Case ID: va_57/html/0053-01.html
Source: Caselaw Access Project
Author: {"author": "MONCURE, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*The Freeman’s Bank v. Ruckman.
    July Term, 1860,
    Lewisburg.
    I. Conflict of Laws—Notes—Character of—Lex Loci Solutionis.—-A note made in Massachusetts, payable at either of the banking houses in Wheeling, Va., is to have its character determined by the law of Va.. and is not a negotiable note.
    2. Pleading and Practice—Non=Negotiabie Paper—Allegation of Assignment.†—The declaration avers that the payee of a note endorsed and delivered it to the plaintiff; the note not being negotiable but assignable: this is a sufficient averment of its assignment.
    3. Same—Same—Same.—The declaration averring that the note sued on was made in Boston, and on the same day and year was endorsed and delivered to the plaintiff, a banking corporation under the laws of Massachusetts, upon demurrer, the court will consider the assignment made In Massachusetts, where it might legally be made.
    This was an action of debt in the Circuit court of Pocahontas county, brought by The President, Directors and Company of the Freeman’s Bank, an institution incorporated by the laws of Massachusetts, endorsers of Emery, Haughton & Co., against John H. Ruckman, to recover the sum of $2500. The first count in the declaration sets out that the defendant, on the 13th of January, 1857, at Boston, by his certain promissory note negotiable by the laws of Massachusetts where the contract was made, promised to pay, five months after the date thereof, to Emery, Haughton & Co., or order, at either of the banking houses in Wheeling, Virginia, twenty-five hundred dollars for value received; and that Emery, Haughton & Co. afterwards, viz: on the day and year aforesaid, for value received, endorsed and delivered the said promissory note to the plaintiffs, of which defendant then and there had notice.
    *The second count after setting out the facts substantially as in the first count, added, that the plaintiffs after the endorsement and delivery of the note and before the same became payable, filed the note in the North Western Bank of Virginia at Wheeling for collection ; and when the note became payable, viz: on the 15th day of June, 1857, it was presented at said bank for payment, and not having been paid was then and there duly protested for non-payment; of which the defendant then and there had notice. And the complaint was that the defendant had not paid the said twenty-five hundred dollars or any part thereof.
    The defendant appeared and demurred to the declaration, and to each count thereof, and pleaded payment; and the plaintiffs joined in the demurrers, and took issue upon the plea. And thereupon the court sustained the demurrers, and rendered a judgment for the defendant. Whereupon the plaintiffs obtained a writ of error from this court.
    Price, for the appellants.
    Dennis and Pry, for the appellees.
    
      
      Conflict of Laws—Notes—Character of—Lex Loci Solutionis.—In Corbin v. Planters National Bank, 87 Va. 665, 13 S. E. Rep. 98, the court said: "It is ageneral rule that eyery contract as to its validity, nature, interpretation and effect, is governed by the law of the place where it is made, unless it is to be performed in another place. Accordingly, it was decided in Freeman’s Bank v. Ruckman, 16 Gratt. 126, that whether a note is negotiable or not is a question which relates to its nature and effect, and is, therefore, to be governed by the Ux loci contractus, although the remedy is governed by the place where the suit is instituted.” But, in the principal case, the court said: “The note in this case being payable in Virginia though made in Massachusetts, its negotiability therefore depends on the law oi Virginia, and not on the law of Massachusetts.”
      In Hefflebower v. Detrick, 27 W. Va. 24, the court said: “The general rule is that all the instruments made and executed in a country, take effect and are to be construed, as to their nature, operation and extent, according to the laws of the country where they are made and executed. But where the contract is either expressly or tacitly to be performed in any other place than where the same was made and executed, the general rule is in conformity to the presumed intention of the parties, that the contract as to its validity, nature, obligation and interpretation is to be governed by the law of the place of performance. Story's Conflict of L. 280, 286.”
      See the principal case cited as to this point in Union Life, etc., Co. v. Pollard, 94 Va. 152, 26 S. E. Rep. 421.
      See also, Wilson v. Lazier, 11 Gratt. 482, where it is laid down as a well settled rule that a negotiable note, made in a particular country, is to be deemed a note governed by the law of that country whether it is expressly made payable there or is payable generally, without naming auy particular place; since at most, under the latter circumstances, it is as much payable in that country as elsewhere.
      †leading and Practice—Nun .Negotiable Paper—AHegation of Assignment.—In Welsh v. Ebersole, 75 Va. 658, the court said: “That case (Bank of Marietta v. Pindall, 2 Band. 475), however, and the case of Freeman’s Bank v. Ruckman, 16 Gratt. 126, seem to ■ establish fully the doctrine that endorsement of the obligee’s name upon the bond accompanying the transfer may be declared on as common-law assignment, and that an averment that the instrument was endorsed and delivered is in effect an averment that it was assigned. Both of these cases were, however, decided upon a demurrer to the declaration. They do not establish that such an endorsement may not be treated as a guaranty if such was the agreement of the parties.”
      Negotiable Paper—Intention.—In Broun v. Hull, 33 Gratt. 33, the court cited the principal case as authority for the proposition that neither the intention of the parties nor their belief could make . a non^negotiable instrument negotiable.
    
   MONCURE, J.

It is a general rule that every contract as to its validity, nature, interpretation and effect, or, as they may be called, the right, in contradistinction to the remedy, is governed by the law of the place where it is made, unless it is to be performed in another place; and then it is governed by the law of the place where it is to be performed. Story’s Confl. of Laws U 242, 260, 263 & 280. The form of the remedy is governed by the law of the place where the suit is instituted. Id. (j 556.

It is often difficult to determine, whether a matter relates to the right or to the remedy, and whether it is governed by the lex loci contractus, or the lex' fori, as *they are called. Id. $ S63; Andrews v. Herriot, note, 4 Cow. R. 528; Leroux v. Brown, 74 Eng. C. L. R. 801. But the question is immaterial in this case, the place of performance and the place of the suit being the same, and the right and the remedy being therefore governed by the same law.

Whether a note is negotiable or not, is a question which relates to its nature and effect. A negotiable note is not of the same nature and effect with a note not negotiable. The rights and obligations of the parties are materially different; especially when the negotiable note is in the hands of a bona fide holder for valuable consideration, without notice of any defence which, might affect it in the hands of a prior holder. Story on Bills ll 14, 15, 17.

In Vidal v. Thompson, 11 Martin’s R. 23, (which was much relied on by the counsel of the plaintiffs in error in this case) the court said: “An instrument, as to its form and the formalities attending its execution, must be tested by the laws of the place where it is made; but the laws and usages of the place where the obligation, of which it is evidence, is to be fulfilled must regulate the performance. The question in that case was, as to the meaning and effect of an article of the civil Code of Bouisiana; and it seems to be at least doubtful, whether the rule laid down by the court is entirely correct, as a general principle of law. See Story on Bills § 159; Story on Confl. Laws 260, 262, 262, a, and 318’ and notes. But whether it be so or not is immaterial to this case, as the negotiability of a note is certainly not a mere matter of form, within the meaning of the distinction stated, but is of the very essence of the contract.

The note in this case being payable in Virginia though made in Massachusetts, its negotiability therefore depends on the law of Virginia, and not on the law of Massachusetts.

It can make no difference, in regard to the note itself, *that it may have been (as it probably was) endorsed and delivered to the plaintiff in Massachusetts and not in Virginia. Its nature and effect and the rights and obligations of the maker must be the same in either case.— Story on Bill, §£ 158, 167, 168, 169; Story’s Confl. Laws, 317, 332; Ory v. Winter, 16 Martin’s R. 277.

The only law of Virginia making notes negotiable, is that which declares, that “every promissory, note or check for.money payable in this State, at a particular bank, or at a particular office thereof for discount and deposit, or at the place of business of a savings institution or savings bank, and every inland bill of exchange, payable in this State, shall be deemed negotiable,” &c. Code p. 144, § 7.

The note in this case was not payable at a particular bank, or at a particular office thereof for discount and deposit, or at the place of business of a savings institution or savings bank”; but was payable “at either of the banking houses in Wheeling, Virginia”; and therefore is not a negotiable note.

But the law of Virginia further declares that “the assignee of any bond, note, or writing, not negotiable, may maintain thereupon any action in his own name which the original obligee or, payee might have brought, but shall allow all just discounts, not only against himself, but against the assignor, before the defendant had notice of the assignment.” Code p. 583, ch. 144, § 14.

The note in this case is therefore assignable, and an assignee thereof may maintain an action thereon in his own name.

It is averred in each count of the declaration that the payees of the note, for value received, endorsed and delivered it to the plaintiffs. This is a substantial and sufficient averment that the note was assigned to the plaintiffs; and in suing as ‘ ‘endorsees, ” they in effect sue as assignees of the note. Indorsement is a term usually, ^applied to the transfer of negotiable paper, while assignment is applied to the transfer of choses in action not negotiable. But when a note is endorsed and delivered to a person, it is in fact assigned to him, whether it be negotiable or not; and an averment that it was endorsed and delivered, is in effect an averment that it was assigned, if it be not negotiable but assignable only. The ordinary form of averring an assignment of a writing not negotiable is, that the assignor, “by an endorsement on the said writing, did assign the same to the plaintiff’ ’; but there is no peculiar virtue in this form, which is prescribed by no law, and the averment may be made in other words of equivalent import.

The case of the Bank of Marietta v. Pindall, &c., 2 Rand. 465, is not in conflict, but is in perfect accordance with what has been just said. That was an action upon a note not negotiable, brought by the assignees thereof; and one of the questions was, whether the contract of assignment was made in Virginia. The declaration sufficiently averred an assignment; but was silent as to the place where it was made. The defendants by special plea averred that the note was endorsed by the payees in Virginia. In delivering the opinion of the court, Judge Cabell uses this language: “How are these averments in the declarations” (there were three actions of the same kind) ‘ ‘met by the pleas? Not by the allegation that the notes were assigned to the plaintiffs in Virginia; nor even by the allegation that they were endorsed to the plaintiffs in Virginia; but simply, that they were endorsed in Virginia. The term endorse, when applied to bills of exchange, negotiable by the custom of merchants, or to papers made negotiable by our statutes, may, ex vi termini, import a legal transfer of the title. But, as to bonds and notes not negotiable, the legal title to them passes by assignment only; and as to them endorsement is not equivalent *to assignment. As to them, assignment means more than endorsement; it means endorsement by one party, with intent to assign, and an acceptance of that assignment by the other party. The notes in question are not negotiable, according to our laws, but assignable only. The pleas therefore that they were endorsed in Virginia, tendered immaterial issues and were properly demurred to. It may have been the intention of the pleader to entrap the plaintiffs, if they took issue, by confining the proof to the mere fact of the payees writing their names on the backs of the notes; and this is rendered probable b}r the circumstance that the notes are not alleged by the pleas to have been endorsed to the plaintiffs. They might well be endorsed in Virginia and assigned in Ohio.” Id. 475. Now if the pleas had not only alleged that the notes were endorsed by the payees, hut also that they were delivered by them to the plaintiffs, in Virginia, they would certainly have been considered by the court as sufficiently averring that the assignments were made in Virginia.

The case of the Bank of Marietta v. Pindall, is a conclusive authority to show that the plaintiffs in this case, though a corporation of Massachusetts and not of Virginia, may maintain this action. In that case the plaintiffs were a corporation of Ohio, and two questions were made upon the pleadings : 1. Whether a Banking Company, not incorporated as such by any law of Virginia, but by a law of one of our sister States, can prosecute an action in Virginia in its corporate name and character, on any contract whatever? And 2. Whether they can prosecute an action in our courts on a contract made in Virginia? The court decided the first question affirmatively. And in regard to the second held, that no foreign bank could make a primary contract in Virginia by discounting notes or otherwise ; and that no right of action, therefore, could arise from the exercise *of such a power. But the court was further of opinion, and accordingly decided, that the pleadings in the cases did not show that the contracts of assignment were made in Virginia. The special pleas, as before stated, only averred that the notes were endorsed in Virginia. And though the declarations did not state where the assignments were made, yet the court was of opinion it ought to be inferred on general demurrer that they were made in Ohio and not in Virginia and therefore overruled the demurrers to the declarations. “The effect of the demurrers,” said the court, “is to admit the assignments, as laid in the declaration. If these assignments were made in Ohio they were lawful, an will serve as the foundation for suits in our courts; if they were made in Virginia, as original contracts, they were null and void and can give no right of action. In the total absence of all allegations by either plaintiffs or defendants, as to the place where the assignments were made, we do not feel ourselves constrained to intend that they were made at a place where the parties had no right to make them, and where the attempt to make them would be vain and nugatory. On the contrary we think, that on these pleadings, the assignments must be taken to have been made at the Bank of Marietta, where the notes were originally made payable, and where the appellants had a right to discount them.” Id. 476.

The same remarks in substance, and the same course of reasoning, apply to this case. The declaration does not state where the assignment was made; but it states that the note was made in Massachusetts, and, on the day of its date, was assigned to the plaintiffs a corporation of Massachusetts; and we think it ought to be inferred, on demurrer to the declaration, that the assignment was made in that State. Therefore the plaintiffs may maintain this action.

It was earnestly, and with great appearance of the reason, ^contended by the counsel for the appellants in this case of the Bank of Marietta v. Pindall, &c., (said the court in that case,) that as incidental to the right of recovering, in Virginia, a debt acquired by an original and legal contract in Ohio, they might legally make in Virginia, a secondary' contract for carrying into effect a contract originally and legally made in Ohio; as for instance, that they might take from a debtor, in Virginia, the assignment of a note or oilier chose in action, in payment of a debt originally and legally contracted in Ohio. But. as this point did not necessarily presern itself in the case the court forbore to express any opinion upon it.—-Id. 474. No such point arises on the pleadings in this case, and therefore no opinion is expressed upon it.

The breach at the end of the declaration applies to each of the counts, and sufficient though the sum is of money therein mentioned is the same sum mentioned at the commencement of the declaration and in each of the counts, to wit: the sum of $2500 the amount of the note. The debt demanded should regularly be the aggregate of all the sums alleged to be due in the different counts; but a mistake in this respect, whether more or less be stated, will not be a cause of demurrer. 1 Chitty’s PI. 361.

Upon the whole we are of opinion that the Circuit court erred in sustaining the demurrer; and therefore the judgment is reversed with costs, the demurrer overruled, and the cause remanded to the said Circuit court to be tried upon the issue joined on the plea of nil debet and for further proceedings therein. And the parties are to have liberty to amend their pleadings if they desire to do so.

The other judges concurred in the opinion of Moncure, J.

Judgment reversed.