendant on the premises of the plaintiff's tenant, and the defendant, to get rid of the distress, accepted the bill in question, it appearing that there was no rent due at the time of the distress, Best, J. left it to the jury to say whether the plaintiff had not falsely represented to the defendant that the rent was due, in order to induce him to give his acceptance, and that if so, it was fraudulent, and the defendant was entitled to a verdict. Grew v. Bevan, 3 Stark. 134, and see Lewis v. Cosgrave, 2 Tuunt. 2. Solomon v. Turner, 1 Stark. 51. ante, p. 105. But in order to entitle the defendant to insist upon the fraud, he should repudiate the transaction altogether, for if he takes a partial benefit under it, the consideration fails in part only, and the plaintiff may recover on the bill. Archer v. Bamford, 3 Stark. 175.
Many cases of want of consideration on the ground of fraud have arisen on compositions with creditors. Thus, where all the creditors of an insolvent consented to accept a composition for their respective demands, on an assignment of his effects by a deed of trust, to which they were all parties, and one of them, before he executed, obtained from the insolvent a promissory note for the residue of his demand, by refusing to execute till such note was made ; it was held that the note was void, as a fraud on the rest of the creditors, and that a subsequent promise to pay it was a promise without consideration. Cockshott v. Bennett, 2 T. R. 763. Jackson v. Lomus, 4 T. R. 166. See also Feise v. Randall, 6 T. R. 146. Rose v. Leicester, 4 Eust, 372. Lewis v. Jones, 4 B. & C. 506. Et
parte Sadler, 15 Ves. 55. The plaintiff, having guaranteed the responsibility of the defendant to A., on the refusal of A. to join in a deed of composition, releasing the defendant, till the plaintiff had paid A the remainder of the defendant's debt, paid such amount to A., and drew a bill upon the defendant for the money so paid, which the defendant accepted. It was ruled that the plaintiff could not recover on this bill
, it being nothing more than a circuitous mode of securing to A. the full amount of his debt. Bryant v. Christie, 1 Stark. 329.
Want of consideration- what amounts to.] The debt of a third
person is a sufficient consideration to support an action on a bill or note. Thus where a promissory note was entered into by A. to pay so much to B. for a debt due from C. to B., and it was objected that this not being for value received, was not within the statute, and that prima facie the debt of another is no consideration to raise a promise, the court of K. B. on error from C. B. held, that the note was within the statute, being an absolute promise, and every way as negotiable as if it had been for value received. Poplewell v. Wilson, 1 Str. 264, and see Coombs v. Ingram, 4 D. & R. 211. Note 18.) So a moral obligation is a sufficient consideration. Where a man is under a moral obligation, which no court of law or equity can enforce, and promises, the honesty and rectitude of the thing is a consideration ; as if a man promises to pay a just debt, the recovery of which is barred by the statute of limitations; or if a man, after he comes of age, promises to pay a meritorious debt contracted during his minority, but not for necessaries; or if a bankrupt, in affluent circumstances after his certificate, promises to pay the whole of his debts ;. or if a man promises to perform a secret trust, or a trust void for want of writing by the statute of frauds. Per Ld. Mansfield, Hawkes v. Saunders, Cowper, 290.
Thus where a bankrupt after his bankruptcy gave a promissory note to the plaintiff, one of his creditors, for part of his debt, it was held that the latter might recover on such note. Trueman v. Fenton, Cowp. 544. So where a bankrupt, having promised before his certificate to pay to the plaintiff a debt due before his bankruptcy, indorsed to him two notes for that purpose, it was held that the debt due before the bankruptcy was a good consideration for the bankrupt's promise ; that it was not barred by the certificate ; and that it would have been available, even if made after the certificate had been obtained. Brix v. Braham, 1 Bingh. 281. See 6 G. 4. c. 16. s. 131.
Where a banker's acceptances for his customer exceeded the cash balance in his hands, and accommodation acceptances were deposited with the banker by the customer as collateral security, Lord Ellenborough ruled, that whenever the acceptances exceeded the cash balance, the bankers held the collateral bills
for value. Bosunquet v. Dudman, 1 Stark. 1, and see Bolland v. Bygrave, Ry. 8 Moo. 271. A. & Co. bankers in the country, being pressed by B. & Co. their agents in town, to whom they were indebted, to send up any bills they could proeure, transmitted for account an accommodation bill accepted
When the bill became due, the balance was in favour of B. & Co., but the bill was not withdrawn. Afterwards the balance between the two houses turned in favor of A. & Co., and B. & Co. became bankrupts. Lord Ellenborough held that on account meant the floating account, and that though there had been a period when B. & Co.'s lien ceased, and the bill might have been redeemed; yet as it was not reclaimed, but allowed to remain in B. & Co.'s hands, the lien revested when the balance turned in their favor, and they were entitled to sue on this bill. Atwood v. Crowdie, 1 Stark. 483, and see Woodroofe v. Hayne, 1 C. 8; P. 601.
The defendant and Morrall were partners, and gave their promissory note to their bankers for 2000l. as a security for advances. The defendant thereupon gave Morrall his note for 10001., to secure his moiety of the 20001. Morrall indorsed this note to the bankers, who having advanced 13001. sued the defendant on his note, and it was held by the court of Common Pleas that there was a sufficient consideration, and that they were entitled to recover. Heywood v. Watson, 4 Bingh. 496. But where A. accepted a bill for the accommodation of B., which B. delivered to C. his creditor, to provide for a bill about to become due, and C. before A.'s bill became due returned it to B. as useless ; it was ruled by Lord Ellenborough that C. could not, by subsequently obtaining possession of the bill, acquire a right of action against A. for that he had abandoned the bill, which B. held as trustee for A. Cartwright v. Williams, 2 Stark. 340.
Where a bill or note is delivered to a person for a special purpose, he cannot repudiate that purpose, and sue upon the bill in his own name. Thus where E. C., to prevent the striking a docket against her son, delivered a bill to the plaintiff, in order to get it discounted, and the plaintiff, having already in his possession certain deeds as a security for a debt due from the son, having got the bill into his possession, insisted upon retaining both the bill and deeds as securities, Lord Ellenborough held that it was not competent to the plaintiff, after having received the bill for the special purpose of procuring it to be discounted, to disappropriate it; and the plaintiff was nonsuited. Delauney v. Mitchell, 1 Stark. 439.
In an action by the payee against the drawer of a bill, it appeared that the plaintiff
, having money in the funds, applied to R. & Co. as his agents, to sell it out, and remit it to him in bills on Holland. Ř. & Co. applied to the defendants, and on 17th February got from them bills on Holland in favor of the plaintiff. It was proved, for the defendants, to be the custom of London, for persons in the habit of remitting foreign bills, to give the bills, but not to receive the money for them till the next post day. In this case the next post day was the 21st. On the 20th R. & Co. failed, so that the money was never paid to the defendants. Lord Loughborough was of opinion that it was competent for the defendants to go into this evidence as against the payee, he being subject to all the equity the defendants could have had against his agents R. & Co., if the bill had been drawn payable to themselves, who must be supposed to have been acquainted with the usage on bills, though his Lordship said that such evidence would be inadmissible had the action been brought by an indorsee for a valuable consideration. Puget de Bras v. Forbes, 1 Esp. 117. To an action by the indorsees against the maker of a promissory note, the latter pleaded that he drew the note as a surety only for the payee, and that the plaintiffs had released the payee from all claim in respect of the said note, (not alleging that the plaintiffs had notice of the want of consideration between the defendant, and the payee). It was held that the indorsement being for a valuable consideration, the indorsees had the security of the defendant as maker of the note, for their debt; and though they had released the original payee, that they still retained their remedy against the maker. Carstairs v. Rolleston, 1 Marsh. 207. 5 Taunt. 551. S.C.
An exchange of securities, as where the maker of a note receives the acceptance of the payee, is a valuable consideration between the parties. Kent v. Lowen, 1 Campb. 179. (n), and see Spooner v. Gardiner, R. & M. 84. Rolie v. Caslon, 2 H. Bl. 571. post, Chap. XIV.
It seems that where a promissory note is delivered as a gift, the maker may insist on the want of consideration in an action against him by the party to whom he delivered it. Formerly, indeed, it appears to have been held that such an instrument might be enforced on the ground of its being in writing, and that the doctrine of nudum pactum therefore did not apply ; Williamson v. Losh, M. 16 G. 3. Chitty, 93. (n). 5th ed. cited 7 T. R. 351 ; but the authority of this case, so far as it depends on the doctrine of nudum pactum, has been denied. 7 T. R. 351. (n). And in Nash v. Brown, 1817, which was an action on a bill of exchange, accepted by the defendant as a present to the payee, and indorsed by him to the plaintiff for a part of the amount ; Lord Ellenborough ruled that the plaintiff was entitled to recover only so much as he had actually advanced on the bill. Chitty, 93, (n). 5th ed., 72, 7th ed. So in action on a promissory note, expressed to be for value received, made in favor of an infant of nine years old, it was held to be a question for the jury whether the note was given