U.S. Supreme Court Mandeville v. Union Bank of Georgetown, 13 U.S. 9 Cranch 9 9 (1815)
Mandeville v. Union Bank of Georgetown
13 U.S. (9 Cranch) 9
ERROR TO THE CIRCUIT COURT FOR THE
DISTRICT OF COLUMBIA FOR ALEXANDRIA
By making a note negotiable in a bank, the maker authorizes the bank to advance on his credit to the owner of the note the sum expressed on its face, and it would be a fraud upon the bank to set up offsets against the note in consequence of any transactions between the parties.
Error to the Circuit Court for the District of Columbia for the County of Alexandria in an action of debt by the Union Bank against Mandeville upon his promissory note to C. I. Nourse, endorsed to the bank.
On the trial below a special verdict was found which states the following facts:
On 15 January, 1811, Mandeville, then and always an inhabitant of the Town of Alexandria in the County of Alexandria for a valuable consideration made his promissory note at the said town, payable to C. I. Nourse or order sixty days after date, negotiable at the Union Bank of Georgetown, payable at the Bank of Potomac in Alexandria for $410.51.
The note was delivered to C. I. Nourse and on the same day endorsed by him and offered for discount at the Union Bank, where it was regularly discounted for his use.
On the 30th of the same month, Mandeville being informed that his note had been discounted, made no objection and said that he had funds to meet it.
The note was not paid when it became due, and was protested for nonpayment.
On the 16th of the same month (the day after the date of Mandevilles note), Charles I. Nourse, for a full and valuable consideration, executed and delivered to Mandeville his note of that date, payable in 60 days, for $400, negotiable at the Bank of Alexandria, payable at the Bank of Columbia in Georgetown.
On the 30th of the same month, C. I. Nourse became further indebted to Mandeville by the acceptance of his order of that date, drawn at sight and by acceptance made payable on 16 February following, in favor of C. Page for the use of Mandeville, for $64, neither of which has been paid. The Union Bank transacts its business in Georgetown, in the County of Washington.
On 2 February, 1811, Mandeville inserted an advertisement in the Alexandria Gazette cautioning all persons against receiving assignments of any notes given by him to Nourse, as he had discounts against them.
Mandeville, in the court below, offered to set off the note and acceptances of Nourse against his own note upon which the suit was brought, but upon the special verdict the court below rendered judgment against him for its whole amount, and he brought his writ of error.
By the laws of Virginia, in force in the County of Alexandria, the defendant is allowed to set off against the assignee of a promissory note any just claim which he had against the original payee before notice of the assignment of the note.
But by the laws of Maryland, in force in the County of Washington, a promissory note payable to order is subject to the same rules as in England under the statute of Anne.
On behalf of the plaintiff in error it was contended that the note, being made at Alexandria and to be paid there, was to be governed by the laws of Virginia, and that as he held Nourse's note before he had notice of
the assignment of his own, he had a right to offset it in this suit.
On the other side it was said that it was immaterial by which law the note was to be governed, for it was made with a view, expressed on its face, to be discounted by the plaintiffs, whereby the defendant had waived any offset to which he might have a right. Besides which, upon being informed that the note was discounted by the plaintiffs, he did not object nor insist upon his setoff, but said he had funds (meaning funds of Nourse) to meet it. By which conduct also he waived his right to the setoff.
MR. CHIEF JUSTICE MARSHALL delivered the opinion of the Court as follows:
It is entirely immaterial whether this question be governed by the laws of Virginia or of Maryland. By neither of them can the discounts claimed by the plaintiff in error be allowed.
By making a note negotiable in bank, the maker authorizes the bank to advance on his credit to the owner of the note the sum expressed on its face.
It would be a fraud on the bank to set up offsets against this note in consequence of any transactions between the parties. These offsets are waived, and cannot, after the note has been discounted, be again set up.
The judgment is to be affirmed with damages at the rate of 6 percent per annum.