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Randel v. Brown. 2 H.

show, therefore, that he has a lien on them, he can neither hold them as security for the payment of the claims set up in his answer, nor is he entitled to payment out of them, at law or in equity. To create a lien on a chattel, the party claiming it must show the just possession of the thing claimed; and no person can acquire a lien, founded upon his own illegal or fraudulent act, or breach of duty; nor can a

lien arise, where, from the nature of the contract between [ * 425 ] the parties, it * would be inconsistent with the express

terms, or the clear intent of the contract. For example, if the goods were deposited in the possession of the party for a particular purpose, inconsistent with the notion of a lien, as to hold them or the proceeds for the owner, or a third person. Story on Agency, 73, 74, 75; Lamprier v. Pasley, 2 Term R. 485; Cranston v. The Philadelphia Insurance Company, 5 Bin. 538; Turno v. Bethune, 2 Desau. 285 ; Jarvis v. Rogers, 15 Mass. 389, 395; Weymouth v. Bowyer, 1 Vesey, Jun. 416; Taylor v. Robinson, 8 Taunt. 648; Gray v. Wilson, 9 Watts, 512; Madden v. Kempster, 1 Camp. 12; Crockford v. Winter, 1 Camp. 124.

In the case of Madden v. Kempster, Lord Ellenborough said: “ The defendant being under an acceptance for Captain Hart, whose agent he had been, might have retained a sum of money to answer that acceptance. But the plaintiff is entitled to recover this sum of money, the defendant having obtained it by misrepresentation. He mentioned nothing of the acceptance, he obtained it as a balance when no balance was due to him. He cannot, therefore, set up the lien to which he might otherwise have been entitled.” Lord Ellenborough held the same doctrine in the case of Crockford v. Winter; and the same doctrine was held in Taylor v. Robinson, 8 Taunt. 648.

In this case of Madden v. Kempster, it is admitted that Kempster would have had a good lien on the £60 if he had obtained the money honestly, and in the course of business. But having obtained it by misrepresentation, he was not permitted to set up the lien, to which he might otherwise have been entitled. How, then, can Brown set up a lien on these certificates, holding possession of them as he does, by just as gross a fraud? There is no aspect in which the question can be placed, consistently with the evidence and the authorities above cited, that will justify the decree in his favor. To permit this decree to stand would be to sanctify fraud, and to allow Brown, by taking advantage of his own wrong, to obtain compensation for his services in a court of chancery, upon a case purely cognizable in a court of law; the decree of the circuit court is, therefore, reversed, and the cause is remanded to the circuit court with directions to enter a decree for the plaintiff, conformably to this opinion, and that the defendant pay costs in both courts.

Rhett v. Poe. 2 H.

64 35

ROBERT BARNWELL Rhett, Plaintiff in Error, v. ROBERT F. PoE,
Cashier of the Bank of Augusta, Defendant.

2 H. 457. A drawer had funds in the hands of the acceptor when the acceptance was made, but with-18h 51

drew them, under an agreement to provide other funds before the maturity of the bill; if the drawer failed to keep this agreement he was not entitled to notice of the dishonor

of the bill, for he had no right to expect it would be paid. When the facts, upon which the question of due diligence depends, are ascertained, whether

due diligence was used, is a question of law. If the holder of a bill is unable, by due diligence, to ascertain the residence of the drawer, he

is excused from giving him notice of the dishonor of the bill. If the drawer and acceptor are copartners in the transaction out of which the bill grew, the

drawer is not entitled to notice. A refusal to give an instruction not applicable to the evidence, is not error. An indorser of a note, intended to guarantee a bill of exchange, cannot avail himself of

want of notice to the drawer of the bill.

ERROR to the circuit court of the United States for the district of South Carolina.

The action was brought by Poe, who was cashier of the Bank of Augusta, against Rhett, as indorser of a promissory note, dated May 9, 1837, for $8,000, signed by B. R. Smith, payable to W. E. Haskell, or order, in sixty days from its date, and indorsed by the payee and Rhett. It appeared that this note was given to the bank as collateral security for a bill drawn by one Timberlake on Smith for $8,000, payable at the same time as the note. Both the note and bill were dishonored at maturity; and though due notice of the dishonor of the note was given to the indorsers thereon, one defence set up was, that due diligence had not been used to give notice to the drawer of the bill for which the note stood as collateral security.

The plaintiff offered evidence tending to show that when the notary protested the bill for non-payment, at Charleston, he did not know where the drawer, Timberlake, lived, and that he sent a notice for him to the Bank of Augusta, as was usual; that it was the duty of the discount clerk of the bank to serve such notices, and he believed, if Timberlake had been in Augusta, the notice would have been served on him; that Timberlake lived in a boarding-house while in Augusta, and was insolvent at the maturity of the bill. There was other evidence tending to show that Timberlake had left Augusta before the maturity of the bill, and left no agent there; that he had desired the postmaster there to forward his letters to him, and that he received several after the maturity of the bill, up to which time, and for three months subsequently, he had a box at the post-office in Augusta.

Two sets of instructions, the first consisting of two, and the

Rhett v. Poe. 2 H.

second of five prayers, were asked for by the defendant, as fol

lows: [ * 460 ] * 1. That by omission to inquire for the residence of Tim

berlake, or to send notice after him, the plaintiff has lost his right of action against him as drawer of the bill for $8,000.

2. That if the jury find that the note was given as collateral security for the bill drawn by Timberlake, and that Timberlake is discharged, then the plaintiff cannot recover against the defendant on the note sued upon.

The second set of instructions prayed for, the court refused to give, with the exception of the fourth, and gave its own instructions to the

jury. Those prayed for were as follows:[ * 461 ] * 1. The parties having shown that Timberlake had drawn

upon Smith four bills, amounting in all to $21,500, which Smith had accepted, and had, at the time of the acceptance of the said bills, $10,000 in hand, received of Timberlake, to meet those bills, the defendant prayed the court to instruct the jury, that if the evidence was believed, then Timberlake had funds in the hands of Smith, and was entitled to notice.

2. The defendant having shown that Timberlake resided in New York, and came habitually, between the months of October and January, to Augusta, and resided in Augusta during the winter and spring, and that Timberlake left Augusta on the 30th June, 1837, and that the notice of non-payment of the draft was forwarded by the notary in Charleston, to the plaintiff, on the 11th July, 1837, and nothing was shown to prove that the plaintiff had made any inquiry after Timberlake, or endeavored to give him notice.

The defendant prayed the court to instruct the jury that the plaintiff had not used due diligence to give the drawer notice.

3. And inasmuch as evidence had been given, that the bills drawn by Timberlake on Smith were drawn for purchases of cotton or stock, on the joint account of Smith and Timberlake, and Timberlake had diverted the property purchased on joint account to his own use, and was therefore bound to provide for the bills which fell due in May, to the amount of $13,500, and had not done so; the defendant prayed the court to instruct the jury, that the default of Timberlake to take up the bills for $13,500, did not excuse the want of notice to make him liable on the bill for 88,000.

4. And the defendant prayed the court to instruct the jury, that if Timberlake had effects at any time between the drawing and the maturity of the said bill, in the hands of Smith, he was entitled to notice.

5. The defendant prayed the court to instruct the jury, that the

Rhett v. Poe. 2 H.

insolvency of the acceptor and drawer, before the maturity of the bill, did not excuse the holder from giving notice of non-payment to the drawer.

On the first instruction asked, the court instructed the jury, that if they believed, from the evidence, that Timberlake had in the hands of Smith, when Smith accepted the bill for $8,000, $10,000, that Timberlake was entitled * to notice of the dishonor of [ * 462 ] the bill from the holder. But if the jury also believe from the evidence that the $10,000, in the hands of Smith, was a fund raised upon Smith's letter of credit to Timberlake, and was to be applied to the payment of purchases on joint account, and had been so applied, and that there was an arrangement afterwards between Timberlake and Smith in respect to all the bills drawn by Timberlake, amounting to $21,500; that Timberlake was to put Smith in funds to pay bills to the amount of $13,500 of the $21,500, which were to become due before the bill of $8,000 became due, and that on Timberlake doing so, Smith was to pay the $8,000 bill; and that Timberlake did not put Smith in funds to pay the $13,500, and that the same were protested, of which Timberlake had notice; then, that Timberlake had no right to notice of the non-payment of the $8,000 bill from the holder.

On the second instruction asked, the court instructed the jury, that if they believe from the evidence that Timberlake resided in New York, and was a sojourner in Augusta, from time to time, as stated in the instruction asked, that then, as drawer of the bill, he was entitled to notice of its dishonor ; but if the jury believe from the evidence, though he may have resided in New York, that he had made Augusta his residence since the fall of 1834 or 1835, and that he had removed from Augusta, and out of the State of Georgia, after the bill for $8,000 was drawn, and before its maturity, that then due diligence had been used to give him notice of the dishonor of the bill.

On the third instruction asked, the court instructed the jury that if they believe from the evidence that the bills drawn by Timberlake upon Smith were drawn for purchases of cotton or stock on the joint account of Smith and Timberlake, and that Timberlake had diverted the property purchased on joint account to his own use, and that after promising Smith, the acceptor, to take up the bills to the amount of $13,500, he had failed to do so, and had not supplied Smith with money to take up the bills for $13,500, after the same were dishonored, up to the time when the $8,000 draft became due, and that there was an arrangement between Timberlake and Smith, after the $8,000 bill was accepted, that Timberlake was to put Smith in funds to take up the drafts for $13,500, which had been dishonored, and did

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VOL. XV.

Rhett v. Poe. 2 H.

not do so, that Timberlake was not entitled to notice of the dishonor of the bill for $8,000.

To the fourth instruction asked, the court instructed the [ * 463 ) jury, if * they believe from the evidence that Timberlake

had effects in the hands of Smith at any time between the drawing of the bill and the maturity of the said bill, that he was, as drawer, entitled to notice.

To the fifth instruction asked, the court instructed the jury that the insolvency of the drawer and the acceptor, before the maturity of the bill, did not excuse the holder of the bill from giving notice of non-payment to the drawer. But the court further instructed the jury, that if the insolvency of the drawer and acceptor were known to each other, and that this bill was drawn to pay for a purchase on joint account, or a transaction in which they were partners, and that the property so purchased had been diverted by the drawer to his own use, and that the payment of all the bills had been the subject of private arrangement between the acceptor and the drawer, that then the holder was excused from giving notice of the non-payment of the bill for $8,000.

The jury found a verdict for the plaintiff for $8,000, with interest from the 11th July, 1837.

Coxe and Legarè, (attorney-general,) for the plaintiff in error.

Wilde and Hunt, for the defendant.

[ * 478] DANIEL, J., delivered the opinion of the court.

The instrument upon which this suit was instituted in the circuit court was, as the aforegoing statement evinces, in form simply a common promissory note, signed by Benjamin R. Smith, made payable to William E. Haskell, indorsed by Haskell to Robert Barnwell Smith, alias Robert Barnwell Rhett, and by this last individual to Robert F. Poe, cashier of the Bank of Augusta, the plaintiff in the action. Such being the nature of the instrument, and it appearing that the formalities of demand at its maturity, and notice to the indorsers have been regularly fulfilled by the holder, a question as to the justice of a recovery by the latter could scarcely be suggested, if the rights and obligations of the several parties shall be viewed as dependent upon their relation to the note itself considered as a distinct and separate transaction. Such, however, is not precisely the attitude of the parties to this controversy. It is in proof that there was held by the plaintiff below, beside this note, a draft for $8,000, drawn by Timberlake on the 6th of May, 1837, at sixty days, in favor

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