U.S. Supreme Court REED v. INGRAHAM, 3 U.S. 505 (1799)
3 U.S. 505 (Dall.)
Supreme Court of Pennsylvania
This was an action brought by the assignee of a stock contract, to recover the amount of the difference, due on the contract, which was expressed in these words: 'On the 18th of April 1792, I promise to eceive from Joseph Boggs, or order, Ten thousand dollars, six per cents, and pay him for the same, at the rate of 23 shillings and 7 pence 3-4 per pound.
(Signed) Francis Ingraham.'
The assignment was indorsed in these words:
'I do hereby authorise William Reed, or his order, to tender or deliver the stock within mentioned, and the said William Reed, or his order, to receive for the same, the sums of money due and payable therefor, at the rates within expressed.
April 7, 1792. (Signed) Joseph Boggs.'
The Plaintiff gave notice of the assignment to the Defendant, a short time before the day fixed for executing the contract; and, it was admitted, that the stock was tendered in due form: But the defence, on the trial, turned upon the question, whether the stock contract was negotiable, so as to enable the assignee to bring an action in his own name? For, the Defendant insisted that Boggs was indebted to him, and that he ought not to be precluded from the benefit of a set-off, by the form of the present suit. It appeared, however, that the debt referred to, arose from a note, which the Defendant had endorsed to accommodate Boggs; but which had not been paid, nor had it, indeed, become due for a long time after this action was commenced: And several experienced brokers proved, that stock contracts, of the present description, had always been considered as assignable in Philadelphia, vesting the interest completely in the assignees, and authorizing them; in cases of default, to proceed in their own names against the defaulters.
By the Court: The action is well brought, as it is founded on a contract, in which the Defendant expressly stipulates, that he will receive the stock from, and pay the price to,
Joseph Boggs, or his order. On general principles of law, stock contracts cannot be regarded as negotiable; but a contractor may certainly make himself liable as if they were so; and the maxim, modus et conventio vincunt leges, applies forcibly to the case.
With respect to the alledged inconvenience, that in the present form of action the Defendant is debarred from the benefit of a set-off, it would be enough to answer, that as this is the consequence of his own act and agreement, he has no reasonable cause of complaint. But it is also obvious, that when the contract was assigned, and the present action was instituted, there did not exist between him and Boggs any mutual debt, or demand, which could be the subject of defalcation, upon the principles of the act of Assembly.
Verdict for the Plaintiff.