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Tucker v. Oxley. 5 C.

out of lands, exhausts the personal estate, to the injury of simple contract creditors.

It is undoubtedly unjust that the Tuckers, having a claim on H. and T. Moore, and being able to obtain payment from H. Moore, should satisfy that claim entirely out of the separate estate of T. Moore, to the exclusion of other creditors, who had no resort to Henry; and it is probable that a court of chancery might restrain this use of his legal rights within equitable limits. But suppose H. Moore, also, to be a bankrupt; or to be insolvent, and unable to pay the debt; would it not be equally unjust to apply the estate of each individual to the discharge of the several debts, to the entire exclusion of their joint creditors, who, previous to their bankruptcy, had a legal and equitable right to satisfaction out of the separate estate of each?

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Mr. Cooke has made a very good collection of the decisions in England on this question. It will be found that a creditor of the partnership was first permitted by consent to prove his debt before the commissioners of the individual bankrupt, and to receive dividends from the separate fund. It was afterwards decided by the chancellor that he had a right so to do; and in con- [ 44 ] formity with this decision was the regular course of the court, until the year 1796. During this time, however, the chancellor, sitting as chancellor, on a bill suggesting equitable considerations for restraining the order he had made, was accustomed to enjoin the dividends which he had ordered, sitting in bankruptcy. This would seem to prove that, at law, the creditor of the partnership had a right to his dividends from the separate fund, but that equity would compel him first to exhaust the joint fund.

In 1796, this whole subject was reviewed in the case Ex parte Elton, reported in 3 Ves. jun, 238. This case has been considered as overruling former decisions; but, in the opinion of the court, it confirms the principle already stated. After stating his objecion tot the prevailing practice, because each order carried in its bosom a suit in chancery, the chancellor took time to consider the subject; and finally determined that the petitioner should be permitted to prove his debt, and that his dividend should be set apart, but not paid to him until an account should be taken of the joint fund.

It is perfectly clear that, in this case, the chancellor, for convenience, exercised, at the same time, his common law and equitable jurisdiction. In conformity with the uniform exposition of the act, he permitted the partnership creditor to prove his debt before the commissioners of the bankrupt, and directed the dividend to be aliotted to him out of the separate fund; and then, without the expense

Young v. The Bank of Alexandria. 5 C.

of a bill, exercising his equitable powers, he suspended the payment of this dividend, until it should be ascertained how much of it a court of equity would permit a creditor to receive. This does not negative, but affirms, the legal right of a partnership creditor to come on the separate fund.

It appears also to be admitted, that if the particular creditors should be satisfied without exhausting the fund, the residue [ 45 ] might be paid to the partnership *creditors. This seems to admit the legal right of those creditors to prove their debts, and to receive their dividends. It is equity, not law, which can postpone them.

It is the opinion of a majority of the court, that the circuit court erred in rendering a judgment on this special verdict for the sum of $143.33, instead of the sum of $16.63; which was the balance after deducting the debt due from H. & T. Moore to the defendants in that court. It is therefore considered by the court, that the said judgment be reversed and annulled; and that judgment be rendered for the plaintiffs in the circuit court for the sum of $16.63, and the costs in the circuit court.

16 P. 291; 8 H. 414.

Judgment reversed.

YOUNG V. THE BANK OF ALEXANDRIA.

5 C. 45.

The act incorporating the Bank of Alexandria provided that in suits brought by the bank, upon notes made negotiable therein, an issue should be made up, and a trial had at the return term of the writ. The appearance day in Virginia for all process was the day after the term. Held, that in such a suit the court below might rule the defendant below to a trial at the return term.

Youngs, for the plaintiff.

Simms and Swann, for the defendant.

[ * 49 ]

MARSHALL, C. J., delivered the opinion of the court, to the following effect:

The writ being returnable to the court, is returnable the first day of the court. It was known to the legislature of Virginia, that the appearance day for all process was the day after the term. When,

Yeaton v. The Bank of Alexandria. 5 C.

therefore, they directed that a trial should be had at the return term, they must have intended that this case should be an exception to the general rule.

5 C. 49.

Judgment affirmed.

YEATON V. THE BANK OF ALEXANDRIA.

5 C. 49.

An accommodation indorsor of a note negotiable in the Bank of Alexandria, is by force of the act of incorporation, liable to an action before the maker has been sued, and though he be solvent.

The

ERROR to the circuit court for the District of Columbia. question, and the material facts, are stated in the opinion of the court.

Youngs, for the plaintiff.

Swann, for the defendant.

* MARSHALL, C. J., delivered the opinion of the court as [ *51 ] follows, namely:

The question in this case is, whether the indorser of a note negotiable in the Bank of Alexandria, if such indorsement 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 indorser 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 indorsement. 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 [ *52 ] it was just, because it was consistent with general usage, and, therefore, was the real understanding with which such an indorsement was made and received.

But in banks, this is probably not the usage; and if it be not,

Yeaton v. The Bank of Alexandria. 5 C.

then the same reason does not exist for annexing such a condition to the contract created by indorsement. 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 indorsement, 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 indorsement 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 indorsed by them, with an express consent, in writing, that they may be negotiable at the said bank, and shall refuse or neglect to make payment at the time the same may become due, and a suit shall thereupon be commenced, &c., judgment is to be rendered in a summary manner.

A person, then, may become indebted to the bank on a note indorsed by him, as well as on a notę made by him; and the question is, when does he become indebted. The act appears to answer this question in the succeeding member of the sentence. The words are," and shall refuse or neglect to make payment at the time the same may become due." To what antecedent does the word,

"same" refer? Most obviously to the words "bond, bill, [ * 53 ] or note." When the bond, bill, or note becomes * due, the maker or indorser, who shall refuse or neglect to make pay. ment, is within the description of the act. No man can be said to refuse or neglect to make payment, before the money is demandable from him, and till then no action can be brought. But the law proceeds to say, "and a suit shall thereupon be commenced." The word "thereupon " must refer to the note, or to the circumstances previously stated. Give it the one meaning or the other, and the law obviously contemplates a suit against the maker or indorser, on his refusing or neglecting to pay such note, when it shall become due. The act then proceeds to say, that, when this suit shall be so commenced, the court shall render judgment thereon in a summary way.

It is alleged that the preceding part of the section is all recital, and cannot, therefore, be construed to give a right to sue, where that right did not before exist; that the enacting clause gives no remedy where

Yeaton v. The Bank of Alexandria. 5 C.

one did not before exist; but substitutes a summary mode of proceeding, for that more tedious action which the previous laws had given.

It is true that the first part of this section is recital; but it describes the precise case in which judgment shall be rendered in a summary way. That precise case is, where a person indebted, by making or indorsing a note negotiable and negotiated in the bank, shall refuse or neglect to make payment thereof, when such note shall become due. The time when he becomes indebted is declared to be, when the note becomes due.

It is alleged that an accommodation indorsor cannot then become indebted. This distinction was completely overruled in the case of Violet and Patton. The consideration moving from the bank to the maker of the note, on the credit of the indorsor, charges both the maker and the indorsor. The indorsor is, in this respect, as liable, both in reason and in law, to the claim of the bank, as if he had placed his name on the face instead of the back of the note.

Judgment affirmed, with costs.

*JOHNSON, J. Both the questions,' argued in this case [54] arise out of the act of Virginia incorporating the Bank of Alexandria.

On the point of the summary jurisdiction, I concur with my brethren, and think this opinion perfectly consistent with the decision, at the last term, relative to the right of appeal. I remember that my opinion in that case was founded on the idea that the provisions of that act, relative to the summary recovery of debts, was entirely a judicial regulation. That the judicial power was unalienable from the sovereignty of a country, and must therefore, in all its modifications, remain subject to the will of succeeding legislatures. That it was, in fact, a subject in which a peculiar, indefeasible right could not be vested in an individual. I thought it, therefore, from its nature, unaffected by the clause of the act of acceptance reserving to the bank its corporate rights, and of course affected by the law which gives an appeal, generally, from the courts of this district to the supreme court above a certain amount. I have no doubt of the power

of congress to deprive them also of their summary remedy; but it has not yet legislated to that effect.

'This case was argued in connection with that of Young v. The Bank of Alexandria, as one case. This opinion therefore, applies to both cases.

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