Case ID: tex_6/html/0077-01.html
Source: Caselaw Access Project
Author: {"author": "Wheeler, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Knight v. Holloman.
    The first and second sections of the act of 1840 (Hart. Dig., art*. 2520, 2521) comprehend all negotiable paper; the third section of the same act (art 2j2j} comprehends all written instruments not embraced in the first and second sections; and whether an instrument falls within one description or the other, the assignee may maintain an action in his own name.
    In a suit by an assignee on a promissory note which contained no words of negotiability the defendant pleaded that ihe plaintiff had no interest in the noto; that one Robert C. BrufFy was the real owner, and that the note was indorsed by him to the plaintiff, and suit brought in his name without his knowledge or consent: Held, That an exception to the plea was properly sustained on the ground that the legal title was in the plaintiff notwithstanding tho plea might be true. (Note 23.)
    It is not necessary for the assignee of a promissory note to aver and prove himself an assignee for value,although the note have no words of negotiability.
    Where the record shows that the court below took action on a paper, it will be presumed that it was marked “filed,” a though it do not appear so from the transcript, unless the objection be made in the court below; and where the objection was made in the court below that the paper (being an amendment) did not appear to have been filed with the consent of the court: ¿Tetó, That it did not amount to an objection that the paper was not marked “filed,” but rather indicated that it was. (Note 2i.)
    Appeal from Port Bend. This suit was brought by the appellee against the appellant upon a promissory note made by the latter and transferred by indorsement to the former. The note contained no words of negotiability. There were in the record two petitions, one purporting to be an amended petition, Both were entitled of the same term, at which term the plaintiff had leave to amend. The record did not show the filing of either petition. At a subsequent term the defendant answered by a general denial, and a plea in which lie alleged that the plaintiff had no interest in the note sued on; that one Robert CCBrnffy was the real owner, and that the note was indorsed by him to the plaintiff, and suit brought in liis name without liis knowledge or consent. Annexed to this plea there were interrogatories propounded to the plaintiff touching the truth of the allegations. The plaintiff filed exceptions to tlie plea and interrogatories, and moved that the latter he stricken out. liis exceptions were sustained.
    The defendant objected to the reading of the amended petition, the same not appearing to have been filed with tlie consent of the court, hut the court overruled the objection and suffered the petition to be read, lie asked of the court the following instructiondo the jury, which was refused, viz : ‘’That if the instrument sued upon is not negotiable on its face, the mere fact that it was indorsed to the plaintiff does not imply either that the plaintiff acquired it for a good consideration or that it is his bona fide property.” There was a verdict and judgment for the plaintiff, and tiie defendant appealed.
    
      B. C. Campbell, for appellant.
    I. Tlie court eirecl in deciding that tlie plaintiff could maintain an action in tiiis case in liis own name. Tlie note having no words of negotiability, tlie right of the plaintiff to sue in his own name, if any he had, must be derived from the act of 1S40. (Hart. Dig., p. 771.) It is confidently believed tiiat a proper construction of that act is repugnant to any such right. The first section enumerates certain instruments, including promissory notes, and tlie second section permits suits in tlie name of any one to whom any of tlie instruments enumerated in the first section niay he “ assigned that is, transferred according to the known modes of the common law. Neither section dispenses with tho necessity of words of negotiability to authorize an “assignment” such as will warrant a suit in the name of the assignee. No such provision is found in cither section as is contained in (lie Revised Code of Mississippi. By the third section of the act bonds and other written instruments are made transferable. Now, to which class of instruments does the instrument sued on belong!' It seems to me that the question admits of doubt. True, it is not negotiable paper in terms. But is it not still a promissory note? it undoubtedly is; for words of negotiability are not necessary to constitute a promissory note. The words of the second section are, “Anyperson to whom any of the aforesaid negotiable instruments may have been assigned,” &e. The words of the third section are, “The obligee or assignee of any bond or other written instrument may transfer to another by assignment,” <fec. Now, if, as I maintain, (lie instrument sued on is a promissory note, and falls within the provisions of the first and second sections, its assignability is left by the act as it was at common law. If, on the other hand, it falls within the description of “bond or other written instrument” it is made assignable by the third section so as to authorize a suit in the name of the assignee. (Vide, bearing on this subject, Bay. on Bills, 1, 9; 6 T. R., 123; Ch. on Bills, 6, 8; Acts of 1846, p. 173, see. 42; 2 T. R., 353; 3 Caines R., 137; 9 Johns. R., 217.)
    The suit could not be maintained in equity. A court of equity has no jurisdiction where there is a complete remedj' at. law. Here the party had a complete remedy at law by suit in the name of the payee for his use.
    II. The court erred in rejecting appellant’s second answer and the interrogatories lo tlie. appellee accompanying the same.
    It will be seen that (lie answer denies that the appellee is at all interested in the note; that it belonged to another, Bruffy; that the appellee resides out of the State, and that he is wholly ignorant of any such note and of the suit.
    A delivery is necessary to a transfer; it is its very essence, and without it no transfer can lie operative. All the forms of declarations on notes and bills.aver a delivery. Here no delivery lias ever taken place. (Bay. on Bills, 103, 2 Am. ed.; 2 Ham. R., 50; 2 Tex. R., 511.)
    To show that the answer contained facts wiiich the appellant could legally plead, the case, of Anderson v. Patrick (7 How. Miss. R., 347) is cited. In' that ease the plea denied that the party suing paid any consideration for the claim or had any interest in it. The plea did not aver facts so strong as those alleged by appellant. The language of the court is, “A party may be now put upon proof of his interest in the note.” “Under the general issue the defendant may show a want of interest in the plaintiff, for it is a general denial tlmt the plaintiff has a cause of action.”
    In 2 How. Miss. It., G-1G, the court, upon a similar plea, say: “It is certainly an undeniable, posilion that lie who seeks to recover must have an interest in the subject-matter of the suit; and if lie have no interest it is difficult to perceive how lie can sustain the diameter of plaintiff in a court of law or equity where a recovery is sought in his-own right. The principle is as applicable to actions on notes as anything else; but wliat will be deemed sufficient evidence of that interest may depend upon the nature of the cause of action. As regards promissory notes, possession is to bo deemed prima facie evidence of interest. When notes have been indorsed proof of the indoisement is sufficient to entitle (lie indorsee to recover; but such proof can be required for no other purpose. than to siiow his interest and consequent right to recover. This was sufficient to give him an interest; but in the sainetease (3 Burr. R., 1516) the principie is distinctly recognized by Lord Mansfield that an interest in the note is essentially necessary, and it. was also said that the holder of a note payable to bearer wouid, under suspicions circumstances, be required to show how he became a party to it. Snell proof could not be required if an interest in the note was not deemed essential to the plaintiff’s right to recover. This right can mean nothing else blit an interest; and if a party, under suspicious circumstances, will be required to show his right or how lie came by the note, it must follow that lie cannot sustain the action unless he came to the possession fairly; else why permit such an inquiry? Anri if the holder will he. required to show how lie came, by if, under certain circumstances, it seems clear that the defendant may show that the plaintiff holds it unfairly or has no interest in it. Nothing but a fair and bona fide transfer of it, or purchase, could divest the right of the payee. Authorities are abundant, if they were, necessary, to show that- the holder of a note must have an interest in it or, what is the same tiling, a right to It before he can recover.
    In file same case the court say : “I cannot assent to the doctrine urged'in argument for the defendant, that this is a question which cannot be raised by the appellants, they being bound to pay whoever may hold the note. It cannot differ from a voluntary payment; and surely if (.lie makers were to pay voluntarily to the holder of a note, knowing that he had no right to receive it, it wouid not have extinguished the note.”
    The same court, in 1 M. & S. R., 249, say : “ A legal right in the plaintiff to the matter in dispute is the necessary foundation to every action at law.”
    To this assignment, vide 1 Oil. PL 1, 2; Bay. on Bills, 37, 59, 103, 339; Cli. on Bills, 131;' 2 Tex. R., 511.
    The eases of Thompson v. Cartwright (Tex. R., 87) and McMillan v. Croft (2 Id., 397) are not adverse to the law as cited in this brief. In those cases tlic parlies suing were the payees of the notes which had not been indorsed. Apparently the legal interest was in the persons suing. Indeed the action could not otherwise be brought. If, in truth, the notes were owned by persons other than those appearing to own them, inasmuch as they must, have, taken them by delivery, in no oilier way could the suits have been brought. Suppose the actions liad been dismissed in consequence of the actual ownership residing in oliiers: what would have been the result? Could actions have been brought except in the payees’ names? Assuredly not. In them, owing to their not being transferred by indorsement, the, legal as distinguished from the equitable interest resided, it is true that both the common and, by implication, the statute law would have allowed suits for the use of the owners. Still, in legal contemplation, the payees would have been flic plaintiffs in the suit. But I affirm that a party may sue without, in such a case, making himself the cestui que vse. lie is licit hv any law required to put his name in tire action. And it never is done but that the court may protect the equitable rights of the assignee. If this, then, lie true, certainly it must appear where a person holds a negotiable note not indorsed by the payee, as presenting a case where if lie cannot use the payee’s name a right exists, hut without any corresponding remedy.
    It is no just ground of objection that the defense was not presented in the form of an answer in abatement. If the facts alleged are true, the right of action in tlje appellee is gone forever. In 7 Howard, already cited, the defense was allowed as proper under the general issu’e.
    III. Thelcourt erred in not giving appellant’s charge to the jury.
    As bearing oil this point, the case of Merlin v. Manering (2 T. R., 359) is cited. In that case the action was upon a note not negotiable in the name of tiie alleged assignee. No indorsement appeared on the note. The only difference/ betweeii that case and this is that here the note was indorsed. Because it. was not a negotiable note, and because it did not appear what, if any, consideration had bee/n given by the plaintiff, the judgment in ids favor in the court below was reversed. Now, here we have a note not negotiable, nor does it appear that any value was paid for the indorsement. Neither of the special indorsements are for “value received.”
    IY. The court erred in allowing the amended petition to be reach
    Although leave was taken to file an amended petition, no proof of filing anywhere appears. The law is positive. The 35th section, p. 371, of 'the District Court law of 1846 provides that no paper shall be considered as tiled in the proceedings o{ any cause unless the clerk shall have indorsed thereon the day of filing and sign his name thereto.” Neither appears. The case of Wooster «. McG-ee (1 Tex. R., 17) is precisely in point.
    Exception in writing were not necessary, for the amended petition was no part of the pleadings.
    /. B. Jones, for appellee.
    I. The position assumed by appellant, that the note was not assignable, cannot be maintained. Third section of the act of 1840 makes it assignable, and authorizes (.lie assignee to sue in ids own name. (Ilart. Dig., p. 772.) The true construction of this section is too obvious to admit of serious argument. (Ogden v. Slade, 1 Tex. R., 13.)
    II. In answer to the second objection, that the amendment to the petition was not filed, we say, 1st, that the record shows (hat it was filed; 2d, that the appellant answered to the petition then in court; that the amendment was filed before service of the petition and summons, and that if defendant wished to make the objection he should have objected to answering the petition. But surely, after lie has treated it as a petition by filing his answer to it, he will not be permitted afterwards to say there was no such paper. If the amended petition was objectionable, still the time and manner of taking advantage of the objection were not proper. A party ought not to be permitted to lie in wait for his adversary, and then, in the manner and at the time as shown by the record in (his case, spring an objection so entirely technical and devoid of all merit. 3d." But the objection insisted on in this court was not presented in the court below. The objection made in the District Court was that the consent of the court was not obtained, and that is answered by the record.
    The 35th section of the act of 1846 relied on by appellant was made to regulate the practice of the District Court and not that of this court; and a party will not be allowed to raise a question for the first time in this court when to sustain such a question would be to set aside more than half the pape'rs in every transcript in the court.
    III. The plea of defendant as to the ownership of the note is at most but frivolous and immaterial; and the exceptions to the plea and to the interrogatories in their support wore well sustained. If available at all they should have been pleaded in abatement and not in bar. (Thompson v. Cartwright, 1 Tex. R., 87; McMillan v. Croft, 2 Tex. R., 307.)
    
      
      Note. — Appellee never had possession.
    
   Wheeler, J.

The grounds relied on for a reversal of the judgment are—

1st. That the indorsee of the note sued on cannot maintain the action in his own name. ■

2d. That the judgment is erroneous, 1st, in sustaining exceptions to the defendant’s special plea, alleging that the real ownership of the note was in a person other than the plaintifi'; 2d, in refusing the instruction asked by the defendant;-and, 3d, in permitting the amended petition to be read anil considered.

The principles maintained in repeated decisions of this court, applied to the present case must, it is conceived, be decisive of the first question here presented. (Ogden v. Slade, 1 Tex. R., 13 ; Smith v. Clopton, 4 Tex. R., 109.)

The question, however, has not perhaps been decided upon facts similar in every respect to the present, or considered in reference to the views now presented in argument. It is due to the very able and elaborate argument of the counsel for the appellant to consider the question in reference to the views presented by it.

The argument is based upon a construction of the 1st, 2d, and 3d sections of the act of 1840 regulating the- transfer, &c., of .negotiable and other instruments. (Hart. Dig., arts. 2520, 2521, 2522.) And it is insisted that the note described in the petition, being a promissory note, comes within the class oí instruments enumerated in the 1st section oí the statute, but that as it does not contain the operative words of transfer, “order” or “bearer,” it could not be transferred by indorsement so as to give a right of action upon it in the name of the. indorsee ; and that being a promissory note, though not negotiable, it is not comprehended within tlie provision of the 3d section of t!ie act.

The argument is not without plausibility, but we do not think it sound.

The 1st section of (he act enumerates bills of exchange, promissory notes, Ac., “or other mercantile negotiable instrument.” And the 2d section provides that “ any person to whom any of the aforesaid instruments may have been assigned may thereupon maintain an action in his own name.” The words “or other negotiable instrument” employed in the 1st section explain or qualify the terms previously employed, and show clearly that none other than negotiable instruments were intended. These only are comprehended within the provisions of the 1st and 2d sections of the act. A promissory note not negotiable is not included. But if it were otherwise, and if, as insisted, a promissory note, though it contained no words of negotiability, is nevertheless a “negotiable instrument” within the provision anil meaning of the 1st and 2d sections, then by express provision of the 2d section the person to whom “ it may have been assigned may maintain an action thereon in his own name.”

But (lie 3d section provides that “any bond or other written instrument” may he transferred by assignment, and (he assignee “may maintain an action n his own name.” This language is sufficiently comprehensive to include, and was doubtless intended to include, every character of instruments not provided for in the preceding sections of the act.

In short the 1st and 2d sections were intended, we think, to comprehend all negotiable paper; and if the present comes within that category the assignee could by force of these sections of (he statute maintain the action in his own name. 'But the 3d section comprehends all written instruments not embraced in (lie 1st and 2d sections; and if the present be not so embraced it comes within the purview and provisions of the 3d section, and the assignee may well maintain the action in his own name under that section.

There is nothing in the objection that the words “assignee” and “assignment.” used as the operative or descriptive words of transfer in the 3d section, were intended to restrict the provisions of that section to any particular class of instruments. These words are, in the legal usage, employed in a great variety of significations, (1 Tom. L. Dic., 100 ;) and in the 2d section of this statute the. word assign is employed to denote the transfer of negotiable paper. IVe conclude that the action was well brought in the name of the indorsee of the note.

'flu; objection that the plaintiff was not the real owner of the note cannot be maintained. The case cannot be distinguished in principle from those cases heretofore decided by this court in which this objection was considered. (Thompson v. Cartwright, 1 Tex. R., 87; McMillan v. Croft, 2 Id., 397.) Here, as in those cases, the legal title to the note was in the plaintiff, and we there decided that the person having the legal title may maintain the action, although the equitable ownership may he in’another. The exceptions to the defendant’s special plea and the annexed interrogatories were therefore rightly sustained.

There was no necessity for proof by the plaintiff of the consideration for which the note was indorsed to him, and the instruction asked was therefore irrelevant, and was rightly refused.

The objection that the amended petition does not appear to have been marked “filed ” by the clerk would apply equally to the original petition. It is probably a clerical omission. But if not, the objection should have been taken below, where the facts could be ascertained and clerical mistakes corrected. But it was not so taken. Tlie objection taken was that the petition did not appear to have been filed ‘-with the leave o£ tlie court.''’ This would seem to imply that it was in fact filed, but without leave of tlie court, and that objection, it seems, was not well founded in fact.

Note 23.—Butler v. Robertson, 11 T., 142; Claiborne v. Yoeman, 15 T., 44; Wimbish v. Holt, 20 T., 673; Rider v. Duval, 28 T., 622; Gregory v. Leigh, 33 T., 813; Moss v. Witcher, 35 T.. 388.

Note 24. — If the clerk omits to make fcbo proper indorsement on a paper which is filed it cannot prejudice the rights of the party; and he will be permitted, with the sanction of the court, to make the indorsement now for then. (Holman v. Chevallier, 14 T., 337; Turner v. The State, 41 T., 549.)

We do not think the objection now taken well founded. And we are of opinion that there is no error in the judgment, and that it be affirmed.

Judgment affirmed.