[Bank of the United States v. Daniel et al.]

James Daniel duly accepted the bill; and it was endorsed by Henry Daniel, Isaac Cunningham, and Samuel Hanson, to the president, directors, and company of the Bank of the United States.

When it was made and accepted, the drawer, Griffing, and James Daniel, the acceptor, resided and were in Kentucky, where the transaction took place. The endorsers, Henry Daniel, Cunningham, and Hanson, also resided there.

The bill was transmitted to New Orleans for payment; but, not being paid, it was regularly protested and returned; and the bank looked to the drawer, acceptor, and endorsers, for the payment of principal and interest thereon, from the 9th February, 1819, the time it fell due, together with charges of protest, and ten per centum damages on the principal. Griffing, the maker, and James Daniel, the acceptor, believing the claim for damages to be legal, paid the bank, July, 1819, the sum of three thousand three hundred and thirty dollars and sixty-seven cents, on account of the aggregate amount due and supposed to be due; and, for the balance, Griffing and Janies Daniel executed their negotiable note for eight thousand dollars, payable sixty days after date, to William Armstrong; to which, Cunningham, Hanson, and Henry Daniel were parties, either as co-drawers or endorsers; and which was discounted by the office of discount of the Bank of the United States, at Lexington, for the benefit of Griffing and James Daniel, upon the express agreement between the parties making and endorsing the note with the bank, that the proceeds should be applied to the payment of the balance due on the bill.

Griffing and James Daniel were the principal debtors, and Cunningham, Hanson, and Henry Daniel, sureties. The principals paid five hundred dollars, in part discharge of the note; and, in August, 1820, Griffing, James Daniel, Henry Daniel, Cunningham, and Hanson, executed their joint note to the bank, for seven thousand five hundred dollars, payable sixty days after date, for the balance. Griffing having died, and the note for seven thousand five hundred dollars not having been discharged, when due, the bank sued James Daniel, Cunningham, Henry Daniel, and Hanson, in the circuit court of the United States, for the district of Kentucky, and recovered a judgment at law, for the principal and interest; at what time does not precisely appear.

In 1827, the defendants to the judgment at law, filed their bill in equity, in the same court; and, after setting out the facts substantially, as above, further alleged-" they were advised the bank was not VOL. XII.-G

[Bank of the United States v. Daniel et al.]

entitled to ten per centum damages, on said protested bill of exchange, inasmuch as the drawer and acceptor thereof both lived in Kentucky, at the date and maturity of said bill; and that, therefore, so much of said eight thousand dollar note, as exceeds the balance due on said bill, for principal, interest, and damages, (after deducting said payment of three thousand, three hundred and thirty dollars, sixty-seven cents,) was included in said note by mistake; as to the legal liability of said Griffing and James Daniel, for said ten per cent. damages, and as to said excess, said note was executed without any consideration whatever."

The complainants also alleged, that the failure of consideration, on which the note for seven thousand five hundred dollars was grounded, being partial; relief against the excess, in the note and judgment, could only be had in a court of equity; and prayed the bank might be restrained, by injunction, from the collection of one thousand five hundred and fifteen dollars, the excess that entered into the judgment, because of the mistake.

At the November term, 1827, an injunction was ordered by the court, restraining the bank from proceeding to collect one thousand five hundred and fifteen dollars, part of the judgment, until the hearing.

The bank answered, admitting the statements of the complainants in reference to the liquidation of the bill of exchange, and the part payment and renewal of the eight thousand dollar note; and further averred, that, on the return of the protested bill, the sum of one thousand dollars, being ten per cent. on the amount thereof, was claimed by the respondents as their damages; and the claim was as sented to by the complainants, with a full knowledge of the facts upon which it was founded, and all the principles of law upon which it was asserted: and, in pursuance of such assent, the amount of said bill, with interest, and the one thousand dollars damages, was liquidated and discharged by complainants, in manner alleged but ayer, respondents cannot admit "this was done under any mistake, either as to fact or law: indeed, two of complainants were lawyers of cele brity, and of deservedly high rank; and respondents cannot impute to them ignorance of the law: and ignorance of the facts is not pretended."

The respondents further alleged, that, by a statute of Kentucky, bills of exchange drawn by a person in that state, on another out of the state, when returned protested, bore ten per cent. damages, besides interest: and, independently of the statute, the bill for ten

[Bank of the United States v. Daniel et al.]

thousand dollars was subject to damages for re-exchange and expenses: that the effect of the statute was to reduce to uniformity and certainty, the amount to which the holders were entitled, in consequence of the money not being paid at the place agreed upon, and the loss arising from difference of exchange and expenses. It is insisted the claim for damages comes within the statute; yet, if not within it, that respondents are entitled to equal damages with those given by the statute, their risk and loss being the same.

In bar of the claim, the respondents say that all the grounds of equity alleged in the bill, accrued to complainants more than five years next before the commencement of the suit, and are barred by the lapse of time; they further allege that the damages were liquidated, assented to, and discharged, more than five years next before the commencement of the suit; and all claim to relief is barred by the statute of limitations.

The allegations in the complainants' bill, not responded to, are admitted. To which answer, a general replication was filed. The only evidence in the cause was, an agreement of facts entered into by the parties, to wit: "It is agreed that the statements contained in said bill, as to liquidation of the bill of exchange, of ten thousand dollars, are true. It is also agreed that this liquidation was on the 8th day of July, 1819, and that no interest was charged up to that time, except upon ten thousand dollars. It is also admitted that such renewals of the eight thousand dollar note were made, as are stated in said bill; and that the judgment at law was on one of the notes given in renewal.”

Upon the pleadings and admissions, the court proceeded to a hearing of the cause at the November term, 1836, and decreed: "That a credit be entered on the judgment at law, obtained by the defendants against the plaintiffs, as set forth in the bill for one thousand dollars, the amount of damages charged on the protested bill, with all interest charged on said sum up to the time of the judgment; and that the defendants be perpetually enjoined from taking out execution on said judgment, for the sum thus decreed to be credited; but the decree not to affect the balance of the judgment.

From which decree, the president, directors and company of the Bank of the United States, appealed to this Court.

The first question raised on the facts, and in advance of the merits is, whether the matter in controversy in the circuit court, was of sufficient dignity to give this Court jurisdiction by appeal.

[Bank of the United States v. Daniel et al.]

The act of congress provides, that appeals shall be allowed to the Supreme Court, from final decrees rendered in the circuit courts, in cases of equity jurisdiction, where the matter in dispute, exclusive of costs, shall exceed the sum or value of two thousand dollars. The expression, sum or value of the matter in dispute, has reference to the date of the decree below, alike in case of appeals in equity, and writs of error at law: they are each grounded on the original process of this Court, operating on the final decree or judgment, and are limited to the sum or value then in controversy, and of which the decree or judgment furnishes the better evidence, should it furnish any. The matter in dispute below, was a claim to have deducted from the judgment at law, one thousand dollars, with interest thereon, after the rate of six per centum, from the 8th of July, 1819, up to the date of the decree, in November 1836; being upwards of seventeen years: and the circuit court decreed the reformation to be made of the judgment at law, by expunging therefrom, and as of its date, the one thousand dollars, with the interest. The effect was to cut off the interest that had accrued on the one thousand dollars, from the date of the judgment in 1827, to that of the decree, in 1836; interest on the principal sum recovered, being an incident of the contract by the laws of Kentucky, as well after judgment as before. The practical consequence of the decree will immediately be. manifest when the bill is dismissed by the order of this Court; the appellants will then issue their execution at law, and enforce the one thousand dollars, with the accruing interest, from the 8th of July, 1819, until payment is made: it follows, that upon the most favourable basis of calculation, and disregarding the statute of Kentucky of 1789, giving ten per cent. damages in addition to legal interest on sums enjoined, the amount to which the decree below relieved the appellees, and deprived the bank of the right of recovery, was two thousand and forty dollars; that is, one thousand dollars principal, with seventeen years and four months of interest: this being the aggregate amount in dispute, and enjoined by the decree, of course, the Supreme Court has jurisdiction.

The second question raised by the record, rests mainly on the pleadings in the cause. It is alleged the bank was not entitled to ten per cent. damages on the protested bill, inasmuch as the drawer and acceptor both resided in Kentucky; that the eight thousand dollar note included the damages of one thousand dollars through mistake; and so far it wanted consideration.

[Bank of the United States v. Daniel et al.]

The defendants deny this was done through either mistake of the fact or law; insist they were entitled to ten per cent. damages by the statute of Kentucky: but if the statute did not apply, they were entitled to damages, for re-exchange, and charges: and that the statute was justly referred to for the rule settling the measure of compensation.

As no mistake of the facts is positively alleged, and if impliedly stated, is directly and positively denied, we must take it no such mistake existed; and such is manifestly the truth. In regard to the mistake of law, however, the pleadings can settle nothing; they make an issue, and refer it to the Court for decision, on the local and general laws governing damages on bills of exchange of the character of the one set forth.

The statute, by force of which the bank claimed damages, declares: "If any person or persons, shall draw or endorse any bill or bills of exchange upon any person or persons, out of this state, on any person or persons, within any other of the United States, of North America, and the same being returned back unpaid, with legal protest, the drawer thereof, and all others concerned, shall pay the contents of said bill, together with legal interest from the time said. bill was protested, the charges of protest, and ten pounds per cent. advance for the damages thereof; and so proportionably for greater or smaller sums."

In 1821, the court of appeals of Kentucky, gave a construction to their statute, in the case of Clay v. Hopkins, 3 Marshall, 488, where it was holden, that where the drawer and acceptor were both of Kentucky, and the transaction took place there, the statute did not apply, although the bill was made payable in Baltimore. That and this case are alike in all their features.

In a subsequent cause of Wood v. The Farmers and Mechanics' Bank of Lexington, 7 Monroe, 284, the same court held, that a bill addressed to " Mr. J. J. Wood, New Orleans," was within the statute, and drew after it ten per cent. damages on protest; distinguishing Wood's case from that of Clay and Hopkins, because the acceptor was addressed at the foot of the bill as of New Orleans, although in fact he was of Kentucky.

This Court, in accordance to a steady course of decision for many years, feels it to be an incumbent duty carefully to examine and ascertain if there be a settled construction by the state courts of the statutes of the respective states, where they are exclusively in force;