lature could not repeal. The present case takes another step, and holds that whether a schedule of charges prescribed by the legislature is reasonable, is a question to be finally settled in the tribunals upon the hearing of evidence. In other words-and this is the practical outcome of it-the legislature of a State has the power of making such regulations, limiting the charges of a railway company, as a Federal district judge shall deem reasonable. Here is the reasoning with which Mr. District Judge Deady asserts in this instance this superintending jurisdiction over the legislature of Oregon:

9

"It is admitted that the right of the corporation to fix its rates and fares is not absolute, and that, if necessary, the legislature may limit the same to what is reasonable. Nor, in my judgment, is the power of the legislature over the subject absolute. It cannot require the corporation to accept less than a reasonable compensation for its services. And while the presumption may be, and doubtless is, that any rate which the legislature may prescribe is a reasonable one, such presumption is not conclusive, and may be overcome by evidence to the contrary, in any case when the question arises before the courts. I am aware that in what are called the 'Granger Cases,' it was practically held that the action of the legislature in fixing the maximum rate of compensation for certain railways was conclusive of the question, and could only be reviewed or reversed at the polls. But in none of these cases, as I read them, was the power of alteration or repeal reserved to the State, qualified as in Oregon, so that it could not be used to impair or destroy any vested corporate right." And the contention of the corporations in those cases was that, although the State had reserved to itself the right of repeal without qualification still the court ought in justice and right toimit its operation as not to allow it to interfere with vested rights, as was suggested by Mr. Chief Justice Shaw, in Com. v. Essex Co.10 But the court refused to do so, and held in effect that, under the unqualified power of repeal reserved to the State, the legislature might deal with the subject as it pleased, even if it deprived the cor

9 94 U. S., 155-187.

10 13 Gray, 239.

poration of all right to compensation for services in the future, and there was no appeal from its action except to the polls; and that, if the business and property of the shareholders was thereby destroyed or rendered valueless, they must blame themselves for engaging in a corporate enterprise under such precarious conditions."

his

Many men who are still living, and who are not old, were wont to hear in their youthful days, a great deal about State sovereignty. But under the manipulation of the Federal tribunals, the "Sovereign States," are fast sinking to a position analogous to that of English buroughs of the times of Lord Holt and Lord Ellenborough; their statutes are by-laws, to be enforced only so far as deemed reasonable, and what is to be deemed reasonable is not to be decided by the legislature chosen by the people, but by a single judge appointed by the president, and responsible for judicial decisions to no one. We say this advisedly in its application to such one as the are commenting upon; because it is well known that orders appointing receivers and directing them in the management of property come within the category of matters of "discretion," which cannot be corrected by appeal. The discretion of one man is thus substituted for the discretion of the whole people of a State expressed through an act of their legislature; popular government is overturned, and the will of the people yields to the will of appointed judges who are responsible to no one.

a case

we

11

RELIEF IN EQUITY AGAINST MISTAKES OF LAW. In Freiknecht v. Meyer, the Supreme Court of Errors and Appeals of New Jersey had occasion to consider the circumstances under which courts of equity will relieve against mistakes of law. The court ruled that when parties have acted under a mutual mistake of law, and the party jeopardized thereby can be relieved without substantial injustice to the other side, equity will afford redress, especially if the party to be benefited by the mistake invokes the aid of equity to put him in a position

11 8 N. J. Law J. 167.

where the mistake will become advantageous to him. The court, in an opinion by Dixon, J., discuss the question as follows: "No doubt the general rule, both at law and equity, is ignorantia juris haud excusat, as the courts of this State have repeatedly declared. 12 The rule, however, has not been considered universal and inflexible. Thus, in Champlin v. Laytin, 18 Vice Chancellor McCoun said: 'As a general rule this court does not relieve upon the ground of a mistake in matters of law, because every man is presumed to have a knowledge of the law. Yet there are cases in which this court will interfere upon the ground of such mistake, as for instance, if both parties should be ignorant of a matter of law, and should enter into a contract for a particular object, and the result according to law should be different from what they mutually intended, there on account of the surprise or immediate result of the mistake of both, there can be no reason why the court should not interfere to prevent the enforcement of the contract and to relieve from the unexpected consequences of it. To refuse would be to permit one party to take an unconscientious and inequitable advantage of the other and to derive a benefit from a contract which neither of them ever intended it should produce.' On this principle he based his decree. On appeal,14 Chancellor Walworth, affirming the decree for other reasons, refrained from expressing any opinion one way or the other upon the point of the decision below, which he said presented great difficulties on both sides. In the Court of Errors, 15 notwithstanding Justice Bronson's elaborate and forcible presentation of the opposite view, Senator Paige stated his concurrence in the principle laid down by the Vice Chancellor. So, in England, Sir John Leach, V. C., in Naylor v. Winch,16 said: party, acting in ignorance of a plain and settled principle of law, is induced to give up a portion of his indisputable property to another under the name of compromise, a court of equity will relieve him from the effect of

'If a

12 Garwood v. Eldridge, 1 Gr. Ch. 145; Bentley v. Whitmore, 3 C. E. Gr. 366; Hampton v. Nicholson, 8. C. E. Gr. 423: Hayes v. Stiger, 2 Stew. 196. 136 Paige, 189, 195.

14 Id. 202.

15 18 Wend. 407.

16 1 S. & S. 555.

his mistake.' And in Cliffton v. Cockburn,17 Lord Brougham said: 'I think I could, without much difficulty, put cases in which a court of justice, but especially a court of equity, would find it an extremely hard matter to hold by the rule and refuse to relieve against an error of law.' Likewise, in Stone v. Godfrey, 18 Lord Justice Turner stated that he had no doubt the court had power to relieve against mistakes in law as well as against mistakes in fact. Similar dicta by all the justices appear in Rogers v. Ingham.19 In the recent case of Cooper v. Phibbs, 20 the Lord Chancellor of Ireland said: 'No doubt a mistake in point of law may be corrected both in this court and in a court of law. This is now, perhaps, sufficiently established, though it was for some time a subject of controversy in courts of law;' and finally, when the case reached the House of Lords,21 Lord Westbury used this language: 'It is said ignorantia juris haud excusat; but in that maxim the word 'jus', is used in the sense of denoting general law, the ordinary law of the country. But when the word 'jus' is used in the sense of denoting a private right, that maxim has no application. Private right of ownership is a matter of fact; it may be the result also of matter of law, but if parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is that that agreement is liable to be set aside as having proceeded upon a common mistake.' To the same effect is the language of Lord Chelmsford, in Beauchamp v. Winn, 22 concurred in also by the other law lords. These citations, and others of similar purport might be added, sufficiently indicate that in a court of equity at least a man is not, under all circumstances, to be regarded as fully comprehending all his legal rights and duties, so far as they grow out of facts which he knew or with reasonable diligence might have learned. Indeed, one large branch of equity jurisprudence, the reformation of written instruments appears to rest mainly upon an exception to

such a doctrine; for if parties acquainted with the tenor of documents which they execute are to be conclusively presumed to know also their legal import, it would seem that there could be no room for the notion that the writings did not express their real intention. But constantly courts of equity reform the most solemn instruments, upon the ground, not that the parties have inserted words which they meant to exclude, or omitted words which they meant to insert, but that the language does not express their agreement; that they did not put upon the terms employed the same construction as the law does; in short, that there was a mutual mistake of law, using the word 'law' in its broader sense. 23 In this state of the decisions and dicta it would be scarcely prudent to attempt to lay down a very comprehensive rule for the relief in equity against mistakes of law. I am not prepared to agree with Lord Westbury that in all cases the ownership of property is to be classed among matters of fact, or that in the maxim ignorantia juria haud excusat,' jus denotes general law, the ordinary law of the country, as distinct from the legal interpretations of private instruments. But I think it will be found to accord with the decisions and with the safe and equitable conduct of affairs, to establish this rule. That whenever the mistake of law is

mutual, and the party jeopardized thereby can be relieved without substantial injustice to the other side, there equity will afford redress, especially if the party to be benefited by the mistake invokes the aid of equity to put him in a position where the mistake will become advantageous to him."

dorser of a commercial paper. This subject is not embraced in De Colyar's work on Guarantors and Principal and Surety, but a brief note is prefixed thereto by James Appleton Morgan of the New York Bar.1

The American editor refers very fully and clearly to the case of Monson v. Drakeley, and presents the interesting points arising in a legal view of the differences between the obligations of such parties, and the difference in their respective rights. We will make no examination of that case, but refer to it as presented in the note to De Colyar, page 357.

66

A very interesting case was argued at a later day than the decision of Monson v. Drakeley, in the Supreme Court of the United States and decided at the October term, 1877. The court held: "In a suit upon a promissory note, the court below charged the jury that if the defendant, without making any statement of his intention in so doing, wrote his name on the back of the note before its delivery to the payee, he is presumed to have done so, as the surety of the maker, for his accommodation, and to give him credit with the payee; and that, if such presumption is not rebutted by the evidence, he is liable on the note as maker. Held, that the charge was not erroneous." 3

This does not controvert the doctrine in Monson v. Drakeley that the guarantor of the ability of the maker is in no sense in privity with the sureties, his undertaking being collateral and independent. He is not chargeable by them with contribution, and cannot claim it; and if he pays the debt his remedy is against the principal claim for indemnity. Clifford, J.,delivering the opinion of the Court. remarked: Decided cases almost innumerable affirm the rule that, if one, not the promisee indorses his name in blank on a negotiable promissory note before it is endorsed by the payee, and before it is delivered to take effect as a promissory note, the law presumes that he intended to give it credit by becoming liable to pay it either as guarantor or as original promisor." 4

an

Notwithstanding the different views held as

1 De Colyar on Guaranties, and Principal and Surety, p. 357. 240 Conn. 553.

3 Good v. Martin, 5 Otto, 90.

4 Bryant v. Eastman, 7 Cush. 111; Benthall v. Judkins, 13 Met. 265; Colburn v. Averill, 30 Me. 310.

to the responsibility of an indorser, if made at the inception of the note, it is presumed to have been for the same consideration and a part of the original contract. But if made subsequently to the date of the note without a prior indorsement by the payee, it will be presumed that it was not for the same consideration, and the party, if liable at all, will be considered as a guarantor. Such a contract to guarantee the debt of a third person, must be in writing, and there must be sufficient proof of the consideration.5

The indorsement of the note by a person after a prior indorsement by the payee, the law presumes it to have been done in aid of the negotiation of the note, and the party will be regarded as a subsequent indorser, vide opinion of Clifford, J., in Good v. Martin."

Considerable difference of opinion exists in the decisions of courts, when the record presents a mere black indorsement by a third party, made before the instrument is indorsed by the payee, and before it is delivered to take effect; the question being whether the party is an original promisor, guarantor or indorser. A ruling principle ought to be that the interpretation of the contract ought to be such as would carry out the intention of the parties. And while it is admitted that proof of intention is admissible from the facts and circumstances attending the transaction, it is also very frequently the case that none occurred, or there is no testimony known that can decide the intention.7

In Absence of Proof.—It has been held under such circumstances that, in absence of proof that the indorser signed the guaranty as a general surety, and with the intention of being liable to contribution with other sureties, he was liable as a guarantor; under such circumstances the plaintiff, as legal holder of the note, can recover from him the whole amount.8

In what Relation the Indorsers are Held.

5 Opinion of Clifford, J., in Good v. Martin, citing Brewster v. Silence, 8 N. Y. 207; Leonard v. Vredenburgh, 8 Johns. (N. Y.) 29; Hall v. Farmer, 5 Den. (N. Y.) 484.

6 Ranger v. Cary, 1 Met. 369; Noxon v. DeWelf, 10 Gray, (Mass.) 343; Collins v. Gilbert, 94 U. S. 753.

7 Denton v. Peters, Law Rep. 5 Q. B. 475; Cavazos v. Trevino, 6 Wall. 773; Shore v. Wilson, 9 Cl. & Fin. 355; Addison Contr. (6th ed.) 919; Taylor's Ev. (6th ed.) 1035.

8 DeColyar on Guaranties, & Principal and Surety, note by American Ed., p. 358.

This question, after much discussion, may be treated as settled by the learned and logical opinion of Mr. Justice Clifford, in the Supreme Court of the United States, where he says:

"Third persons indorsing a negotiable promissory note before the payee, and before it is delivered to take effect, cannot be held as first indorsers, for the reason that they are not payees; and no party but the first payee of the note can be the first indorser, and put the instrument in circulation as commercial security. Such a third party may, if he chooses, take upon himself the limited obligation of a second indorser, but, if he desires to do so, he must employ proper terms to signify that intention, the rule being that a blank indorsement supposes that there are no such terms employed, and that he is liable either as promissor or guarantor." "

The difference between a guarantor, and an indorser is fully recognized and usually distinct, from the nature of the obligation, and the character of the contract.

We will only further remark, on this point, that the obligation of the indorser of a bill of exchange, or other negotiable paper by his indorsement makes him responsible to the holder for the amount of the bill or note, if the latter shall make a demand from the payor, and in default of payment give proper notice thereof to the indorser. But the indorser may make his indorsement conditional, which will operate as a transfer of the bill, if the condition be performed; or he may make it qualified, so that he shall not be responsible on non-payment by the payee.' In relation to the guarantor, his obligation is distinguished from suretyship like that of an indorser, in being in the alternative, and his contract must be specially set forth.11

The principle of obligation recognized under the law of indorsement is, that the first indorser is liable to every subsequent bona fide holder. 12

How ought a suit to be brought on a negotiable or promissory note?

Who Should be Made Parties.-This is not

9 Good v. Martin, 5 Otto, 90, 96. Mr. Justice Cifford's opinion.

10 Chitty on Bills, 179, 180. 118 Pick. (Mass.) 423.

12 3 Kent. Com. 89.

only an interesting legal question, but has received different views by Supreme Courts in different States.

"The holder may, when the note has been dishonored, either resort to his immediate indorser, and then he must give him notice within proper time, or he may resort to any or all of his indorsers, in which case he might give them notice respectively, in the same manner as if each was the sole indorser; for the holder is not entitled to as many days to give notice, as there are indorsers, but each indorser has his own day. If, therefore, there are five indorsers, and the holder should not give notice to the first indorser until five days, that will be too late; and, unless some subsequent indorser has given him notice in due time, who has himself received due notice, such first indorser will be discharged from all liability to the hold

er. ,, 13

Can the Maker and the Indorser on a Promissory Note be Sued by the Holder?—This question has attracted much attention among authors, and the courts. It admits of a very extensive discussion.

We find it stated in the following positive language: "A suit against the maker and indorser of a promissory note cannot be maintained, there being no joint liability,

their contracts being several, and their liability depending upon different contingencies.14 We have cited the head note in the case of Webster v. Barnett. The question is but briefly argued by the chief justice delivering the opinion, it being considered a misjoinder to sue the maker and indorser of a promissory note, the chief justice remarking in quotations: "If too many persons are joined as defendants in an action on a contract or specialty, if the objection do not appear on the pleadings, the plaintiff may be nonsuited; or if the objection appear on the pleadings, defendant may demur, move in arrest of judgment, or bring error.

15

If the opinion of the court is correct as to the misjoinder, there is no question as to its

13 Story on Promissory Notes, § 330; Pardeseus Droit Commercial, tom. 2, Art. 429-430; Chitty on Bills, c. 10, p. 523, note (a).

14 Webster v. Barnett, 17 Fla. 272.

15 Citing 2 Saunders Pl. & Ev., 15; 1 Chitty Pl., 50; Tidds Pr. 630; Chandler v. Parkes, 3 Esp. N. P. 76; Coryton v. Sithebye, 2 Saund. Rep. 112, 117 note.

soundness, and the force of the authorities cited; and also, "that in an action ex contractu against several defendants, the plaintiff must show a joint liability in all."16 We have no doubt as to the soundness of the opinion of the court in this case, from the manner of the pleading; yet we consider it worthy of investigation, on other authorities, from the standpoint whether it is a misjoinder of action to sue a maker and endorser on a negotiable note.

We find it stated by Mr. Justice Story:

"Duties of the Maker- Payment.-In the next place, as to the duties and obligations of the maker of a promissory note. They may be summed up in a very few words. He undertakes to pay the money stated in the note at the time when it becomes due, or, as the common phrase is, at its maturity, to the payee or other person entitled to receive the same, according to the tenor thereof."'17 The maker, in case of the note being payable to bearer, or indorsed in blank, may discharge himself by payment to any person who is in possession of it with an apparent lawful right of ownership. 18

In connection with this subject Story says: "It is no part of the duty of the holder to sue the maker; he has the choice to sue whom he

pleases; all the indorsers are in default to

him." 19

Charging Indorsers.-By general commercial laws the indorser can recover against any antecedent indorser by making due demand on the maker, and due notice of dishonor given the indorser.20 An action by the payee against the maker alone is allowed, and is the common practice. An action is also proper by the indorser against the maker, or by endorsee against indorser.21 The parties to a bill of exchange are the drawer; the drawee; the acceptor; the payor; the indorser, or he who writes his name on the back of the bill for the purpose of becoming a surety to pay it on condition that the parties before him shall not do so, and also on condition that notice of such non-payment

16 Vide Opinion of the court in this case, p. 278.

17 Story on Prom. Notes (7 ed.) § 113.

18 Ib. Bayley on Bills, c. 5, § 2, pp. 129-131; (5 ed.) Story on Bills, § 450.

19 Story on Prom. Notes, § 115, a. 20 Ib. 171.

21 2 Archibalds N. P. pp. 109-124-129.