National Republican. (Washington City (D.C.)) 1872-1888, 1874-12-15

iSigned) -, Auditor.
On the 18th Of January, 1874, the plaintiff Dor
rOWed from the defendant, Mandle the sum Of
$4lsl.5O and as collateral security deposited in
his hands auditors certificates, Endorsed in blank
20 the amount of SIC, 453.G1, and took from him
receipt in the following words:
Received from the Ballard Paving Company
$lO453.4l, (ten thousand four hundred and nifty
three dollars and I0rty-one ee1tS,l IN sHoitors
lateral, to secure the payment Of their note OF
$4lsl.5O, flour thousand one hundred and eighty
months from date or upon three days notice.
;WtSHISGToN, January II, Is74.''
The particular certificates thus deposited, are
not specifically described in this receipt but they
have been identified by the evidence taken in
On the 2sth Of the same month, Aistrop &
Dudley, two other of the defendants, made a
loan TO the plaintiff Of SIX thousand four hun
cents, for which they took the plaintiffs note at
four months, secured by deposit Of certificates
amounting to sixteen thousand and seventy dol
lars and seventy cents.
Before the maturity Of either of these notes,
and without notice given to the plaintiff, these
defendants sold and delivered the certificates to
other parties, who purchased them without
knowledge that they had been deposited merely
as collateral, and on the faith Of the blank in
dOrsements upon them, and the notes were sever
ally paid from the proceeds. The holders of
these certificates have presented them to the
board Of audit, appointed by the act Of Congress
Of June 20 1874, and claim payment oil their tull
amounts, respectively, in the bonds or certificates
authorized tc be issued under that law.
TO PREVENT Such PAYMENT
is the object OF the present suit, the plaintiff
claiming a right to redeem its certificates by
paying the amount of the notes, respectively, for
which they had been deposited as security. On
the other hand, the present holders, who have
also been made defendants to the suit, claim that
they are entitled TO be paid the full amount of
the certificates. which they aver were all pur-
chased in good faith, and without notice Of the
equity existing between the plaintiff and those
with whom they had been deposited as collateral
security.
AS to the character of the certificates, it is clear
that they are not bonds Of the District Of Colum-
bia, nor are they obligations Of any kind Issued
by its authority, or negotiable like municipal
bonds made payable to bearer or order. The
Board Of Public Works had no authority to issue
paper of that character, much less the auditor,
who was nothing more than hookkeeper for the
board: They were merely written statements
made and signed by the auditor, showing that the
contractor named possessed valid claim against
the District Of Columbia Of the amounts seVerally
specified in the papers, according 10 his informa-
ton and opinion. In an action brought by con-
tractor against the District il is more than doubt
full whether they would be admissible evidence TO
determine either
TIRE JUSTICE
OF amount Of his claim. He would be obliged,
notwithstanding his certificates, to establish his
claim by other evidence superior to this. So it
appears that these certificates in themselves do
not amount even to so much as q chose in action
not even to evidence of a chose in action IN favor
Of the contractor; for it is the money due upon
the contract, and not the paper used as evidence,
which is the chose IN action. The act of Congress,
however, has made these certificates evidence be-
fore the board Of audit on the surrender of which
obligations may be issued which would be obli-
EatOry upon the District; but that was not the
character Of these certificates at the time they
were issued, or at the time they were sold to the
defendant purchasers.
But assuming that the certificates in question
contained in each instance a correct statement Of
the sum due to the contractors, they can have no
effect beyond this so that, in the hands of pur-
chaser by assignment from the contractor, the
latter would gain no more than If he had taken
an assignment Of the contractors claims without
the certificate, and that would be the assignment
Of q bare chose in action.
Now il is clear that If the certificates in question
had remained in the hands Of the hrst aSSignees
with whom they had been placed as collateral,
they would have been regarded by the court as
I'LL after default made in payment Of the notes
respectively and reasonable notice given that they
should be redeemed, else they would be sold for
payment Of the notes; and If sold, any surplus,
after satisfying the debts, would be the property
Of the plaintiff. See Hart VS.. Ten Eyck, Johns,
Oh. r, 100.
Besides selling these securities previously to
the maturity OF the notes, these PLEDGES sold
them also without having given to the plaintiff
any intimation of that purpose, and thus
VIOLATED THEIR TRUSTS
in fraud of the plaintiff rights and to its serious
damage, if it be now without relief as against
these purchasers.
And this brings us to the question whether
these purchasers have acquired any greater in
IeTeSLs uQOeE the CCEuuCdLGb III QuGsllOu IMAM
belonged to the respective parties from whom
The general rule on this subject, we'll settled
both on authority and reason is that the purchase
Of a chose in action is not within the rule which
protects purchasers for q valuable consideration,
and that the vendee will take no better title than
that Of his vendor. The reason is that the as
signmeIt of every mere chose in action is but the
assignment Of an equity, and on its face defect
i've title. Thus It was said by Gibson, q. j., in
Chew vs.. Barnett, y 5. and R., $50, that when it
is asserted that a purchaser for valuable con-
sideraEOn takes the title free of every trust or
equity, Of which he has no notice, it is intended
as the purchase Of title perfect its face, for
every purchaser Of an imperfect title takes it
, with all its imperfectiOns on its head 1t Is his
own fault that he cOnhdes in title which ap-
pears defective to his own eyes, and he does so
AT HIS OWN PERIL.
Now every equitable title is incomplete on its
face. II is in truth nothing more than q title to
20 into chRncery to have the legal estate con-
Teyed, and, therefore, every purchaser OF mere
equity takes it subject TO every clog that may lie
on it whether he has had notice or not But the
purchaser Of legal title takes 1t discharged OF
every trust or equity which does rot appear on
the lace Of the conveyance and Of which he has
not had notice either actual or constructive"
number Of eminent authorities bearing Oh
the case are then cited, and the opinion concludes
as follows:
To maintain the estoppsI claimed in this case
would be unjust to the complainant, which, also,
must be presumed TO have acted upon knoWl-
edge Of the law for its protection, at the time 1t
Endorsed and delivered the certificates to be held
as security for payment of its notes. 1t was
aware that its Endorsement vas simply the trans
fer Of chose in action for particular purpose,
and that it was secure, therefore, against any
fraud in the disposition Of the Instruments which
might be attempted on the part Of the PLEDGES
Of the paper.
The presumption which holds every person to a
knowledge Of the legal effect of his own acts, in
the present case operates to protect the COM
plainant, while it casts the loss upon the other
party, whose negligence has been the conse-
queDce Of his own ignorance OF the law.
To sustain an estopPel sgainS the plaintiff in
this case, therefore, would be tB postpone that
party, all Of whose acts were bona ffe and ODE
dent 10 the law, and TO prefer the other party
whose acts were done either in ignorance Of the
law, which they were bound to knew, or were ne
Electful Ofits requirements.