LIABILITY OF DRAWER.

JAMES HOPKIRK, surviving Partner of SPIERS, BOWMAN, & Co., v. WILLIAM BYRD PAGE, Executor of WILLIAM BYRD.

(2 Brockenbrough, 20. Circuit Court of the United States for Virginia, May, 1822.)

Drawing without funds. — If the drawer have no funds in the hands of the drawee at the time of drawing, and no right to draw, and has the strongest reasons to believe that his draft will not be paid, he is not entitled to notice of dishonor.

THE case is stated in the opinion of the court.

MARSHALL, C. J. This suit is brought to obtain payment of two bills of exchange, drawn by the late William Byrd, of Virginia, on Robert Cary & Co., merchants of London, the one in the year 1774, and the other in 1775. These bills were regularly protested; but the defendant makes several objections to paying them. The first to be considered is, that no notice of their non-payment and protest was given either to William Byrd in his lifetime, or to his representatives since his death.

The plaintiff contends that this notice was unnecessary, because the drawer had no funds in the hands of the drawee.

Although this application, in consequence of the state of the fund to which the plaintiff must resort, it consisting of equitable assets, is made to a court of equity, it is admitted to be a law case depending entirely on legal principles. It

requires an attentive consideration of the question, how far the want of funds of the drawer in the hands of the drawee discharges the holder of a bill of exchange from the necessity of giving notice to the drawer of its dishonor.

The rule requiring this notice was for a long time supposed to be general, and Mr. Justice Blackstone in his Commentaries lays it down without any exception. The first case in which an exception was admitted is Bikerdike v. Bollman, decided in November, 1786, and reported in 1 Durn. & East, 405; in that case the court stated that, if it be proved by the holder that "from the time the bill was drawn till the time it became due the drawee never had any effects of the drawer in his hands," notice to the drawer is not necessary. The reason given is, that he had no right to draw, and could not be injured by not receiving notice. An additional observation. made by one of the judges is, that to draw in such a case "is a fraud in itself."

It does not appear from the report of this case, nor is there any reason to believe, that there were any running accounts between the parties; the whole complexion of the case, and the reasons assigned by the judges for their opinions, negative the idea; it is simply the case of a debtor drawing a bill on his creditor, without a prospect of its being paid. In such a case, notice is declared by the court to be unnecessary.

It is remarkable that in this case, although the principle is expressly asserted by both the judges, each declares that the case would be decided in the same way on a different principle.

In Goodall and others v. Dolley, decided in 1787, 1 Durn. & East, 712, the judgment was against the holder of the bill, for want of notice; but, in giving his opinion, Mr. Justice Buller recognizes the principle established in Bikerdike v. Bollman.

In Rogers v. Stevens, 2 T. R. 713, decided in 1788, the law is said to be settled that no effects of the drawer in the hands

of the drawee excuses the holder from the necessity of giving notice; yet, it is remarkable that, in this case, all three of the judges rely very much on a subsequent assumpsit made by the drawer.

In Gale v. Walsh, 5 T. R. 239, decided in 1793, the principle appears to be recognized; but a rule to show cause why a new trial should not be granted for this cause was discharged, because the fact did not exist in the case.

These are the earliest cases on this point: it has occurred very frequently in subsequent cases, and the principle seems to be firmly established; but as the question has come forward in different forms, and been viewed under different aspects, the principle has been greatly modified, and is no longer laid down in the general terms which were carelessly used on its introduction. It has been found necessary to define its extent with more precision, and to state the rule with more accuracy. It was perceived, that in the course of commercial dealing, it would frequently occur that a person might draw a bill with the best reasons for believing that it would be honored, although, in fact, he might have, at the time, no funds in the hands of the drawee; and that all the reasons for requiring notice would apply in such a case with the same force as if the bill had been drawn on actual funds. In Legge v. Thorpe, 12 East, 171, Le Blanc and Bayley, JJ., stated the principle laid down in Bikerdike v. Bollman, and afterwards adhered to, in these terms:

They said "that the court in that case, looking to the reason for which notice was required to be given, laid down the rule, not generally, that where the drawer had no effects in the hands of the drawee at the time (which perhaps might turn out to be the case upon a future settlement of accounts between them) no notice of dishonor should be given; but that it need not be given where the drawer must have known at the time that he had no effects to answer the bill, and could have no reason to expect that his bill would be honored."

In Blackhan v. Doren, 2 Camp. 503, Lord Ellenborough said: “If a man draw upon a house with whom he has no account, he knows that the bill will not be accepted, he can suffer no injury from want of notice of its dishonor, and, therefore, he is not entitled to such notice. But the case is quite otherwise where the drawer has a fluctuating balance in the hands of the drawee."

In Walwyn v. St. Quintin, 1 Bos. & Pul. 652, one of the strongest cases in the books in favor of dispensing with notice, Eyre, Ch. J., said: "But it may be proper to caution billholders not to rely on it as a general rule, that, if the drawer has no effects in the acceptor's hands, notice is not necessary. The cases of acceptances on the faith of consignments from the drawer, not come to hands, and the case of acceptances on the ground of fair mercantile agreements, may be stated as exceptions, and there may possibly be many others."

In Brown et al. v. Maffey, 15 East, 216, Lord Ellenborough said "The doctrines of dispensing with notice of the dishonor of a bill has grown almost entirely out of the case of Bikerdike v. Bollman. That decision dispensed with the notice to the drawer, where he knew beforehand that he had no effects in the hands of the drawee, and had no reason to expect that the bill would be paid when it became due."

"But that exception must be taken with some restrictions, which, since I sat here, I have often had occasion to put on it, as where the drawer, though he might not have effects at the time of the drawing of the bill in the drawee's hands, has a running account with him, and there is a fluctuating bal⚫ance between them, and the drawer has reasonable ground to expect that he shall have effects in the drawee's hands when the bill becomes due. In such cases, I have always held the drawer to be entitled to notice, because he draws the bill upon a reasonable presumption that it will be honored."

In Rucker et al. v. Hiller, 16 East, 43, Lord Ellenborough said: "Where the drawer draws his bill in the bona fide ex