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Decisions of the Superior Courts of New South Wales, 1788-1899

Pitt v. Biggers [1808] NSWKR 3; [1808] NSWSupC 3

promissory notes - insolvency

Court of Civil Jurisdiction
Kemp A.J.A., 9 August 1808
Source: Sydney Gazette, 14 August 1808, 2; see also Court of Civil Jurisdiction Proceedings, 1788-1814, State Records N.S.W, 2 August 1808, 5/1102 [1]

On Tuesday the 9th instant a course came before the court, which from its tendency appears materially interesting.

This was a cause Pitt v. Biggers for the recovery of £157, that being the amount of a note paid by the defendant to the plaintiff as it had become due, but without the defendant's indorsement .

On the part of the plaintiff it was stated, that an agreement had been entered into between the parties for the purpose of a note for £157, the plaintiff tendering his note of hand for the balance of [£75]. The note £157 was tendered for payment to the drawer, who declared his incapacity to honor it at the moment; that the plaintiff had received it from the defendant under the idea of its being as good as ready money, which eventually turned out not to be the case; that the plaintiff had immediately on the disappointment and within a few days after his receiving the note represented the matter to the defendant, and got the bill noted; and that he therefore brought this action to recover the amount, as he had taken it through the defendant's misrepresentation of the drawer's circumstances at the time of his negotiating it.

The defendant offered in reply that he had himself taken the note for a valuable consideration, that the drawer was at the time supposed to be in solvent circumstances, and the plaintiff had himself received it without any kind of hesitation upon the faith of the drawer as he himself had done, without suggesting a wish of having it indorsed; that the drawer had however since become insolvent, and therefore the verdict of the court was likely to fix the loss upon one of the contending parties. He denied the plaintiff's declaration of his promising the note to be as good as ready money, as it was not in any man's power to issue a covenant the performance of which rested not with himself but upon another person. He doubted not, from the evidence he was prepared to bring forward, to prove it to have been a bona fide transaction, upon which he considered the matter would materially rest.

Three respectable settlers who were present at the agreement, spoke pointedly as to the fairness of it. Two likewise declared an oath that they had made an offer to the plaintiff to receive this note of £157 in payment, as they considered it at that time to be good, but that he had refused to part with it.

After much consideration the court found a verdict for the defendant, upon which occasion the Acting Deputy Judge Advocate observed that as the mercantile interests of the colony appeared highly interested in the verdict given, the court had taken every pains to get to the knowledge of the various circumstances of the transaction, which carried nothing of a suspicious nature with them, but appeared upon the contrary to have been fair and equitable. This bill did not appear to have been noted when received by the plaintiff. It never had been determined, he believed, that a note was not negotiable after its becoming due, and upon examining this note the plaintiff had accepted it as an acknowledgement for the sum expressed, without requiring the defendant's indorsement . Had which been done, even although it had been indorsed after becoming due, it would have been considered as a note newly drawn by the person indorsing it, and of course if the drawer then refused to pay it, the holder had his remedy against the indorser .

           Upon the business of notes it is a subject of astonishment and regret that for want of common caution men frequently intail upon themselves the most ruinous losses. Notes to a serious amount are passed from hand to hand, frequently without any personal knowledge of the drawer, and without any enquiry into his means of taking out the obligation, when it shall be due. This incautious mode of dealing opens an avenue of fraud, deception, and chicanery. Submitting to imposition in the first instance, by imprudently taking the note of an insolvent person, it then becomes necessary to transfer the obligation to another, and thus an instrument of no real value whatever is kept rapidly in motion, until notoriety puts an end to its career, and saddles some unfortunate man or other with the loss. Incidents of this kind daily happen, but [their] frequency is by no means an argument against exposure of the practice.

Notes

[1] This case is important for two reasons. First, as we saw in Thompson v. McCarthy, 1804, the colony had insufficient sterling money. As a result, all kinds of people issued promissory notes. Whether or not the drawers were solvent, these notes circulated around the colony as a form of currency. Eventually they fell due and the holder was sometimes left with a note drawn by someone who was penniless. In that case, the holder tried to find someone else liable on the note, an indorser. In this case, the note was drawn by the notoriously insolvent Provost Marshal William Gore.

Secondly, this case occurred during the time of illegal government, after the overthrow of Governor Bligh in January 1808. The military administration appointed a series of acting Judge Advocates in place of the lawful Judge Advocate, Richard Atkins. At the time of this case, the acting judicial position was held by Captain Kemp, who had accepted it most reluctantly. The case shows that even these unlawful Judge Advocates sometimes took their legal obligations seriously.
See also in State Records N.S.W., Court of Civil Jurisdiction Proceedings, 1788-1814, 2/8149, p. 545; Court of Civil Jurisdiction Proceedings, 1788-1814, 5/1102 (unnumbered pages). On this case, see

B. Kercher, Debt Seduction and Other Disasters: the Birth of Civil Law in Convict N.S.W., Federation Press, Annandale , 1996, 21, 38, 139, 141.

Published by the Division of Law, Macquarie University