Case Name: Buckner et al. vs. Real Estate Bank
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1844-07
Citations: 5 Ark. 536
Docket Number: 
Parties: Buckner et al. vs. Real Estate Bank.
Judges: 
Reporter: Arkansas Reports
Volume: 5
Pages: 536–551

Head Matter:
Buckner et al. vs. Real Estate Bank.
It is by force of the custom of merchants that hills of exchange are assignable — and the negotiability of such instruments as they existed'by the law merchant, is not changed, but confirmed by our statute.
The jurisprudence regulating bills of exchange, embodies the usages of merchants in different commercial countries, and the general principles of natural law, applicable to their respective rights and duties.
One who sues upon a bill of exchange, must show title in himself.
The title in the original payee is immediate — but one taking by assignment, takes a derivative title not acknowledged at common law — he takes by the law merchant, by a writing called an endorsement.
Bills drawn in favor of one, or bearer, are assigned by delivery, and are not payable to order, but to the bearer: and are only transferable by delivery, either actual or constructive.
Where an endorsement is necessary, no particular form of words is required to pass the title — nor is it necessary that the writing should be on the back, as the word imports ; it may be on the face, or even upon a separate piece of paper annexed to the bill.
A deed of assignment made by a corporation, whereby it assigned, transferred and made over all its estate, real and personal, choses in action and assets, does not transfer the legal interest in a bill of exchange, so as to enable the assignee to sue in his own name.
The word “order” in a bill of exchange has a positive, fixed meaning, and means an order endorsed on or accompanying the bill — and means nothing else.
The words “assignment” and “endorsement” are frequently used interchangeably.
Our statute of assignments makes many instruments negotiable which were not so before, but does not purport to change the law merchant as to instruments before assignable — it merely adds to their number.
In construing a statute the court looks to the former mischief, the proposed remedy, and the reasons for the change.
In a statute using a word, the meaning whereof is well known, and which has a definite sense at common law, the word will be restricted to that sense.
The words “assignor” and “assignment” in our statute, relates to bills and notes not negotiable, but payable to bearer: and the words “endorser" and “endorsement,” to all other instruments made negotiable.
An averment in a pleading that a bill of exchange, together with all other, the pro. perty, real, and personal, choses in action and assets of one, were transferred by deed to trustees in trust, and in no other manner whatever, is an affirmative averment inconsistent with the idea that the assignment was made by endorsement on tho bill, or on a paper accompanying it.
This was an action of assumpsit, determined in the Pulaski circuit court, at May term, 1844, before the Hon. John C. P. Tollison, special judge. The Bank sued Simeon Buckner, Lambert J. Reardon and Robert A. Watkins, on a bill of exchange. The defendants pleaded that since the last continuance of the suit, the Bank had, on the 2nd April, 1842, by deed of that date, assigned, transferred and delivered the bill mentioned in the declaration, to Carey A. Harris, James S. Conway, Sam C. Roane, Henry L. Biscoe, Wm. F. Moore, John Preston, jr., Anthony H. Davies, Sandford C. Faulkner, Silas Craig, John Drennen, Lorenzo N. Clarke, Robert S. Gibson, Daniel T. Witter, George Hill, and Enoch J. Smith, and prayed judgment if the plaintiff should further maintain her suit, &c. To this the plaintiff"replied that she ought not to be barred, &c., because, &c., that the bill in the declaration and plea mentioned, was assigned, transferred, made over, and delivered, by her to said persons in that behalf in said plea mentioned, on the 2nd day of April, 1842, by her deed of that date, duly executed, whereby she conveyed the same with all other her estate, real and personal, choses in action, and assets to said persons in said plea mentioned as trustees, in trust for the payment of all her debts and liabilities, and in no other way or manner howsoever — concluding with a verification and prayer of judgment. To this there was a demurrer — the demurrer overruled, and the defendants saying nothing further in bar, final judgment was entered against them. The case came here by writ of error.
Ashley & Watkins, Trapnall & Cocke, for plaintiffs.
The trust feature in the replication can have no weight in this argument, because if the deed itself is valid, it would undoubtedly pass the legal estate.
The transfer of choses in action in this State is not governed by the principles of the law merchant. If the bill sued on was assignable, it was solely by virtue of our statute of assignments. This is the great distinguishing feature of all the decisions made by this court upon this subject. We refer more particularly to the cases of Small vs. Strong, and Block vs. Walker. Upon no other principle than- that the law merchant did not prevail here, could this court have decided that the holder of a note or bill, could not in any state of case, reinvest himself with the legal interest, by striking out an endorsement.
The question now is, whether any instrument made assignable by our statute can be assigned by a separate deed or instrument. We imagine the Bank or its assignees will be the last persons to dispute • this proposition. We need not go further than the case of Conway et al., ex parte to establish it, and its application to this case.
If the assgnment is required to be on the paper, it would seem to be a part of it. But this court have decided, in the case oí McClain et al. vs. Onstott, 3 árk. E. 478, that the endorsement is not a part of the note.
Now, upon principle, a plaintiff who sues as assignor, or can derive his title as well through an assignment in a separate instrument or piece of paper as by endorsement — and the defendant is entitled te oyer of such an assignment, and can question its validity with the like effect as if it was endorsed.
The court of appeals in Kentucky, in the case of Instone vs. Williamson, 2 Bibb 83, decided directly that an assignment might be made upon a separate instrument so as to authorize an action in the name of the assignees:- and so in Hughes vs. Harrison, 2 Miller’s Louisiana Rep. 89:
Pike & Baldwin, for' defendants.
The defence is not a remarkably equitable one, or entitled to special favor at the hands of the court.
Where a bill is negotiable, if it is payable to bearer, it may be transferred by endorsement, Ch. on Bills, ch. 5,p. 178-’9. (8 Edition 1833.) Id. ch. Q,p. 218-19, 262.- Bayley on Bills, ch. 1, sec. 19,p. 30, 31. (.5 Edition 1830.) Id. ch. 9,p. 388. 3 Kentp. 78. (4 Edition.) Story on Bills, 221. Bank of England vs. Newman, 1 Lord Rayrn. 442. Brush vs. Reeves, adm’r. 3 J. R. 437.
If a bill be originally payable to a person or his order, then it is properly transferable by endorsement, because in no other way will the transfer convey the legal title to the holder. Story on Bills, sec. 201. In Gibson & Johnson vs. Minch & Fedor, in the House of Lords. 1 H. Bla. 569, this point is fully considered. See Ch. on Bills, 252. Bayley on Bills, 120, 121. The same doctrine was held in the case of a promissory note, payable to the payee or order, in Pease vs. Hirst, 10 B. & C. 122. In Hopkirk vs. Page, it was said by Marshak,, C. J., that bills of exchange are transferable, not by force of any statute, but of the custom of merchants. Their transfer is regulated by usage, and that usage by convenience — a transfer of a large number of bonds, bills, notes and accounts by deed, would be anti-commercial; but such an instrument might properly be considered as transferring the equitable interest, the right to receive the money, but not a negotiation of the -bill, -so as to authorize the holder to sue in his own name. The principle of the decision is sustained also, by Waters vs. Millar, 1 Dali. 360. Barrier vs. JVairac, 2 Dali. 249. Douglass vs. Wilki-son, 6 Wend. 639. Story on Bills, 25.
Our Revised Statutes change no portion of this law, but expressly re-affirms it. By it “all bonds, bills, agreements and contracts in writing, for the payment of money or property, or for both money and property, shall be assignable.” This makes many instruments negotiable which were not so by the law merchant. This does not change the law as to instruments already assignable, but merely adds to their number by including a new class of instruments. Hagoorfs case, 3 Co. 7. Stowell vs. Zouch, Plowd. 365. 1 P- Wm’s. 262. Dwarris 712. 2 Just. 200. 1 Just. Ill, 113. Dwarris 637, 640.

Opinion:
By the Court,
Lacy, J.
The question to be decided here, arises upon the demurrer to the plaintiff's replication, which is an answer to the defendant's plea,puis darrien continuance. The replication avers that the bill of-exchange upon which the suit is brought, was assigned and transferred upon the 2nd of April, 1842, by deed of that date duly executed, whereby the Real Estate Bank of the State of Arkansas conveyed the same with all her estates, real and personal, choses in action and assets to certain trustees therein mentioned for the payment of all her debts and liabilities. This assignment is shown by the plea to have been made subsequent to the institution of the suit, and the enquiry now is: does the deed of assignment pass the legal estate in such manner as to divest the corporation of her right of action, and convey the same to the trustees?
It is by force of the custom of merchants that a bill of exchange is assignable. Our statute only confirms the negotiability of such instruments as it existed by the lex mercatoria. It changes no principle of the law merchant in regard to the manner of assignments, but expressly recognizes them. The jurisprudence which regulates bills of exchange is founded upon and embodies the usages of merchants in different commercial countries, and the general principle of natural law, as applied to their respective rights, duties and obligations. Story on Bills of Exchange, 25. A bill payable to a person or his order, is properly transferable by endorsement. " Properly," says Justice Story, "because in no other way will the transfer convey the legal title to the holder, so that he can at law hold the other parties liable to him ex delicta, whatever may be his remedy in equity." "If there be an assignment without endorsement, the holder will thereby acquire the rights only that he would acquire upon an assignment of a bill not negotiable Story Bill Ex. sec. 201. A plaintiff who sues upon a bill of exchange must show title in the same manner as every other plaintiff. The title of an original payee is immediate and apparent upon the face of the bill. He who takes by assignment, takes a derivative title which the common law does not acknowledge. He takes title by the lex mercatoria, and the custom in such cases directs that the manner of assignment should be made by a writing called an endorsement, purporting that the contents of the bill are to be paid to a third person. And in respect to bills drawn in favor of a person or bearer, the assignment is to be made by delivery. In such a case the bill is not negotiable or payable to order, but to the person or bearer; it is then transferable only by delivery. Either actual or constructive delivery is indispensable to constitute a legal title to such a bill. In cases where an endorsement is necessary to pass the bill, no particular form of words are required. The word endorsement, in its strict sense, imports a writing upon the back of the bill, but it is now settled that this is not essentially necessary to pass the bill. On the contrary, it would be a good endorsement if it were made upon the face of the bill, or in another paper annexed thereto, (which is called in France Allonge,) and which is sometimes necessary, where many successive endorsements are to be made. Chitty on Bills, ch. 5, p. 147. In Hopkirk vs. Page, 2 Brock. 41. Chief Justice Marshall held "that the legal interest in a bill of exchange, according to the law merchant, could not be transferred otherwise than by an endorsement, and the endorsement must be upon the bill, or, at least, must accompany it; and that a general assignment by deed of all the debts of an individual cannot be considered as a negotiation of a bill upon mercantile usage, so as to authorize the holder to sue in his own name." The doctrine here laid down conclusively shows that the deed of assignment we are here considering, does not transfer the legal interest in the bill to the trustees, in such manner as to authorize them to sue in their own names. In other words, that it is no't a good endorsement or assignment. Chitty on Bills, ch. 5, 178, 179; ch. 6, 218, 219, 252. Kent Com. 4 Ed. p. 78. Story on Bills, 221. Gibson & Johnson vs. Merrit & Fento, 1 H. Bla. 562. Waters vs. Miller, 1 Dall. 269. Douglass vs. Wilkison, 6 Wend. 639.
The authorities already cited, prove that by the law merchant, there is a positive and fixed meaning to the word "order" in a bill of exchange, and that it means, generally, an order endorsed on the bill, and can mean nothing else: and that the words "assignment" and "endorsement" are frequently used interchangeably by all the writers on the subject. By the first section of the chapter of assignment it is provided that "all bonds, bills, notes, agreements and contracts in writing for the payment of money, or property, or for both money and property, shall be assignable." This makes many instruments negotiable which were not so by the common law. This act does not purport or intend to change the law merchant as to the instruments before assignable. But merely adds to their number by including a class of agreements which were not before negotiable. This undoubtedly would be the true meaning of the act, if it contained no other provisions bearing upon the subject, for in construing it, we would be bound to look to the former mischief, the proposed remedy and the reasons for the change. Hayden's case, 3 Coke 7. If a statute makes use of a word, the meaning of which is well known, and has a definite sense at the common law, the word shall be expounded and restricted to that sense. 2 Mod. 43. Dwarris on Stat. 637, 640, 712. 2 Ins. 200. 1 Ins. 211, 215. By reference to the 4th section it is perceived, that the assignee in bringing his suit on any instrument of writing made assignable, shall not'be required to prove the assignment, unless the defendant annex to his plea an affidavit stating that he believes that the assignment on such instrument was forged. Section 5 speaks of assignments on such assigned paper, and section 7 speaks of blank assignments; section 9 uses the words "endorsers" and "assignors," but this must be understood in reference to the true meanings of assignment. The words "assignor" and "assignment" relate to bilk and notes not negotiable, but payable to bearer; and the words "endorser" and "endorsement," to all other instruments made negotiable. By sections 7 and 8 of the chapter upon bills of exchange, no damages are given, except upon such as are payable to order or bearer; and the 10th section gives an action against the drawer, acceptor and endorser. These several sections clearly show that the endorsement must be made upon the instrument assigned, or on some paper accompanying it at the time the bill passes.
In the present case the replication avers, that the bill of exchange, together with all the other property, real, as well as personal, and assets of the Bank, was transferred by deed to certain trustees for the payment of the debts of the Bank. This is an affirmative averment, and is wholly inconsistent with the idea that the 'assignment was made by endorsement upon the bill, or by any other instrument of writing attached to it. If the facts alleged be true, and the demurrer admits them to be so, it inevitably follows that 'the bill was not endorsed or assigned in the manner required by the law merchant and statute. It would have been impossible that such a deed as the one averred to be executed, could have been made upon the bill. The plea avers that the assignment was made after suit brought by the Bank, and the replication equally contradicts the supposition that the deed of assignment accompanied the bill, or was attached to it. It may be said that the replication does not exclude the hypothesis that the bill might not have been assigned by some other instrument (other than the deed) accompanying it. We think otherwise. It avers affirmatively that it passed by the deed of assignment, and "in no other manner whatsoever." This allegation expressly negatives the intendment that it might have been endorsed or assigned by some other instrument which was attached to the bill. The affirmative averment in this instance is equivalent to an express negative, and to us is conclusive upon the point. "Nothing," remarks Chief Justice Mashali, " can be more anti-commercial than the idea of transferring negotiable paper by a deed conveying a vast number of bills, bonds, notes and accounts." Such an instrument may be very properly considered as conveying the eqnitable interest and the right to receive the money, but cannot be regarded as the negotiation of a bill upon mercantile principles, so as to authorize the holder to sue in his own name. We, therefore, regard the replication as a sufficient answer to the plea, and consequently, the demurrer to it was properly overruled. The judgment is therefore affirmed; and as this case was submitted before there was a seizure pronounced against the corporation of the Real Estate Bank of the State of Arkansas, the judgment here given is ordered to be entered as of the 18th day of July, of this term.