CASES

ARGUED AND DETERMINED

IN THE

SUPREME COURT OF THE STATE OF GEORGIA,

AT SAVANNAH,

JANUARY TERM, 1848.

No. 1.-DAVID C. LEVY, plaintiff in error, vs. SOLOMON COHEN, defendant in error.

[1.] Although a note on its face, be negotiable and payable at Charleston, still, if it be indorsed in this State, and there is no evidence to show the understanding of the parties-that the undertaking of the indorser was to be performed in Charleston, the indorsement will be deemed a Georgia, and not a South-Carolina contract.

[2.] When an offer is made by letter, an acceptance by written reply takes offect from the time when the communication containing the acceptance is sent, and not from the time when it is received by the other party.

Assumpsit upon an indorsement of a note.

Judge FLEMING in Chatham Superior Court.

Tried before

The facts of this cause are fully set out in the opinion of the Court.

WM. & W. F. LAW, for the plaintiff in error.

It is conceded as the general rule, that the law of the place where the contract is made, is to govern, as to the nature, validity, obligation and construction of the contract.

But the plaintiff in error maintains that the contract of indorsement in this case is a Carolina contract, and must be governed by the law of Carolina.

The general rule conceded above, supposes that the contract is

Levy vs. Cohen.

to be executed where it is made. The law of the place can never be the rule when the transaction is entered into with an express view to the law of another country. Pr. Ld. Mansfield, Cited in Bayley on bills, 78.

Burr. 1077.

In the case at bar the.note was made and indorsed for a special purpose, viz: for the accommodation of the maker to renew and take up a note discounted at the Bank in Charleston; it was made payable and negotiable there, was to be used there, to be passed away and put into circulation there, by being discounted. All the parties had reference to, and had in view Charleston, where the paper was to become a note, and where it was first to be negotiated, passed away, and put into circulation. Its application to any other purpose by the indorser, or the passing it away by him to any indorsee in Georgia, or other person than the Bank in Charleston to take up the old note, would have been a fraud on the maker: and a holder taking it, not in the usual course of business, or with a knowledge of the purpose for which it was made, could not have recovered from the maker on it.— See 1 Stark. Rep. 439. 1 Barn. & Adolp. 528. 9 Wend. Rep. 170. 8 Wend. 437. 10 John. Rep. 198. 15 John. Rep. 270. See all these cases cited in Bayley on bills, 525, 526.

The note in the case at bar was intended for discount and negotiation in Charleston. It was in point of fact so negotiated and passed away. There was no contract of indorsement until it was passed away and transferred-and that was done in Charleston.

It is not the writing of the name on the note which constitutes the contract of indorsement; it is the writing the name and delivery to the indorsee. Bayley on bills, 102, 103.

The indorsement of a note passes no interest to the indorsee, as long as the indorser retains it in his possession, Bayley, 103. Clark vs. Boyd, 2 Hamm. 56. (1 Ohio, 279.) Ramsay vs. Livingston, 18 Martin, 15.

Suppose the defendant had written his name on the note in Georgia, and put it in his pocket and gone to Carolina, and had there contracted with a person for the transfer of the note, which he there delivered, could it be pretended that the indorsement was a Georgia contract?

It is the passing away and delivery of the note, and its receipt and acceptance by the indorsee, which completes and consummates the contract of indorsement. All this was done in Carolina.

Levy vs. Cohen..

Where the drawer of a bill agrees with the payee that the bill shall be negotiated in another country, the drawer is held liable to the payee for the damages which he, the payee, had to pay as indorser. 1 Stewarts' L. Can. Rep. 70, and cited Bayley, 84.

Why is this liability of the drawer? The place of his contract involved the obligation to pay different damages for its breach, than the place where the payee negotiated and passed away the bill. The answer is, the bill was drawn to be used and negotiated in another country; the contracting parties had that in view, and when negotiated there, the law of that country governed the obligations of the contract. How much stronger is the case at bar, in which an accommodation paper is made and discounted expressly to renew a note running to maturity in a bank in Carolina, and to which purpose it was actually applied. But returning to the enquiry when was this contract of indorsement completed, let us test it by another illustration.

According to the rule, once very generally acted on in this country, that a party to a negotiable paper could not be received to impeach its validity at the time it was made, the question arose in the case of the Hartford Bank vs. Barry, whether Eaton the maker of the note could be a witness to prove that the note was an accommodation note, indorsed at his request by the defendant, and discounted for him at usurious interest. The decision of this question turned upon the answer to the enquiry, when was the note made? The Supreme Court of Massachusetts say, we consider the note as made to all substantial purposes, when Eaton procured it to be discounted, which was the purpose for which it was made. It had never before been uttered, &c. 17 Mass. Rep. 94,'6,'7.

Now let it be observed, Eaton had signed his name to this note, had delivered it to Barry the indorser, who wrote his name on it; but still it had not been put into circulation, it had not been used, not passed to any one by sale or discount; it was indorsed for the accommodation of the maker; when sold or discounted by him, then for the first time it became a negotiable note.

In the case at bar the defendant had no right to use the note, it was given to him to indorse for the accommodation of the maker, and when it was discounted and put in circulation, then and there, at that time and in that place it received vitality, became a negotiable paper, and was to all purposes as between the parties to it, made and indorsed.

Levy vs. Cohen.

A bill or note is not considered as issued until it is passed away by the drawer or maker. Bayley on bills, 97. Kennerly vs. Nash, 1 Stark. Rep. 452.

But what is an indorsement? It is a contract between two persons; there must be an assignor and assignee, by whom, and to whom, the transfer is made. See Story on notes, Sec. 120, 126. In Slacum vs. Pomery, 6 Cranch, 221, and in 6 Wheat. 146, the Supreme Court U: S. say, that an indorsement is not simply the transfer of the paper, but is a new and substantive contract.

1.

What are the obligations of the contract of indorsement. To indemnify holder. 2. That all the antecedent parties had authority to draw, indorse, &c. 3. That the instrument is genuine. Story on bills, Sec. 109, 110, 111. These obligations must be entered into with some contracting party-they cannot exist until the bill is delivered, is issued, uttered, put in circulation.

With whom was the contract of indorsement in this case made? Being an accommodation note to renew an old note by the same parties in a Bank, the contract was with the Bank which discounted it; and was made with them in Charleston where it was delivered to, and received by them. There was no indorsee in Georgia with whom any contract was made, in whom any interest in this note became vested by any assignment and delivery in Georgia. The contract had reference to Carolina, the party was there, there it was passed away, received, uttered, and put in circulation.

And the general principle of law is, that a contract is to be deemed made, where it is perfected, eo loco, quo ultimus in contrahendo assentitur. Story's Con. of laws, page 265, Sec. 319, and authorities there cited.

Tested by this principle, when was this contract perfected?— We answer when the Trust Company discounted it-it was that act by which they ratified the contract and finally perfected it.Until that act of discounting the note, the transfer and assignment was incomplete, because there was no acceptance of it.

It was said in the argument that the indorser does not contract to pay where the note is payable, but only to guarantee its payment in that place, and in case of default, to reimburse the holder according to the law of the place where he indorsed. And this is very true. But the question recurs in this case, where is the place of indorsement? When that is established there is no dis

Levy vs. Cohen.

pute as to the law that is to govern-but where is the place?hic labor, hoc opus est, in this case.

It was urged in the argument of this case upon the trial, that if this note had been lost or stolen in its transit from Savannah to Charleston, and had fallen into the hands of a bona fide holder for value, he could have recovered on it. And hence it was argued that the note was made and indorsed before it left Savannah. Admit the proposition that the innocent holder for value of a lost note may recover-how does that prove, that as between the original parties to an accommodation note for the use and benefit of the maker, the note is legally made, or becomes legally a negotiable paper, until it is negotiated, passed away, and put i tin circulation by the maker?

Test the principle by the decisions upon the question, whether a new stamp be necessary. In Kennedy vs. Nash, 1 Stark. 452, before cited, the bill had been altered after it had been sent to Nash for acceptance, by consent of the drawer; Ld. Ellenborough held it did not require a new stamp because it was not a bill until issued or passed away by the drawer. See Bayley, 97. Yet if this bill had been lost in its transit for acceptance, being payable to the drawer's own order, if indorsed by him, an innocent holder for value, could have recovered from the drawer.

The right of the innocent holder for value to recover, stands upon its own principles-but these have nothing to do with questions involving only the relations and rights of the original parties,

Upon the argument of the case in the Court below, much reliance was placed by defendant's counsel on the case of Snaith and others vs. Mingay and others, 1 Maule & Sel. 87.

Upon a careful examination of that case, it will not be found to militate with any of the principles we have maintained. In that case Bayley & Catterell, partners at Waterford in Ireland, drew bills with Irish stamps, at Waterford in Ireland, in the name of the firm, and indorsed by the firm, leaving blanks for the date, sums, time when payable, and names of the drawees; and transmitted them in that state to Wallace in London, to be used by him Wallace, for his individual accommodation. Wallace filled up the blanks, as he was authorized, and negotiated the bills. In an action against the indorser, the defence was that they were English bills and void for want of English stamps. The decision affirms that they were Irish bills. Now mark the dis.