Case ID: tex_4/html/0055-01.html
Source: Caselaw Access Project
Author: {"author": "Hemphill, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Smith v. Clopton.
    wh«a party premised in writing to pay so muc.h an ac.ro for ■> i many acres as, &c., and at a subsoqtH'tn. timo indorsed the number of aoi and iixcc he amount to bo paid: Held, Tied theiusfr'imenfc was a promissory note fro. i iho'time o‘ :,ie indorsement.
    Th. only inquiry to lie made is whether the facts . ■' tho case sueh,as to entitle the. party in a ¡adamen', in his favor, in either law or eq'toy; and if Iv have rights cognizable by her, such relief will be adjudged by tho ooui • a; die nutur- of tho ease demands. (Note 21.)
    Our laws recognise the negotiability of promissor notos. IV m .otlie assignment is in writing, there nail b > no question of the rights of .he assignee i , bring the aetion in ins own name; and who.re an instrument payable to bt veer is transir red by delivery, the right of the assignee seems on principle to bo equally < loar. (Note 21.)
    
      ’Qucrc, as to the eas as in which tho vendee may resist the payment of tile purchase-money,on the ground of defect of title in the vendor. (Note 2Ó.) where there is no proof to tho contrary, a negotiable instrument in the hands of a third person will bo presumed to have been transferred before maturity.
    Appeal from Bastrop. Clopton. as bearer of the following instrument in writing, sued Smith in a Justice’s Court:
    “ On or before the first (lay of January ne"xt, I promise -to pay IV. B. Wal- “ drop or bearer one dollar ancl fifty cents for each and every acre of land “ which lies north (that is to say) above Walnut Creek, which said Waldrop “has this day sold to me, being part of the land which was sold unto the said “Waldrop byL. C. Cunningham, the said land being (he consideration of “ this note; and if this note is not paid promptly at maturity, id shall draw interest at the, rate of ten per cent, per annum until paid. Witness: E. C. “ CüNNINCrHAM.
    Thohas Smith.
    “BASTROP, April loth, 184S.
    “Since, the within was written, tho land has been surveyed and found to be “sixty-five acres, which will make the within call for 697.50.
    “Thomas M. Smith.
    “Bastrop, Now. 10í7¿, 1848.”
    •Clopton recovered judgment in tho Justice’s Court, and Smith appealed to the District Court, where Clopton again
    recovered judgment. The only ((vide, nee besides tire instrument‘sued on was that the legal title to the laud for which (he note was given was in tho witness Cunningham; that Smith knew it at the time,; that he took Waldrop’s bond to make title as soon as the note was paid, and that he had ever since been in possession of the laud.
    
      Sneed 8? Oldham, for appellant.
    I. Tho instrument sued on is not a promissory note, hut an agreement. (Baylev on Bills, 14; Smith v. jSTight'mgale, 2 Stark. It., 373; Ellis v. Ellis, Uow.,‘210.)
    II. Cloy;oil held (he instrument sued upon as hearer. Ile'conld not maintain a suit, upon it as such. By the law merchant, which* may be considered part of ( lie common law, bills of exchange were the only instruments transferable by delivery so as 1o vest iri the holder a right of action upon them. The ■instrument in ibis case, if not a promissory note,'"does not come within the provisions of tho statute, of 3d and 4th Ann. Chan., 9, s. 1; and if a promissory note, that statute is not in force here. The- negotiable quality of every written instrument, save bills of exchange, must depend upon some positive statute. Our statute of 1810 does not authorize the transfer by delivery of an instrument payable to hearer.
    Equity has no jurisdiction of such a case. Courts of equity, it is true, as well as courts of law, will take, notice of assignment of papers not negotiable, and afford them every protection not inconsistent with the principles-and proceedings of tribunals acting according to tho course of the common law. (Manr idiville ®. Welsh, 3 Coiul. B. S. C. IT. S., 554; Andrews v, Beecher, 1 Johns. Cas., 411; Litttcfprd v. Story, 3 Johns. It., 42G; "Warden v. Eden, 2 Jolms.. Cas.. 121; Raymond v. Squicr, 11 Jolms. It., 47 ; 1 Wash. C. C. R.. 424.)
    III. The instrument sued on and the bond of Waldrop for title are hot parts of an entire contract. The stipulations are dependent, (limit v. Livermore,. 5 Pick. It., 395; Sexton a. Wood, 17 Pick. It., lit); Cunningham v. Gwinn,. 4 Blackf., 312; Tarpiey v. Poage’s Ad., 2 Tex. It., 139.) The vendor having no title, could convey none. But admitting- that Waldrop liad a good title to the laud and was able to conves', still lie could not sustain an action-for the recovery of the purchase-money without having- executed a conveyance' or offered to do so. (Sug. Vend., 229; 1 Pet. It., 435; Green v. Reynolds, 2 Johns. R., 207; Parker v. Parmale, 20 Johns. It., 130; Hudson v. Swift, 20-Johns. It., 24; Jones v. Gardiner, 10 Jolms. It., 2G0 ; Fulton v. Hubbard, G Cow. B., 13; Fuller v. Williams, 7 Cow. It., 53; Fauchot v. Leach, 5 Cow It., 50G; Blood is. Goodrich, 9 Wend. It., 08; Love®. Jones, 4 Watts., 4G5; Dearth ®. Williamson, 2 S. & R. R., 50; Withers v. Alkcasou, 1 Watts R., 230; 3. Rawle R., 393; Withers v. Beard, 7 Watts It., 227 ; Leonard v. Bates, 1 Blackf., 172.) w
    IV. Suit Being brought in the name of the assignee or hearer dons not alter the case. He took it subject to all the equities subsisting between tlie assignór and debtor. (2 Story Eq., 311.)
    Poage, for appellee,
    argued that the payment of the money was a condition, precedent to the making of the title. The appellant executed the note sued on, payable “on or before ” a particular day, and accepted "Waldrop’s bond to malm a title after the payment of the money. (Gibson «. Newman, 1 IIow. Mi. R., 341; Leftwich v. Coleman. 3 Id., 1G7; Owen v. Norris, 5 Blackf. R., 479; G Cow. R., 038; 1 Sug-. Vend.', 272, Gtli Am. Ed.; 1 N. Y. Dig-., 25S, 2GI.)-
    II. Waldrop could make title, although it was in a third person. (2 Sug. V., 27, Gth Am. Ed.; Ti-ask v. Vinson, 20 Pick. R., 111.)
    III. Tlie appellant entered into possession of the land and has kept possession under tlie purchase. (Ayres v. Pease, 12 Wend. R., 393; 2 Sug. V., S, 6th Am. Ed.; 1 Madd. Ch„ 440; Hoy ei al. v. Taliaferro, 8 S. & M. R., 727 ;■ Duncan et al. v. Lane, Id., 744.)
    IV. This court has decided that the holder or bearer of a note is-prima fade owner thereof, and can maintain an action on it in his own name.. (Ogden a. Slade, 1 Tex. R., 13.)
   Hemphill, Ch. J.

The first position contended for by appellant is that the instrument sued on is not a promissory note, and if a promissory note, it is not, according to the laws of this State, negotiable, nor does it vest such rights in Clopton as are required by the holders of instruments made negotiable by the law merchant or by statute.

The objection to its being- regarded as a promissory note, from the circumstance that no precise sum was, in its original formation, designated as the amount to be paid, we consider as obviated by the fact that this was ascertained and acknowledged on the same instrument, under the, signature of the maker,, before tlie note arrived at maturity. This acknowledgment conferred upon it certainty as to the amount, tlie only requisite wanting to constitute it a commercial negotiable instrument; and from the date of the admission it became the promissory note recognized by our laws as having tlie quality of negotiability and other incidents pertaining to mercantile paper by the usages of the law merchant.

It is urged that if it even be a promissory note, yet it does not possess the privilege of negotiability conferred on sucli instruments by the statute 3 and' 4 of Anne, c. 9, which is not in force in this State, nor any one containing similar provisions. It is true that we have no statute which in direct terms-declares, as does tlie English statute in substance, that a “note, payable to a “person or persons, bis", her, or their order, shall be assignable over in tlie “same manner as inland bills of exchange are or maybe by the custom of' merchants,” &c. But it is a misapprehension to suppose that the laws of this State do not recognize tiic negotiability of promissory notes. These instruments were, nuclei the laws iii force before 1S-10, negotiable, but with some restrictions not necessary to he specified. On the introduction of tiic common law, they were, by the “ act to dispense with the necessity of protesting negotiable instruments,” &c., (Acts of 1840, 145.) described as “mercantile negotiable instruments,” and as such were contradistinguished from other written instruments not assignable by the usages of commercial law. Bills of exchange and promissory notes are, in the lirst section of the statute, classed as “mercantile negotiable instruments,” and by the second any person to whom any of (lie “aforesaid negotiable instruments may have been assigned may thereupon maintain an action in his own name,” &c.; and “should he obtain sucli instrument before its maturity, by giving for it a valuable consideration, and without notice of any discount or defense against it,'then lie shall be compelled to allow only the just discounts against líhuself.” A promissory note is-treated by this statute as negotiable and as possessing the privilege of relieving the holder, by transfer before maturity, from the defenses which might be set up by the maker against the original payee of the note.

At the request of the counsel, we have examined the decision in the case of Ogden v. Slade, (1 Tex. R., 13,) and can perceive no error in the position that under our system of procedure an assignee of a note not negotiable is entitled to sue in his own name, or in his own nanie to discount such note against the demand of the plaintiff. Before the introduction of tho common law the distinction between law and equity'- was altogether unknown. The parties stated their causes of complaint and grounds of "defense, and on the allegations and proofs such relief was afforded as they were entitled to under any and all the laws of the land, without reference to the peculiarity of tho English system of jurisprudence which rendered the rights of parties, or at least their relief, dependent not only upon the facts of their case, but also upon thojfbma» in which redress was sought. Upon the introduction of the common law the intention of the Legislature is manifest to prevent such distinction from being recognized; at least to an extent which deprive parties of any'relief to which they maybe entitled under the rules and principles of either law or equity. By the Constitution of the State and subsequent legislation the distinction between these two systems is in a great measure,' if not totally, disregarded. The District Courts have jurisdiction of till suits, complaints, and pleas whatever, without regard to any distinction between law and equity. “Jury trials “are to be allowed on application of the parties in equity cases.” "(Art. 4, Const.) All civil suits are to be commenced by petition, which must contain a clear statement of tho cause of action and of tiic relief sought; (Acts of 1846, p. 305;) and the district judges are authorized, on an appropriate prayer for relief, to grant all sucli orders or writs or other process as may be necessary to obtain sucli relief; and may also so frame tiic judgments of the court as to afford all the relief which may be required by the nature of the ease, and which is granted by courts of law or equity. (Acts of 184G, p. 202.) The only inquiry then to be made at the institution of a suit is whether the facts of the case áre such as to entitle a party to a judgment in bis favor in either law or equity; and if ho have rights cognizable by either, such relief will be adjudged by the court as the nature of the case demands. The rule that courts of equity will interfere only where the party is remediless at law has but little application under a system in which the litigants in a suit can demand and obtain all the relief which can he granted by either courts of law or equity.

With reference, to" tile particular question under consideration, it seems to be of but little consequence whether an unnegotiable instrument be sued in the name of the payee, obligee, &c., or in that of the assignee. By the third section of the act of 1840, above referred to, tiic assignee of any bond or written instrument not negotiable is authorized to maintain an action in his owii name, allowing discounts and defenses to which it would have been subject in the hands of a previous owner. When the assignment is in writing, there can be wo question of the right of the assignee to bring the action .in his own name; and where an instrument payable to bearer is transferred by delivery, the right of tlie assignee seems on principle equally clear. An assignment in writing of an nnnegotiable chose in action has, under statutes somewhat similar to our own, been held to be a letter of attorney to the assignee, who may elect to regard himself in that character and sue in the name of the assignor or in his own, under tlie authority of tlie statute. (2 McCord’s R., 274) And the transfer by delivery of such instruments as the one under consideration (on the supposition that it'is not a negotiable promissory note) is regarded in courts of purely common-law jurisdiction as an authority for its collection, but in the name of the original payee. (2 Bailey R., 546.) The ground on which suit could not be brought nor discounts offered in tlie name of tlie assignee was from tlie fact that courts of common law could take notice only of legal rights. (2 Bailey R., 136.) This principle lias no application to our system’; and tlie reason of tlie rule no longer existing, the rule itself ceases to operate; and parties who have rights under tlie laws are entitled to have them sustained and enforced, whether they be legal or equitable. As before observed, the right of the assignee to bring a suit in his own name is of but little consequence,'as he is subject to all tlie equities and defenses which exist against tlie previous owner.

The defendant has urged as a ground for the reversal of the judgment a want of title in the vendor; and could this defense he legally set up against tlie plaintiff*,‘ who is the holder of tlie note, it would be’somewhat difficult to make a satisfactory disposition of the point under the circumstances of the case. It appears that the defendant was perfectly cognizant at the time of the sale of all the defects of the title. There is no evidence of fraud or misrepresentation on the part of the vendor. On tlie contrary, the vendee was informed at tlie time of tlie sale that the “title ” was in the witness, Cunningham, and there was a mutual understanding between witness, vendor, and vendee, at that time, that a title would lie made on payment of the price; and this the witness declared he is still willing to execute on the performance of that condition. Tlie vendor secured tlie vendee against loss by a bond of title, and the latter remains in undisturbed possession of tlie premises. It-would seem that if there be any ease in which a vendee, holding- possession under an executory contract, as this is, for the sale of lands, cannot resist the payment of the pitr-chase-money on the ground of the vendor’s title being wholly defective, this is one. But adversely to this view, it may be arguéd that iii executory contracts it is an undoubted principio that the purchaser lias a right to resist the payment of the-purchase-money or to have it- refunded if paid, on the ground of defect of title in the vendor. (11 Johns. R., 525; 8 Humph. R., 519; 2 Johns. R., 519; 1 Hill’s S. C. R., 326; 2 Rich. Eq. R., 320.) When tlie coutract is oxe-cutedand a conveyance lias passed, it is held in perhaps most of the States that such defense cannot avail tlie vendee, unless he has been evicted or there is fraud in the transaction. (S Humph. R., 519; 1 Johns. Chan. R., 213 ; 2 Johns. R., 519; 2 Rich. Eq. R., 336.)

The discussion of some of these points might with propriety have been waived, as not being absolutely ne'cessary to tlie determination of the ease; nor would they have' been considered had our attention not been especially directed to them by the able argument of the counsel of tlie appellant.

In others this defense is considered available, whether the vendee he in possession by deed or bj an equitable title. (1 N. & McC., 212; 2 N. McC., 199-204; 1 Rich. Eq., 52.) The fact of possession, according to these authorities, is of no consequence, as it is but that of a mere trespasser, who is accountable for the use and occupation to tlie real owner of the land. It would he without advantage to prosecute a further inquiry into the availability of this defense, if offered against tlie vendor under tlie circumstances of this ease. A decision of the question is not necessary to a determination of this case ; and we forbear the expression of an opinion, and especially as there might not be a full con•currence in any views which might be advanced.

Note 23 —Douglass v. Neil, 37 T., 528.

Noth 2k — The rule is the same where it is payable in other articles than money. (Hopkins v. Seymour, 10 T., 202.) The person having tho legal title to a note may maintain the action, though tho oqnitablo ownership bo in another. (Butler v. Robertson, 11 T., 142; Knight v. Holloman, 6 T , 153; Greneaux v. Wheeler, 6 T , 515; Claiborne v. Goeman, 15 T., 44; Rider v. Duval, 28 T., 622.) Tho possession of a promissory noto, payable to another or order and nofe indorsed, docs not constitute evidence of ownership, without proof of its transfer tor value, (Ross v. Smith, 19 T., 171; Merrill v. Smith, 22 T., 53; Gregg v. Johnson, 37 T., 558; Ball v. Hill, 38 T,, 237.)

Kotj5 25. — In executory contracts for the sale of land, the vendee may resist the payment of tho purchase-money, or have it refunded, if paid, on tho ground of defect of title in the vendor. (Jones v. Taylor, 7 T., 240; Perry v. Rice. 10 T., 367; Neel v. Picket, 12 T., 137; Taul v. Bradford, 20 T., 261; Hurt v. McReynolds. 20 T., 595; Littlefield v. Tinsley. 22 T., 250; same case, 26 T., 353; Baldridge v. Cook, 27 T., 565; Demaret v. Bennett, 29 T., 262; Gober v. Hart, 36 T., 139.) If the contract is executed, the vendee must show a superior outstanding title that he will be evicted, and that ho did not know or'intend to run the risk of tho defect. (Cooper v. Singleton, 10 T., 260; Cook v. Jackson, 20 T., 209; Smith v. Nolen, 21 T., 496; Luckie v. McGlasson, 22 T., 282; Herron v. DeBard, 24 T., 181; Johnson v. Long. 27 T., 21; May v. Taylor, 27 T., 125; Lemmon v. Hanley, 28 T., 219; Tooke v. Bonds, 29 T., 419; Keep v. Simpson, 38 T., 203; Price v. Blount, 41 T., 472.)

The instrument sued on, having been decided to be a negotiable promissory note, must be presumed to have been transferred before maturity, there being no evidence to the contrary, and is therefore in the hands of the plaintiff', not subject to defenses which might well be pleaded in an action brought by the payee or assignee after the nóte became due.

Tlie trial below was on an appeal from a magistrate. There were no pleadings in the case, nor was any of tlie evidence taken admissible, except the instrument sued upon, which proved itself. There was no foundation laid for tlie introduction of the proof by showing such circumstances as would .have subjected the plaintiff' to the equities which were raised or supposed to exist against the vendor.

Judgment affirmed.