Jarvis v. McMain, 10 N.C. 10, 3 Hawks 10 (1824)

June 1824 · Supreme Court of North Carolina

10 N.C. 10, 3 Hawks 10

Jarvis v. McMain & Simmons.

"l J- From Craven. J >

Days of grace are not to be allowed, as between the original parties, to a single bill, notwithstanding such paper is made negotiable by statute.

Debt on the following instrument:

“ Six months after date, we promise to pay Moses Jarvis, or order, one hundred and eighty-one dollars and ninety-eight cents, for value received. Witness our hands and seals, Newbern, February 4th, 1823.

“ J. A. McMAIN, [L. S.]

“JOHN SIMMONS,” [L. S.]

The writ was issued on the 5th day of August, 1823. Plea, the general issue. Defendant contended on the trial below, before Daniel, Judge, that the writ had issued before the debt was due, as he was entitled to days of grace. The Jury found a'verdict for the Plaintiff, subject to the opinion of the Court, on the point of law as to days of grace. The Court was of opinion, that the Defendants were not entitled to days of grace,, as in the case of bills of exchange and promissory notes, and gave judgment accordingly, whereupon Defendants appealed.

Gaston, for Appellant.

Days of grace are claimed as matter of right, and must be observed as well on notes as on inland bills. — (Cliitty on Bills, 271-2.) Brown v. Marraden — (4 Term R. 152.) Tinclal v. Brown — (1 Term R.)

This must be equally the case, whether the claim be against maker or indorser, by payee or indorsee, and the true principle is, that the privilege of days of grace attaches itself to notes, whether negotiated or not, because they have been made negotiable.

The maker’s engagement, his rights, and his obligations, cannot be varied by a transfer. Smith v. Kendall — (6 Term 123.) t

By the act of 1786, (Ch. 248, New Rev.) notes with 3eal are, for the purposes of negotiation, placed on the same footing with promissory notes, are converted into negotiable instruments for the convenience of trade, and ... ' tiicy become, necessarily, subject to this rule of mercantile convenience.

Hawks, contra.

Days of grace are not a consequence of negotiability, because,

1st. There are various other instruments, possessing this quality, on which days of grace are not allowed; for instance, India bonds, Checks on banks, (Chitty on Bills, 345,) Post notes, (Ibid. 340,) Bank notes, and , Banker’s cash notes — (Chitty 423.)

2d. If the doctrine were as contended for, whence arises the fact, that ever since the act of 1786, making single bills negotiable, it never was before asserted ?

3d. The whole doctrine of days of grace is referred, by every writer on the subject, to the custom of merchants, alone, for its origin, and was, primarily, applicable to bills of exchange, only.

4th. Days of grace do not attach to a single bill at common law, and if they follow as a consequence of negotiability, it is a necessary consequence that single bills cease to be such, if made negotiable; now the Legislature did not conceive, that by the 1st section of the act of 1786, making all single bills negotiable, they, thereby, destroyed the existence of that species of security for debt, for, in the last section, they speak of such bills thereafter to be made.

Previous to legislative interference, neither promissory notes or single bills had any one attribute of bills of exchange; nor does the resemblance now, .ever begin until endorsement. — (Burr. 676.) On principle, therefore, it would seem that as between the original parties, to either species of instrument, days of grace are not allowable $ but it is admitted that the case of Smith v. Kendall, referred to, is an instance of the allowance of days of grace, in a suit between the original parties to a promissory note. It is a solitary case, and none other' js believed can be produced, nor did the doctrine con- .... , __ _ tamed in it meet with no resistance. May v. Cooper— (Fort. 376.) Befanx v. Hood — (Butter’s JV*. P. 274.) Ward v. Honeywood — (Bong. 61, 63.) But admit it to be now settled law, still it does not apply, for the instrument here declared on is not a promissory note.

The act of 3d and 4th Anne, (of which our act of 1762 is a copy,) after recognising the existence of a certain species of paper or notes, proceeds, for the benefit of commerce, to make them, first, securities for debts, which they were not before,* being only evidence of debts, makes them assignable, and permits payee to recover thereon by virtue of the note, as he might, do on inland bills of exchange; and also gives the assignee his remedy. Our act of 1786, declaring by its title that its sole object was to make single bills, with some other securities, negotiable, took up single bills, on which a complete remedy already existed at common law, for payee against maker, (Co. Lit. 172. — Shep. Touch. 367,) made them negotiable in the same manner as promissory notes had theretofore been, and gave the assignee a remedy, without mentioning the payee$ it surely was not intended,' hereby, to make single bills promissory notes, even after negociation, and still less, before. The truth is, the statute of Anne made a new security, unknown to the common law, and declared its effect $ our act of 1786, only legislated to niake negotiable an instrument perfectly familiar and well known to the common law-

Haxx, Judge)

delivered the opinion of the Court:

The decisions are of modern date, that give to pro-piissory notes a right to days of grace — (4 T. Rep. 152.), When days of grace originally extended to bills of exchange, they were gratuitous, J need not cite authority for this.

In bills of exchange theligbility of the parties is ere-ated more by the law-merchant, than by the express stipulation of the parties •, hence days of grace and other regulations, suiting a commercial people, grew into use; but where the liabilities of the parties are altogether of their own making, (such as when a bond shall become due,) it is more difficult to perceive the propriety of altering that contract by law, and saying that although tiie debtor has agreed to pay on a given day, yet lie shall not pay till three days afterwards. To be sure it has been done in England thirty or forty years ago,' but I know of no instance of its having been so decided in this State.

The remark may pass for what it is worth, that this note has not been endorsed, before which it bears no resemblance to a bill of exchange. — (Bur. Rep. 676.) It is a mere contract, like any other, between the parties.

I think the understanding of people, generally, is, that they must pay on the day designated by the note. I think that a new trial ought not to be granted.

Henderson, Judge, concurred.

Taylor, Chief-Justice,

dissented. — I understand it to be conceded on all hands, that if the action had been brought in the name of an indorsee, the days of grace would have been allowable, by force of the acts of 1762, giving negotiability, to promissory notes, and of 1786, placing single bills on the same footing with promissory notes. But the argument is, that neither instrument acquires the qualities of a bill of exchange, nor its effept, until it is indorsed, for then, only, the resemblance between the two begins, and the observations of Lord Mansfield, in 2 Bur. are quoted to establish this position. But when these remarks are duly considered, it will appear that they have no bearing on the case, and that they were made diverso intuiti. There the action was brought on an - inland bill of exchange, by the iti-^0I’se0 against the indorser, and the objection on the part of the Defendant was, that a demand of payment 0lJS'ht to have been made on the drawer; in support of which, some cases on promissory notes were cited, iu which that assertion was made. To shew its correctness as to promissory notes, in which the indorser is considered as the drawer, arid its incorrectness as to bills of exchange, in tiie case under consideration, it become necessary to trace the resemblance between them from its beginning, in order to mark, with precision, the liability of the different parties, and thereby to shew that a demand upon the drawer of a bill of exchange was unnecessary. But what were the incidents or qualities of a promissory no(e, before indorsement, it is perfectly clear that the Judge intended to intimate no opinion upon. The form of a declaration on a note made negotiable by the statute, when a suit is brought by a payee against the maker, removes all doubt on that subject •, it is there stated that the maker became liable by reasou-of the note, ami by force of the Statute 3 Morgan 24. 1 Went. 331; showing, beyond controversy, that if it be negotiable, the statute affects it, and impresses it with certain qualities even before it is negotiated ; whereas, if it be not a note within the statute, as being payable in any thing but money, a consideration must be stated and proved, as in any other common law assumpsit; for, before the statute of 3 8¡- 4 Ann, no action could be maintained, expressly, on a note, even for the payment of money, without declaring on it as a special agreement, and setting forth the consideration. — (5 Term. 482.) The statute seems to have-designed to assimilate promissory notes of a certain description, to hills of ex- ' change, as far as the different nature of the instruments will admit of it, and I cannot perceive why the days of grace should be allowed as against the indorsee, and disallowed as against the payee $ why the latter, by force of the general words, should be considered as transferring the note, subject to an inconvenience, on the part of the indorsee, which had not attached upon it, in the hands of the payee.

This would be my opinion in the absence of any adjudged case, but it is confirmed when the only adjudged case upon the subject is strictly in point. In Smith v. Kendall, the action was brought by the payee also, and it was considered so much a matter of course to allow the days of grace upon promissory notes, within the statute, that it was not even questioned j and'the only doubt was, whether a note payable to A, without adding to order, or bearer, was within the statute. That point being ascertained, it resulted at once, that the days of grace were allowed against the payee.

The case seems to have undergone much consideration, and satisfies me that the law is so settled in England. If it should he thought that these rules are unfit to be adopted here, where the pursuits of the people are so little commercial, the answer is, that a certain portion of the community is as much so, as in any other country, and that persons who receive negotiable instruments, are bound to ascertain their legal qualities ; that we have heretofore borrowed, and daily do borrow, our constructions from the same source •, and that it seems too late to object to these customs, their comr mercial nature, when wc have adopted and enforced the ■very strictest amongst them, viz : that notice of nonpayment of a promissory note, shall ho given to the in-dorser, within one day (allowing for the days of grace,) after the demand has been made upon the drawer, otherwise the indorser is discharged. — (3 Murph. 73.)