OpenJurist

138 US 93 City of Superior v. Ripley

138 U.S. 93

11 S.Ct. 288

34 L.Ed. 914

CITY OF SUPERIOR
v.
RIPLEY et al.

January 26, 1891.

[Statement of Case from pages 93-95 intentionally omitted]

J. M. Ragan, for plaintiff in error.

Clinton Rowell, for defendants in error.

Mr. Justice BROWN, after stating the facts as above, delivered the opinion of the court.

1

1. In support of its demurrer founded upon the alleged want of jurisdiction in the circuit court, the plaintiff in error insists that the plaintiffs below obtained their right to bring suit upon this order by assignment from S. K. Felton & Co., who are not alleged to be citizens of any other state than Nebraska, and hence that the plaintiffs are disqualified to sue, under the act of August 13, 1888, (25 St. 433,) the first section of which provides that no circuit or district court shall 'have cognizance of any suit, except upon foreign bills of exchange, to recover the contents of any promissory note or other chose in action, in favor of any assignee, or of any subsequent holder if such instrument be payable to bearer, and be not made by any corporation, unless such suit might have been prosecuted in such court to recover the said contents, if no assignment or transfer had been made.' The action in this case is brought upon an order drawn by S. K. Felton & Co., in which they direct the city to pay to the plaintiffs below a certain sum of money upon the completion and acceptance of certain work undertaken by them for the city, and charge the same to their contract price. This order was presented to the corporation, and formally accepted, 'provided the waterworks are fully completed, according to plans and specifications, and are duly accepted by the city,' and the city promised to pay the same in city warrants. This acceptance was a contract directly between the city and the plaintiffs below, upon which the city was immediately chargeable as a promisor to the plaintiffs. Nothing is better settled in the law of commercial paper than that the acceptance of a draft or order in favor of a certain payee constitutes a new contract between the acceptor and such payee, and that the latter may bring suit upon it without tracing title from the drawer. From the moment of acceptance, the acceptor becomes the primary debtor, and the drawer is only contingently liable, in case of non-payment by the acceptor. Dan. Neg. Inst. § 532; Fentum v. Pocock, 5 Taunt. 192; Wallace v. McConnell, 13 Pet. 136. Ever since the case of Young v. Bryan, 6 Wheat. 146, it has been the settled law of this court that the circuit court has jurisdiction of a suit, brought by the indorsee of a promissory note against his immediate indorser, whether a suit would lie against the maker or not, upon the ground, as stated by Chief Justice MARSHALL, 'that the indorsee does not claim through an assignment, but upon a new contract between himself and the indorser.' This case was approved in Mollan v. Torrance, 9 Wheat. 537; Evans v. Gee, 11 Pet. 80; and Coffee v. Bank, 13 How. 183. It needs no argument to show that the same rule would apply as between the acceptor and the payee, and, if the latter be a non-resident of the state, he may bring suit directly against the acceptor, notwithstanding the drawer of the paper is a resident of the same state as the acceptor, for the same reason that the acceptance creates a new contract, to which the drawer is not a party. Thompson v. Perrine, 106 U. S. 589, 1 Sup. Ct. Rep. 564, 568. The same principle is illustrated in the case of De Sobry v. Nicholson, 3 Wall. 420, in which it was held that, if the requisite citizenship exist between the immediate parties to a contract, the jurisdiction of the circuit court cannot be defeated by the fact that another and prior contract, to which the plaintiff is not a party, is set out as an inducement to the making of the contract in suit. So, in Manufacturing Co. v. Bradley, 105 U. S. 175, a corporation agreed to pay on a certain date to A. a sum of money, at a specified rate of interest, and, by an indorsement on the paper after it matured, further agreed, in consideration of forbearance to a date named, to pay at a higher rate of interest, to bearer. It was held that the indorsement was a new contract, upon sufficient consideration, and negotiable within the meaning of the law-merchant, and that B., the legal holder of the paper, was not precluded from suing thereon in the circuit court, by the fact that A. was a citizen of the same state as the corporation. In delivering the opinion of the court, Mr. Justice MATTHEWS observed: 'It is true that the bond, as originally executed, was payable to Gayer, receiver, simply, and was not negotiable; but the subsequent indorsement was a new and complete contract, upon a distinct and sufficient consideration, and, being payable to bearer, is negotiable by delivery merely.'

2

2. In support of its second ground of demurrer, the defendant city further insists that, inasmuch as the acceptance of the city was a promise to pay in city warrants, the petition should allege that the plaintiffs demanded paymen in warrants, and that the city refused to give them warrants for the order. The order, however, was to pay a certain sum in dollars and cents, and the promise was to pay the amount of the acceptance, and, if payment had been made or tendered, either in current money or in city warrants, it was matter of defense, and the burden of proof was upon the defendant. No allegation in the petition that payment in city warrants was demanded and refused, was necessary to constitute a complete cause of action, and it is only after a failure to make out a prima facie case in the petition that a general demurrer will lie. Wallace v. McConnell, 13 Pet. 136; Brabston v. Gibson, 9 How. 263, 279. As the warrants were a mere method of payment in money, for the convenience of the city in carrying on its financial business, it may be treated as a promise to pay in money. Babcock v. Goodrich, 47 Cal. 488. If the promise were to pay in bank-notes, or other representatives of money, it would scarcely be claimed that it was not a promise to pay in money, or that any special demand of bank-notes was necessary to be averred. There is an allegation in the petition that, though ofter requested, the said city of Superior has not paid to plaintiffs the amount of said order and acceptance, or any part thereof, and that there is now due and unpaid upon the same, the entire amount thereof. We think this is a sufficient allegation of nonpayment and refusal to pay to render the city chargeable in this form of action. The judgment of the circuit court must be affirmed.