YEATON v. THE BANK OF ALEXANDRIA, 5 Cranch 49

March 10. Marshall, Ch. J. delivered the opinion of the court as follows, viz. The question in this case is, wfieth.er 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. ,Thi3 condition, howe.ver, was nót express* ed. Yét'it was just, because, it was consistent with genera) usage, and, therefore, was the real undérstanding with which such an endorsement was’ made and received - But in banks, this is probably not the usnge ; 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 pointi The 2Qth

section of that act declares, “ that when? ever 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 payment at the time the same may become due, and. a suit shall thereupon be coihmenced, &c. judgment is to be rendered in a sum-mar.y manner.

A person, then, may becoiné indebted to the bank on a.note endorsed by him, as well as on a note made by him ; and the question is, when • dpes hé become indebted.The act appears.-to answér 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 pr note.” When the bond, bill or note becomes due, the maker or endorsor, who shall refuse or neglect to make payment, 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 tot the circumstances previously stated. ■ Give it the one meafiing or the other, and the 'law obviously contemplates a suit against the maker or endorsor, 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 tight- to sue, where that right did not before exist: that the enacting clause gives no remedy where 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 endorsing 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 endorsor cahno.t then become indebted. This distinction was completely overruled in the case of Violet and Pat-topi The consideration moving from the bank to the maker of the nóte, on the credit of the endorsor, charges both the maker and the endorsor.

The endorsor 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 the1 back of thénote.. Judgment affirmed with costs. Johnson, J. Both the questions, argued in this-case, arise oüt 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. t 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 coufse 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. On the other question, I entertain a¡ very strong opinion in opposition to that'of the court. The doctrine has been repeatedly sanctioned™ this court, that, in the state of Virginia, the holder oí a promissory note cannot recover against an endorsor without proving the insolvency of the drawer, But it is contended that the act, incorporating this bank, has placed the notes negotiable therein on a different footing; and that an endorsor of such a note may be sued as soon as it is dishonoured, without any evidence of the insolvency of the drawer.

The following are the words.of the clause, so far as they are material to this case: “ And whereas it is absolutely necessary that debts due to the said bank should be punctually paid, to enable the directors to calculate with certainty and precision on ineeting the demands that may be made upon them, be it enacted, 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 payment at the time the same may beóome due, and a suit shall be thereupon commenced'against such defaulter, and a capias ad respondendum returned and executed, or a copy left at the usual place of residence of such defaulter, at least ten days before the return day of such writ, the court shallj” &c.

It then goes on -and enacts, that, in such case, “ the court shall order the proceedings to be made up, and the cause tried at the first court.” This bare recital, or

preamble, without one enacting word, is what is supposed to have effected this important change in the law of Virginia, relative to the liability of anendorsor. Much stress was laid, in the argument, upon the use of the word “ indebted,” as applied to the endorsor, the words “ negotiable at the said bank,” and words which suppose the commencement of a suit, as soon as a note “ becomes due.” I positively deny the correctness of' maintaining any repeal or alteration in the principle of a law, upon an implication drawn from a mere

preamble or recital to

an act. Enacting words will undoubtedly often produce a repeal by implication, but a recital or

preamble sets forth merely the motives or inducements of the legislator, and, whether founded in error or truth, serves no other purpose .than to justify him to those for whom he is [egHating, or, at times, to assist in developing. the .';.-ming of doubtful enacting words. Admit the principle, that a

preamble may have the effect of enacting words, and there is no necessity for dilating on the inextricable absurdities in which a court may be involved. In the case before us, it is possible that the legislature may have supposed that the law of Virginia would sanction an immediate suit against the endorsor without evidence,of the drawer’s insolvency j but their courts of justice have decided otherwise ‘ , and it would be' singular if an erroneous opinion* entertained .by that body, should have all the effects of a law passed by it. But there is not a word contained in this

preamble "which may not be fully satisfied, without producing any necessary implication! against the general law of Virginia, relative to the diability of the endorsor. When the legislature speaks of a person'indebted' by endorsement, it can only be understood to speak of one indebted according to the legal liability of an endorsor; which is only, by the laws of-Virginia, in case of the insolvency of the drawer. ' When it speaks of a consent in writing, that it may be negotiable at the said bank, it can only mean what it expresses ; and intends it for the purpose of subjecting the individual to the

summary recovery-given in such a case; for, as to his general liability a;s' endorsor, such a consent was in nowise necessary; that liability existed in its full extent without it.

And as to the supposition of the endorsor’s liability to be sued when the note becomes due; this also is strictly and literally true, if the drawer should then be insolvent, or (I suppose) if he should become so at any /time before the trial of the issue Upon the whole, therefore, it appears to me that there is no possible difference betwee'n the liablity of an endorsor generally, and an endorsor,of a note negotiable in.the bank of Alexandria; that the legislature intended to make no distinction* and* if‘it had expressly declared such to be its intent, no such change would have beeh produced, without following up that intention with sufficient enacting words ; but that in fact, its sole object was to do that which- it professes to intend, and alone has effected, viz. to give a

summary remedy against all persons becoming ■ indebted to that bank, whenever- their, legal liabilityis incurred.

In fact it may, with the utmost correctíjess, be affirmed of an pndopsor that he is indebted,, and that he may be sued when the note, becomes, due., •without at all interfering with the laws of Virginia On this subject: for a thing may be debitum.in presenti, and yet no cause of action'exist against hint ) he may lie-under a.present obligation to pay a sqm of money, upon some contingency on future event, And, with regard to his liability to be suedtfvhen the note becomes due, it may be very correctly affirmed that it is not due from him until the insolvency of the drawer can be'shown.

As to the drawer,, the note is due when it is made payable; but the. principles of the Virginia law add a contingency to ..the liability of the endorser, aa that, in fact, his .undertaking is collateral and contingent, and the amount. is not legally due from him until after the day of payment, and provided the drawer should prove insolvent. This case was argued in connection with that of Young v. The Bank of Alexandria, as one ease. This opinion, therefore, applies to boih cases.