D'Arcy v. Ketchum. 11 H.

the question, whether our federal constitution and the act of congress founded on it have altered the rule?

*The constitution declares that "full faith and credit [* 175] shall be given in each State to the public acts, records, and judicial proceedings of every other State. And the congress may, by general laws, prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof."

By the act of May 26, 1790, congress prescribes, first, the mode in which the judicial records of one State shall be proved in the tribunals of another; to wit, that they shall be authenticated by a certificate of the clerk under the seal of the court, with a certificate of the presiding judge that the clerk's attestation is in due form. Secondly, "And the said records and judicial proceedings, authenticated as aforesaid, shall have such faith and credit given to them, in every court within the United States, as they have, by law or usage, in the courts of the State from whence the said records are or shall be taken."

These provisions were considered by this court in the case of Mills v. Duryee, 7 Cranch, 483, where it was held that the recited sentence of the act of 1790 did declare the effect of a state judgment, by enacting that it should have such faith and credit in every other State as it had in the courts of the State from whence it was taken; and that a judgment, where the defendant had been served with process, concluded such defendant from pleading nil debet when sued in another State on the record, and consequently from going behind the judgment and reëxamining the original cause of action; that he was concluded by the record, in like manner as he stood concluded in the State where the judgment was rendered.

This decision was made in 1813, and has since been followed as the binding and proper construction of the act of 1790, in cases where process has been served. But, as was then predicted, (and as has been manifest ever since,) great embarrassment must ensue if the construction, on the facts of that particular case, is applied to all others, without exception.

In construing the act of 1790, the law as it stood when the act was passed must enter into that construction; so that the existing defect in the old law may be seen, and its remedy by the act of congress comprehended. Now, it was most reasonable, on general principles of comity and justice, that, among States and their citizens united as ours are, judgments rendered in one should bind citizens of other States, where defendants had been served with process, or voluntarily made defence.

As these judgments, however, were only prima facie evidence, and

Hortsman v. Henshaw. 11 H.

subject to be inquired into by plea when sued on in another [* 176 ] State, congress saw proper to remedy the evil, and to provide that such inquiry and double defence should not be allowed. To this extent, it is declared in the case of Mills v. Duryee, congress has gone in altering the old rule. Nothing more was required.

On the other hand, the international law, as it existed among the States in 1790, was, that a judgment rendered in one State, assuming to bind the person of a citizen of another, was void within the foreign State, when the defendant had not been served with process or voluntarily made defence, because neither the legislative jurisdiction, nor that of courts of justice, had binding force.

Subject to this established principle, congress also legislated; and the question is, whether it was intended to overthrow this principle, and to declare a new rule, which would bind the citizens of one State to the laws of another; as must be the case if the laws of New York bind this defendant in Louisiana. There was no evil in this part of the existing law, and no remedy called for, and in our opinion, congress did not intend to overthrow the old rule by the enactment that such faith and credit should be given to records of judgments, as they had in the State where made. The language employed is not only fairly open to construction, but the result arrived at by the court below, depends on construction; and when we look to the previous law, and the evil intended to be remedied by the framers of the constitution and by congress, we cannot bring our minds to doubt that the act of 1790 does not operate on, or give additional force to, the judgment under consideration; we concur with the various decisions made by state courts, holding that congress did not intend to embrace judicial records of this description, and are therefore of opinion that the defendant's exception was valid, and that the judgment must be reversed; and so order.

18 H. 404; 1 B. 566; 5 Wal. 290; 6 Wal. 231.

JOHN HORTSMAN, Plaintiff in Error, v. JOHN HENSHAW, WILLIAM WARD, and JOSEPH W. WARD, Merchants and Copartners, doing Business under the Firm and Style of HENSHAW, WARD, and Co., Defendants in Error.

11 H. 177.

If the drawer of a bill puts it in circulation, bearing a forged indorsement of the name of the payee, and the drawce accepts and pays to a bonâ fide holder for value, he cannot recover back the money paid; his acceptance is a conclusive acknowledgment that he has funds of the drawer, and against him he can charge the amount of the bill, because the drawer is estopped to deny the verity of the indorsement.

Hortsman v. Henshaw. 11 H.

ERROR to the circuit court of the United States for the district of Massachusetts. The case is stated in the opinion of the court.

Fletcher Webster, for the plaintiff.

Edward Curtis and Whiting, contrà.

*TANEY, C. J., delivered the opinion of the court.

The material facts in this case may be stated in a few words.

[*182 ]

Fiske and Bradford, a mercantile firm in Boston, drew their bill of exchange upon Hortsman of London, payable at sixty days' sight to the order of Fiske and Bridge, for six hundred and forty-two pounds sterling. The drawers, or one of them, placed the bill in the hands of a broker, with the names of the payees indorsed upon it, to be negotiated; and it was sold to the defendants in error bonâ fide and for full value. They transmitted it to their correspondent in London, and, upon presentation, it was accepted by the [*183] drawee, and duly paid at maturity. The payees and indorsees all resided in Boston, where the bill was drawn and negotiated. It turned out that the indorsement of the payees was forged,-by whom does not appear; and a few months after the bill was paid, the drawers failed and became insolvent. The drawee, having discovered the forgery, brought this action against the defendants in error to recover back the money he had paid them.

The precise question which this case presents does not appear to have arisen in the English courts; nor in any of the courts of this country with the exception of a single case, to which we shall hereafter more particularly refer. But the established principles of commercial law in relation to bills of exchange leave no difficulty in deciding the question.

The general rule undoubtedly is, that the drawee by accepting the bill admits the handwriting of the drawer; but not of the indorsers. And the holder is bound to know that the previous indorsements, including that of the payee, are in the handwriting of the parties whose names appear upon the bill, or were duly authorized by them. And if it should appear that one of them is forged, he cannot recover against the acceptor, although the forged name was on the bill at the time of the acceptance. And if he has received the money from the acceptor, and the forgery is afterwards discovered, he will be compelled to repay it.

The reason of the rule is obvious. A forged indorsement cannot transfer any interest in the bill, and the holder therefore has no right

Hortsman v. Henshaw. 11 H.

to demand the money. If the bill is dishonored by the drawee, the drawer is not responsible. And if the drawee pays it to a person not authorized to receive the money, he cannot claim credit for it in his account with the drawer.

But in this case the bill was put in circulation by the drawers, with the names of the payees indorsed upon it. And by doing so they must be understood as affirming that the indorsement is in the handwriting of the payees, or written by their authority. And if the drawee had dishonored the bill, the indorser would undoubtedly have been entitled to recover from the drawer. The drawers must be equally liable to the acceptor who paid the bill. For having admitted the handwriting of the payees, and precluded themselves from disputing it, the bill was paid by the acceptor to the persons authorized to receive the money, according to the drawer's own order.

Now the acceptor of a bill is presumed to accept upon funds of the drawer in his hands, and he is precluded by his acceptance from

averring the contrary in a suit brought against him by the [* 184] * holder. The rights of the parties are therefore to be determined as if this bill was paid by Hortsman out of the money of Fiske and Bradford in his hands. And as Fiske and Bradford were liable to the defendants in error, they are entitled to retain the money they have thus received.

We take the rule to be this. Whenever the drawer is liable to the holder, the acceptor is entitled to a credit if he pays the money; and he is bound to pay upon his acceptance, when the payment will entitle him to a credit in his account with the drawer. And if he accepts without funds, upon the credit of the drawer, he must look to him for indemnity, and cannot upon that ground defend himself against a bona fide indorsee. The insolvency of the drawer can make no difference in the rights and legal liabilities of the parties.

The English cases most analogous to this are those in which the names of the drawers or payees were fictitious, and the indorsement written by the maker of the bill. And in such cases it has been held that the acceptor is liable, although, as the payees were fictitious persons, their handwriting of course could not be proved by the holder. 10 Barn. & Cres. 478. The American case to which we referred is that of Meachim v. Fort, 3 Hill, (S. C.) 227. The same question now before the court arose in that case, and was decided in conformity with this opinion.

Another question was raised in the argument upon the sufficiency of the notice; and it was insisted by the counsel for the defendants, that, if they could have been made liable to this action by the plain

League v. De Young. 11 H.

tiff, they have been discharged by his laches in ascertaining the forgery and giving them notice of it.

But it is not necessary to examine this question, as the point already decided decides the case.

The judgment of the circuit court is affirmed, with costs.

WILLIAMS C. BEVINS and OLIVER P. EARLE, surviving Partners of the Firm of BEVINS, EARLE, AND Co., who sue for the Use of OLIVER P. EARLE, Appellants, v. WILLIAM B. A. RAMSEY, ROBERT CRAIGHEAD, JAMES P. N. CRAIGHEAD, THOMAS W. HUMES, and JAMES MCMILLAN, Administrator of ANDREW MCMILLAN, deceased.

11 H. 185.

THIS action at law was dismissed because brought here by appeal instead of writ of error.

THOMAS M. LEAGUE, Plaintiff in Error, v. JOHN DE YOUNG, Surveyor for the District of Galveston, and SAMUEL P. BROWN, Deputy.

11 H. 185.

The prohibition, in the constitution of the United States, against state laws which impair the obligation of contracts, does not affect laws of Texas, passed and taking complete effect before the admission of that country as a State into the Union.

ERROR to the supreme court of Texas. The case is stated in the opinion of the court.

O. F. Johnson and Wood, for the plaintiff.

Harris, contrà.

GRIER, J., delivered the opinion of the court.

A brief statement of the history of this case will be necessary to a correct apprehension of the points involved.

[ * 200 ]

By the colonization laws of Mexico in force in the State of Texas before their revolution, every married man who became a settler or colonist was entitled to a square league of land. In 1835, when Texas declared her independence, the faith of the republic was pledged that all who would perform the duties of citizens should receive the benefit of this law; accordingly, in the constitution of the new republic, adopted on the 17th of March, 1836, it was provided, that all white persons "residing in Texas on the day of the declara.