Story Case

Hays Hammond executed and delivered this bill of exchange to Jeannette Gilder:

"$50. January 15,1915.

John Stillman, pay, in thirty days, to Jeannette Gilder, or order, fifty dollars.

(Signed) Hays Hammond." Stillman accepted the instrument, but failed to pay it after the thirty days had expired. When Gilder brought suit against Hammond his attorney maintained that, since the bill of exchange did not contain words showing a consideration, it must be proved by the holder of the bill. Is this correct?

Ruling Court Case. Hatch Vs. Trayes, Watson Vs. Kightley, Volume 11 Adolphus And Ellis Reports, Page 702

These were two cases of similar fact passed upon by the court at the same time. In the first case Trayes made a promissory note in writing, and delivered it to Hatch, and thereby agreed to pay Hatch, or his order, the sum of £44. At maturity, payment not being made, Hatch sues.

In the second case, Watson drew a bill of exchange upon Kightley, directing the latter to pay to Watson, or order, one month after date, the sum of £7 8s 10d. Kightley accepted the bill. When the bill was presented for payment, Kightley refused to settle it. Watson sues him.

In each case, by way of defense, it was contended that there was no liability, because in neither the note nor the bill occurred the words "for value received.,, It was insisted that these words were necessary to render the respective instruments valid.

Decision: It is not a necessary thing in a note or a bill to recite that it is given for value received. Therefore, Hatch and Watson may recover against Trayes and Kightley, respectively. Lord Denman, Chief Justice, said: "The question was substantially the same in the two cases, and the counsel who contended that the actions were not maintainable for want of words "value received" admitted that, if these words had been inserted the plaintiff in each case must have succeeded. But we are of opinion that those words express only what the law must imply, in each case, from the nature of the instrument and the relation of the parties apparent upon it, and it, therefore, makes no difference, as to this question, whether the words be or be not inserted." Judgment was given in the first case for Hatch and in the second case for Watson.

Ruling Law. Story Case Answer

Though the words "Value Received" are generally inserted in bills, notes and checks, they are not necessary to the validity of the instrument. It is sometimes supposed that they are necessary, in order to create the presumption of consideration. But the law presumes a consideration because of the nature of the instrument, and the insertion of these words does not affect the instrument one way or the other. The contention of the attorney, in the Story Case, is not correct.