Townsley v. Sumrall

THIS suit was originally instituted by Joseph K. Sumrall, in a state court of Kentucky, and afterwards, on the petition of Thomas F. Townsley the defendant below, removed into the circuit court of the United States for the district of Kentucky, where the same was tried before a jury, and a verdict rendered for the plaintiff.

The action was upon an alleged verbal promise made by the defendant, as one of the partners of Townsley and Co., that they would accept a certain draft or drafts, to be drawn on them at New Orleans by one Richard S. Waters, in favour of Joseph K. Sumrall; and the cause of action alleged was a failure to comply with the promise. The bill was drawn and remitted to New Orleans, and not being paid, was returned under protest to Kentucky, and this suit was brought.

On the trial in the circuit court, various bills of exceptions were taken by the defendant, all of which are stated in the opinion of this Court; and in which opinion is also stated, the points on which the plaintiff in error sought to obtain a reversal of the judgment of the circuit court.

Mr Coxe, for the plaintiff in error, contended:

1. That a parol promise to accept a non-existing bill does not constitute a contract, for the breach of which an action may be maintained.

He admitted that the acceptance of an existing bill might be by parol; but the allowance of such a principle of law had been regretted by judges. A written agreement to accept a bill not yet drawn, is valid; but there has been no decision which affirmed that a parol acceptance of such a bill is binding; and the leaning of courts has been against it. Cited, 2 Wheat. 66. 1 East, 98. 4 East, 57. 5 East, 514. 1 Atk. 611. 3 Mass. 10.

The general principle of our law is, that a verbal promise of this kind will not sustain an action. The provisions of the statute of frauds are infringed, by making it otherwise.

The admission of such a parol contract will lead to difficulties and uncertainties; and the danger of such a course is shown in this case, as no one of the witnesses, of three who were examined, represent the agreement to accept to the same extent.

2. The court were requested to instruct the jury, that if they believed the bill was drawn by Waters to pay a partnership debt, as stated by Waters, they should find for the defendant.

This was accommodation paper, the benefit of which was to enure to the drawer and the payee, to enable them to pay a joint debt. No consideration, in fact, passed for it from the plaintiff to either the drawer or the drawee. He stands in the same situation he would have been in if it had never been drawn.

This prayer, and this view of the case, are put hypothetically to the jury. The facts upon which they are based are detailed in the testimony of Waters, and the jury was to judge of his credit. There was therefore enough to warrant the prayer, and it should have been allowed. So also, he contended, the next instruction should not have been refused, as it leaves to the jury the decision upon the testimony of Waters.

Upon the question, whether, if a bill be drawn in Kentucky, on a person in New Orleans, the protest is, in itself, evidence of demand and refusal: in Nicholas vs. Webb, 8 Wheston, 326, it was held, that the protest of a foreign bill is sufficient; but a distinction is taken between foreign bills, and those instruments in which a protest is not necessary, and therefore not the official act of the officers. In cases of inland bills the protest cannot be read. Chesmer vs. Noyes, 4 Camp. 129. 2 Barn. & Ald. 696.

The supreme court of New York have held such bills as this to be inland bills. Miller vs. Hackley, 5 Johns. 175. Also cited 2 Tucker's Blackst. 467. 5 Cowen, 363.

Under the English statutes, provision is made to protect inland bills; but the same statutes prescribe that the acceptance shall be in writing.

At common law no protest of an inland bill of exchange was ever made. It was introduced by statute. By the law of Louisiana, an inland bill cannot be protested for nonpayment, unless it has been accepted in writing; and the holder of an inland bill need not protest it. ''Livingston's Crim. Code'', p. 55, art. 318; p. 73, art. 487; p. 99, art. 717. The form of protest is to be conformable to the custom of the place where it is made, p. 100, art. 727.

Although the contract was made in Kentucky, yet it was to be executed in Louisiana, and the law of that place must be the law of the contract. 1 ''Gallis. Rep.'' 371, 372. Robinson vs. Bland, 2 Burr. 1077, 1079. 1 Bl. Rep. 256.

Under the French law, which prevails in Louisiana, no acceptance is valid unless it is in writing.

Mr. Nicholas, for the defendant in error, stated that the principal question is whether an agreement to accept a bill to be drawn was binding.

Originally, at common law, a verbal acceptance of a bill was as good as if it had been written; and courts have since gone further, and have made circumstances equivalent to an acceptance.

In Coolidge vs. Payson, 2 Wheaton, 66, this Court decided, that a verbal acceptance was as good as one which is written; and whatever may be the law of England, this is now settled law in the United States. All the the cases go upon the question whether the promise to accept was the inducement to take the bill.

If a verbal acceptance is as valid as one which is in writing, where is the authority to show that a parol agreement to accept a bill to be drawn is not binding. The objection to such an acceptance, on the ground of inconvenience, would prevail equally against all parol acceptances.

A verbal promise for a good consideration is binding, and the policy of extending the rule to bills to be drawn, to the same extent as it operates to bind the verbal acceptor of a bill drawn, is equal. In Kentucky, if A. says to B. 'let C. have four thousand dollars in goods, and I will pay the amount;' the promise is good. Notwithstanding the statute of frauds, this is law in that state.

Before the statute of frauds any parol promise was good, even for the conveyance of a freehold; and until it shall be shown, that in the statute of frauds there is a provision against the contract upon which this suit is brought, it will operate.

The lex loci will sustain this contract. It was made in Kentucky, and was to be performed at New Orleans; and the remedy for the breach is to be obtained by the laws of Kentucky. A demand was necessary at New Orleans; but this did not transfer the contract to that place.

The law of Kentucky requires that a bill drawn on a person out of the state shall be protested. 2 Littell's Laws, 103, 105. It not only authorizes a protest, but upon its being made, creates an additional liability for damages. Thus, therefore, the protest is by a statute, by provision, made necessary, and it becomes of course prima facie evidence of demand and refusal to pay. Upon principles frequently recognized, this Court have decided, that the law of Kentucky upon this matter will be respected and enforced here.

Mr Justice STORY delivered the opinion of the Court.