What is the holding of Mandeville & Jameson v. Riddle?

A remote indorsee of a promissory note cannot sue a prior indorser in assumpsit for money had and received because there is no privity of contract between them; the implied promise from indorsement runs only to the immediate indorsee.

Why does privity of contract matter in this case?

Because the Virginia statute did not create an express right to sue indorsers, any such action had to rest on an implied promise. The law implies a promise only between parties in privity—here, between the assignor and the immediate assignee, not remote parties down the chain of indorsements.

What is the difference between suing the maker versus suing an indorser under the Virginia statute?

The Virginia statute expressly authorized the assignee to sue the maker of the note in debt. But the statute was silent on suing indorsers, so liability of indorsers depended on common-law principles of implied contract, which required privity between the parties.

Why does this case matter for bar prep and 1L Contracts?

It illustrates the strict privity requirement for implied contracts and the historical limits on negotiability before the UCC. Students should understand how privity restricted the assignability of contract rights and how quasi-contractual remedies like money had and received were bounded by the same requirement.

Could Riddle & Co. have sued anyone successfully on this note?

Yes. Riddle & Co. could sue Gray, the maker (which they did, though he became insolvent), and they could sue M'Clenachan, their immediate indorser, with whom they had privity. They simply could not reach back to Mandeville & Jameson, an earlier indorser.

Contracts · MBE-tested

MANDEVILLE AND JAMESON v. JOSEPH RIDDLE AND CO.

5 U.S. 2901 Cranch 290·Supreme Court of the United States·1803

Remote indorsee cannot sue prior indorser for want of privity of contract.

Summary

The Supreme Court held that under Virginia law, a remote indorsee of a promissory note cannot sue a prior indorser in assumpsit for money had and received because no privity of contract exists between them. The implied promise arising from indorsement runs only between the immediate assignor and assignee, not to subsequent holders. The Virginia statute that made notes assignable authorized suit against the maker but was silent on assignor liability, leaving the assignee's remedy against assignors to rest on implied contract—which requires privity.

ContractsNegotiable InstrumentsQuasi-Contract (Money Had and Received)Privity of Contract

Parties

Plaintiffs in error: Mandeville and Jameson (first indorsers). Defendants in error: Joseph Riddle and Co. (final indorsees).

Procedural posture

Joseph Riddle and Co. sued Mandeville and Jameson in the circuit court for the District of Columbia sitting at Alexandria, bringing an action for money had and received. The circuit court ruled in favor of Riddle and Co., and Mandeville and Jameson sought review by writ of error to the Supreme Court.

Facts

Vincent Gray executed a promissory note on March 2, 1798, promising to pay $1,500 sixty days after date to the order of Mandeville and Jameson. Mandeville and Jameson indorsed the note to James M'Clenachan, who in turn indorsed it to Joseph Riddle and Co. On May 5, 1798, a notary protested the note, showing that both Gray and Mandeville and Jameson refused payment; M'Clenachan did not dwell in the notary's district. Riddle and Co. sued Gray, obtained judgment, and had him imprisoned; Gray took the insolvent debtor's oath and was discharged on February 6, 1799. In July 1801, Riddle and Co. commenced the present action against Mandeville and Jameson on a single count for money had and received. The circuit court permitted the action and admitted the note into evidence.

Issue

Whether an action of indebitatus assumpsit for money had and received can be maintained by a remote indorsee of a promissory note against a prior indorser when there is an intermediate indorser between them?

Holding

Under Virginia law, an action of indebitatus assumpsit cannot be maintained by a remote indorsee against a prior indorser because there is no privity of contract between them; the implied promise arising from indorsement runs only to the immediate indorsee, not to subsequent holders.

Rule

A remote indorsee of a promissory note cannot maintain an action of indebitatus assumpsit against a prior indorser when an intermediate indorser stands between them, because the law implies a promise only between immediate parties to an assignment, and privity of contract is required to enforce such an implied obligation.

Reasoning

Chief Justice Marshall began by identifying the controlling law: the Virginia assembly's statute made promissory notes assignable and gave the assignee a right to sue the maker in debt, but was silent regarding any claim against the assignor. Virginia case law had settled that an assignor becomes liable upon assignment for the note's contents if the maker proves insolvent, but left open questions about the measure of damages and whether an assignee could pursue anyone other than the immediate assignor. The Court applied common-law contract principles. Because the Virginia statute created no express right to sue the assignor, any such action must rest on an implied promise. The law implies a promise only from facts showing an undertaking. When an assignor indorses a note to a specific person, the law implies a promise to that person based on the act of assignment itself. But the indorsement creates no factual basis for implying a promise to anyone other than the immediate assignee. The Court framed this in terms of privity: privity of contract exists between assignor and immediate assignee, but no privity exists between the assignor and a remote assignee further down the chain. The implied promise is personal to the transaction between assignor and assignee. The Virginia statute did not make the implied contract itself assignable; it made only the underlying note assignable as against the maker. Therefore, a subsequent holder acquires rights against the maker but not against prior indorsers with whom he has no direct contractual relationship. The Court rejected the argument that principles governing negotiable instruments or the custom of merchants created universal liability to any holder. The action for money had and received, though flexible, still requires that the defendant hold money belonging to the plaintiff. Here, any implied promise by Mandeville and Jameson ran only to M'Clenachan, their immediate indorsee, not to Riddle and Co., who dealt only with M'Clenachan.

Judgment

Reversed.

Why it matters

This early Supreme Court decision illustrates the strict privity-of-contract requirement that governed negotiable instruments before modern commercial codes. It is important for contracts students studying the evolution of negotiability, the doctrine of privity, and quasi-contractual actions like money had and received. The case shows how implied-in-law obligations were limited by the absence of privity, a principle later liberalized by statute and the development of the law merchant. It also demonstrates how state law governed the incidents of promissory notes in the absence of comprehensive federal commercial law.

Authorities cited

Grant v. Vaughan, 3 Burr. 1516 — distinguished; court limited its holding to notes payable to bearer, not applicable where privity is lacking
Miller v. Race, 1 Burr. 452 — cited in argument for negotiability principles but distinguished as involving bearer instruments
Ward v. Evans, 2 Ld. Raym. 930 — cited in argument to show money had and received does not require privity, but Court rejected application to remote indorsers
Smallwood v. Vernon, 1 Strange 479 — cited in argument for proposition that indorser is as maker of new note, but Court limited liability to immediate indorsee

Opinion

MANDEVILLE AND JAMESON v. JOSEPH RIDDLE AND CO. In Virginia, an indorsee of a promissory note can not maintain an action against a remote indorser, for want of privity. Error from the circuit court of the district of Columbia sitting at Alexandria, in an action on the case brought by the defendant in error for money had and, received, which was the only count in the declaration; and to which the defendant pleaded the general issue. The evidence offered and admitted to support the declaration was a promissory note made by Vincent Gray, dated at Alexandria on the 2d of March 1798, by which he promised to pay sixty days after date to the order of Mandeville and Jameson 1500 dollars for value received, negotiable at the bank of Alexandaia. This note was indorsed by Mandeville and Jameson to James M‘Clenachan, and by him to Joseph Riddle and co. the defendants in error. The protest of a notary public made on the fifth May 1798, attesting that he had on that day demanded payment of the note of the maker, who refused, and of Mandeville and Jameson the first indorsers, who also refused, and that James M'Clenachan the other indorser did not dwell in his district. The record of a suit on the same note brought by Joseph Riddle and co. on the 14th of June 1798, against Vincent Gray, the maker, prosecuted to final judgment and execution, upon which execution he was committed to jail and took the oath of an insolvent debtor and was discharged, on the 6th of February 1799. The present action was commenced in July 1801. A bill of exceptions was taken by the defendants below, stating these facts, and that they prayed the opinion of the court, 1st. Whether, this action could be sustained by the present “ plaintiffs against the present defendants, there be- “ ing an intermediate indorser between them,” and, 2dly. “ Whether if the said action is sustainable, the “ said evidence is admissible upon a single count for money “ had and received: ” and that the opinion of the court below was that the action might be sustained, notwithstanding the intermediate indorser ; and that the evidence was admissible upon the single count for money had and received. Verdict and judgment for the plaintiffs for 1919 dollars and costs, to reverse which, the defendants below sued out the present writ of error. E. J. Lee and Swann, for plaintiffs in error. Simms, for defendants. E. J. Lee. 1st. The action of indebitatus assumpsit will not lay for holder against a remote indorser, because there is no privity of estate or privity of contract. It is an action at common law; and by the common law no action of indebitatus assumpsit for money had and received will lay except between privies. Kyd. 175. (113, 114) 2d. There being only one count in the declaration, and that being only for money had and received, the note ought not to have been given in evidence, because it must have been a surprise to the defendants. In England it is usual to give notice of the plaintiffs real ground of action either by a special count, or by a formal notice. The defendants could not come prepared to defend the action. The action for money had and received is said to be in the nature of a suit in equity. But here the defendants were in a worse situation, than if a bill in chancery had been filed against them; for in that case the bill must have stated the grounds of the claim and shown the equitable circumstances which entitled the plaintiffs to recover. A remote indorser is liable to the holder only upon the custom of merchants, and therefore there ought to have been a special count stating the custom. The English statute of Anne respecting promissory notes is not in force in Virginia ; and the act of assembly which supplies its place only allows an assignee to bring an action of debt in his own name against the maker of the note, but gives no remedy against the assignors. Hence it results that the remedy of the assignee against the assignors is either at common law or under the custom of merchants. By the common law the action of indebitatus assumpsit lies only between privies ; and here is no privity. And if resort be had to the custom of merchants; that custom must be averred in the declaration. Simms, contra. Every indorser is as the maker of a new note. 1 Strange, 479, Smallwood v. Vernon. Esp. N. p. 33. 2 Bur. 674, Heylin v. Adamson. He undertakes to pay the sum mentioned in the note, if the original maker does not. As soon as the original maker fails to comply with his engagement, that of the indorser becomes absolute. He then becomes the holder of so much money as is expressed in the note, to the use of his immediate indorsee, or of such person as he shall name. It is true the plaintiffs below have fought their remedy at common law; and by common law they are entitled to recover. Every man ought to be compelled to pay money which he has in his hands belonging to another, and which in equity and good conscience he has no right to retain. And the principle is now well established that at common law he may be compelled to pay it, by action for money had and received. As to the evidence offered on this count, it was long doubted, before the statute of Anne, whether any other than an action of indebitatus assumpsit for money had and received, or for money lent, would lay upon a note. This was the ground of contention between lord Holt and the merchants of Lombard street; he strenuously contending that the action for money had and received, or for money lent, was the only proper remedy; and they endeavoring to bring into use the form of declaring upon a note as a specialty. Although a note may now, under the statute, be declared upon as a specialty, yet the statute has not taken away the common law remedy which existed before. As to surprize, the objection made would go to almost every case where money had and received is the proper action, such as where the consideration happens to fail, or where money has been paid by mistake, &c. Indorsement is evidence that the indorser has received money of the indorsee. And at and from the time of the indorsement, the indorser is debtor to the indorsee, and the debt may be proved under a commission of bankruptcy against the indorser before the note is payable. In this case however there could be no surprize, the defendants below had notice of the non-payment of the note and that they would be held liable; and it is immaterial by what means notice is given. Doug. 138, Longchamp v. Kenny. In the case of Grant v. Vaughan, 3. Bur. 1516, the cases upon promissory notes before the statute of Anne are taken up and considered with great clearness and ability by the court. Every principle established in that case furnishes an argument for the original plaintiffs in this. The case there was, that Vaughan drew a check or order on his banker in these words ( “ pay ship Fortune or bearer “ £.70”) and gave it to Bicknell, who lost it. It was found by some person, and honestly taken in payment for goods by the plaintiff, in his way of trade as a mercer. Payment of the check being stopped at the bankers, the plaintiff brought suit against Vaughan the drawer, and declared upon an inland bill, and for money had and received to his use. It was held that there notes are, by law, negotiable and were so before the statute of Anne, and that the bearer of them might maintain an action as bearer, where he could entitle himself to them on a valuable consideration, and for this was cited Hinton’s case, 2 Shower 235, in the reign of Charles 2d. Crawly v. Crowther, 2 Freeman 257, in the year 1702, before the statute of Anne. 1. Salk. 126 pl. 5. Anonymous, 10th Will. 3d. And Miller v. Race, 1. Bur. 452. 31 Geo. 2. That the only dispute before the statute of Anne was as to the mode of declaring: but that it never was disputed “ that an action upon an indebitatus assumpsit generally for “ money lent, might be brought upon a note payable to “ one or order;” and cites 2d lord Ray, 758, Clerke v. Martin. “ That upon the second,” lord Mansfield said, “ the “ present case is quite clear, beyond all dispute. For un- “ doubtedly, an action for money had and received to the “ plaintiff’s use, may be brought by the bona fide bearer of “ a note made payable to bearer. There is no case to the “ contrary. It was certainly money received for the use “ of the original advancer of it; and if so, it is for the use “ of the person, who has the note as bearer.” And Wilmot, justice, said, that it was notorious, that such notes were fact and practice negotiated. “ Proba- “ bly, the jury took upon themselves to consider, whether “ such bills or notes as this is, were in their own nature “ negotiable; but this is a point of law; and by law, they “ are negotiable.” And again he says, “ but this is a “ negotiable note; and the action may be brought in the “ name of the bearer. Bearer is descriptio personæ; and “ a person may take by that description, as well as by any “ other. In the nature of the contract, there is no impro- “ priety in his doing so. It is a contract to pay the bearer, “ or to the person to whom he shall deliver it, (whether it be “ a note or a bill of exchange;) and it is repugnant to the “ contract, that the drawer should object that the bearer “ has no right to demand payment from him. The rea-“sons given in the cases that are opposite to this are alto- “ gether unsatisfactory.” Even before the statute of 3 and “ 4 Anne, lord chief justice Holt himself thought, that an “ indebitatus assumpsit for money lent, or for money had and “ received, might be maintained upon such a note.” And Yates, justice, said “ Nothing can be more peculi- “ arly negotiable than a draught or bill payable to bearer; “ which is, in its nature, payable from hand to hand, toties “ quoties.” It had been doubted, it is true, whether that “ species of action, where the plaintiff declares upon the “ note itself as upon a specialty, was proper; but here is a “ count upon a general indebitatus assumpsit, for money had “ and received to the plaintiff’s use. The question, whether “ he can maintain this action, depends upon its be- “ ing assignable, or not The original advancer of the “ money manifestly appears to have had the money in the “ hands of the drawer, and therefore he was certainly “ entitled to bring this action. And if he transfers his “ property to another person, that other person may also “ maintain the like action. Whoever has money in the “ hands of another may bring such an action against him. “ This appears from the determination in the case of Ward “ v. Evans, reported in 2 lord Ray, 930; where not a " shilling of money had passed between the plaintiff and defen- “ dant; and yet Holt and Powell both held that an inde- “ bitatus assumpsit for monies received to the plaintiff’s “ use, properly lay.” This case clearly shews, that actions upon promissory notes payable to bearer, or order, might have been maintained before the statute of Anne; and that such actions did not depend upon the privity of contract. There certainly is not more privity of contract between the drawer of a note, and the bearer, (especially after that note has been lost by the lawful owner, and comes to the hands of the plaintiff through the finder) than between the maker of a note payable to order, and the indorsee. It also shows, that there are certain instruments, which are negotiable in their own nature by force of the contract itself, independent of statute law; and that a promisee may as well be described by being the bearer of a certain paper, as by being named with his christian and surname. And if he may be designated by the fact of being the bearer of a paper, there is no reason why he may not equally be described by the fact of his being the nominee of a certain other person, and the holder of a certain note. There is no doubt that before the statute of Anne notes were passed from one to another, and actions for money had and received were, on common law principles, maintained by the bearers and indorsees. The indorsement was considered as conveying or assigning the money of the payee in the hands of the maker; and the original contract of the maker was, to hold the money to the use of the payee or of such person as he should appoint. Privity of contract is not the ground of the action for money had and received. And among the many cases of that kind, there will be scarcely found one in which such a privity has existed. If I lose money, I may have this action against the finder. If A. delivers money to B. to be paid over to C. the latter may maintain this action against B. If a man, under pretence of authority from me, receive money due to me, I may recover it of him in this form of action. So if I pay money to another by mistake. So if a man obtains money from me by fraud and deceit. So if the consideration of a bargain fail. So if one pretending to a right to an office receive fees, the rightful officer may, by an action for money had and received, recover of him the amount of fees so received. The indorser is a new drawer as to all the subsequent parties. He has received money from his indorsee which he engages to hold to his use, or to the use of such person as he shall appoint, in case the maker does not pay the note on demand. This principle results from the custom of merchants; for the moment a promissory note payable to order, is indorsed, it becomes, in its nature, independent of any statute, an inland bill of exchange, both in form and substance. The indorser orders the maker to pay to the indorsee, or his order, the sum of money mentioned in the note. The maker by signing the note acknowledges that he has effects of the payee, to the amount of the note, in his hands; and by making the note payable to the order of the payee, he authorizes the payee to draw upon him for that amount, and pledges himself to honour the draft. An acceptance may be made before the bill is issued, and is equally binding as if made after. Kyd. 48. 49. The signature of the maker to the note is an acceptance of the payee’s bill. No part or circumstance of a bill of exchange is wanting. The plaintiffs below therefore were clearly entitled to recover the money from the defendants; and therefore the defendants ought not in justice and good faith to withhold it. In such a case there never has been a doubt but that the bill may be given in evidence on the count for money had and received. Swann in reply. If the indorser is liable, it must be under the act of assembly. But the act of assembly gives an action only against the maker, as is evident from the provision for allowing all just discounts, not only against the holder but against his assignor before notice. No case can be found of an action for money had and received brought by an indorsee against a remote indorser, either before the statute of Anne or after. The cases cited are of a note payable to bearer. If any action will lay, it must be on the statute of Virginia. Marshall, chief justice. It is decided in Virginia that an action is maintainable by the assignee against the assignor, and not under the act of assembly. February 26th. [MAJORITY — The chief justice] The chief justice delivered the opinion of the court. “ The only question in this case is, Whether an action “ of indebitatus assumpsit can be maintained by the assignee “ of a promissory note made in Virginia, against a re- “ mote assignor. “ The act of the Virginia assembly which makes notes “ assignable, gives the assignee an action of debt in his own “ name against the maker of the note, but is silent with “ respect to the claim of the assignee against the assignor. “ It was therefore long a doubt whether the assignor be- “ came liable on his mere assignment, without any special “ agreement, for the contents of the note, in the event “ of the insolvency of the maker. This doubt has at “ length been settled in Virginia, so far as to declare the “ liability of the assignor on such assignment; but not the “ amount for which he is liable. It seems to be yet a ques- “ tion whether he is answerable for the sum mentioned in “ the note, or for only so much as he received for it, “ provided he shall be able to prove the sum actually re- “ ceived. It is also a question whether the assignee can “ have recourse to any other than his immediate assignor. “ As the act of assembly gives no right to sue the as- “ signor, such an action can only be maintained on the “ promise which the law implies from the assignment, and “ consequently can only be sustained by and against the “ persons to and from whom the law implies such a pro- “ mise to have been made. As the assignment is made to “ a particular person, the law implies a promise to that “ person; but it raises no promise to any other. There “ is no fact on which to imply such promise. “ In the language of the books, there is a privity be- “ tween the assignor and his immediate assignee; but no “ privity is perceived between the assignor and his remote “ assignee. The implied promise growing out of the in- “ dorsement, is not considered as having been made as- “ signable by the act of assembly, and therefore the as- “ signee of that promise can not maintain an action of “ indebitatus assumpsit on it. “ It is therefore the opinion of the court that this ac- “ tion is not maintainable and that the judgment ought “ to be reversed.” See note (A.) in the appendix to this volume of reports.