Case Name: Commercial Bank of Columbus, use of the Planters and Merchants Bank of Mobile vs. John Thompson, Robert Bell, William Montgomery, and William Thompson
Court: High Court of Errors and Appeals of Mississippi
Jurisdiction: Mississippi
Decision Date: 1846-11
Citations: 7 S. & M. 443
Docket Number: 
Parties: Commercial Bank of Columbus, use of the Planters and Merchants Bank of Mobile vs. John Thompson, Robert Bell, William Montgomery, and William Thompson.
Judges: 
Reporter: Mississippi Reports
Volume: 15
Pages: 443–448

Head Matter:
Commercial Bank of Columbus, use of the Planters and Merchants Bank of Mobile vs. John Thompson, Robert Bell, William Montgomery, and William Thompson.
The act which prohibits the banks of this state from assigning their negotiable securities, and requires them to receive their own notes in payment of all debts due them, was intended for the benefit of the debtors of the banks, and they may waive their rights under the act, if they choose to do so. Where therefore a bank assigned a note, and the assignees instituted suit, and recovered judgment thereon, without the defendant’s pleading the assignment in abatement, the defendants were held to have waived their right to pay in the notes of the bank.
If a bank in this state assign any of its evidences of debt, and the assignee bring suit thereon, the defendants can avail themselves of the benefit of the statute prohibiting the banks from assigning their evidences of debt, and requiring them to receive their own notes in payment of all debts due them, by plea in abatement only.
The assignee of a bank in this state, instituted suit and recovered judgment, and the defendants paid the notes of the bank into court, and made a motion to have the execution which issued on the judgment entered satisfied, and the court sustained the motion, and ordered the entry of satisfaction to be made: Held, that the assignee was not bound to receive the hank notes in payment, and the judgment ordering the entry of satisfaction was erroneous.
Error from the circuit court of the county of Octibbeha county; Hon. Benjamin F. Caruthers, judge.
This was an action of assumpsit brought by the Commercial Bank of Columbus, use of the Planters and Merchants Bank of Mobile, in the circuit court of Octibbeha county, against John Thompson, William Montgomery and Robert Bell, founded on their joint and several promissory note, in favor of the Commercial Bank of Columbus, for the sum of $4611 46. The defendants pleaded non assumpsit. Judgment was rendered in favor of the plaintiff, and the execution which issued thereon was levied, and a forthcoming bond given, with William Thompson as surety therein, and forfeited. At the return term of the execution which issued on the forfeited forthcoming bond, the defendants paid into court the amount of the execution with interest, in the notes of the Commercial Bank of Columbus, and entered a motion to have the execution and judgment entered satisfied. On the trial of the motion the defendants proved that on the 26th day of April, 1841, the note was in the hands of the agent of the Commercial Bank of Columbus, and the property of the bank. They also proved that they had tendered to the sheriiT, in whose hands the execution was placed for collection, the amount of the execution in the notes of the Commercial Bank of Columbus, and he- refused to receive them in payment. The court sustained the motion, and ordered the execution and judgment to be entered satisfied. Whereupon the plaintiff brought the case to this court by writ of error.
A. C. Baine, for plaintiff in error.
I suppose we may, on the part of the plaintiffs in error, concede, all the defendants contend for, and yet not touch the legal merits of this case. For the question evidently is, not what equities the defendants had under the statutes of this state, on the 4th and 5th of Anne; but when and before what forum they ought to have availed tjjemselves of them. It is clear, that be their claim legal, or be it equitable, it is one that should be heard in a court of law; and they have very properly resorted to it. There is no dispute about the forum, then.
The only question is, then, when ought they to have interposed this defence, and how? They certainly ought to have done it at the time of the trial. And they ought to have done it by plea in abatement. The court, within the last two weeks, have settled this part of the case.
The defendants argue this whole case as if they were in a court of equity. Proceeding upon this view of it, shows very fully the grossness of their position and the error of the circuit judge. Suppose they were now in a court of equity, setting tip this defence, which they had neglected to make before a forum having jurisdiction of the cause and ample power in. its nature, as well as express authority by statute, to have granted' them relief; would they be heard? Certainly they would not. They would be told, without any hesitancy, that they had had an opportunity of making the defence before the legal tribunal which had before had jurisdiction of the right insisted upon, and that for their remissness in failing there to set it up the chancellor would, without argument or deliberation, turn them from his doors. I need not further argue the cause.
Harris and Harrison, for defendants in error.
The question presented is, whether the defendants have the right to pay the debt in the bills of the Commercial Bank.
The act of 1840, p. 15, sect. 7, provides “that it shall not be lawful for any bank in this state to transfer, by indorsement or otherwise, any note, &c. ” and by the supplement to the same act, it is declared that the banks in this state “ shall at all times receive their respective bills at par in the liquidation of their bills receivable and other claims due them.” The act of 1843, p. 56, sect. 8, contains a proviso to the same effect. The intention of the legislature is also made still more apparent by the statute of 1842, in relation to garnishments, when the transfer was effected by operation of law.
In the case of Payne et al v. Baldioin et al 3 S. & M. 679,. it is said by the court that the bank “cannot sell that which it is illegal to sell, or which is not transferable from one to another.”
“In England, notes received their negotiable character from 4th and 5th Anne; before that time they were not assignable, it being a general principle of the common law, that choses in action were not assignable.” Ib. 678. With us they derive their character for negotiability from a statute, which declares that they may be assigned by indorsement. Ib. 680. To negotiate notes was a privilege enjoyed by the corporation solely under this law, and it is one that was taken away by the repeal of the law. Ib.
The note upon which the judgment is predicated was not indorsed, and the whole proceedings are in the name of the Commercial Bank, the payee, for the use of a bank in Mobile. There has been no legal transfer of the title, which is still in the Commercial Bank, and the usee has but an equity which the courts of law will inquire into and protect, or not, upon the principles of courts of equity. 1 Tucker’s Lectures, 347, and cases cited; 2 Story’s Eq. 392, sect. 1056. “The corporation itself must be considered as the real plaintiff, and its right tojprosecute the suit cannot be affected by the allegation that it is brought for the benefit of others.” Corporation of Washington, use of McCue et al. v. Young, 10 Wheat. 406.
In treating of the assignment of choses in action, Story says: “ In courts of law these principles of courts of equity are now acted on to a limited extent. But still whenever a bond or other debt is assigned,'and it is necessary to sue at law, for the recovery thereof, it must be done in the name of the original creditor; the person to whom it is transferred, being treated, rather as an attorney than an assignee; although his rights will be recognized and protected, in some measure, at law, against the frauds of the assignor.” 2 Eq. Jur. 392, sect. 1056.
It is against the assignor that he is to be protected, and that not because he has any right at law, but the courts of law, assuming the province of a court of chancery, pro hac vice, will look into the equities claimed, and enforce them, if by the doctrines of a court of chancery they ought to be protected.
In equity it is held that the assignee (even if bona fide such) has no enlarged or additional privileges; that he must, therefore, take subject to all equities of the obligor. Hence, in Virginia, even after judgment obtained in the name of the assignee, a court of equity permitted a debtor to set up his equitable defence against the assignor of a bond. The court say “ that in England the assignee of a bond takes it charged with every species of equity which was attached to it in the hands of the assignor. If a different principle prevail in this country it must arise by statute. Norton v. Rose, 2 Washington’s R. 248.”
The assignee of a chose in action, then, not indorsed, acquires no right against the debtor even after judgment, independent of the act of 1840, for even without this prohibition, he could only acquire the rights of the assignee in equity; he could acquire no legal right; he could maintain no action in his own name, and the rendition of judgment in the name of the party having the legal title, for his use, does not change the equitable interest into a legal right. As the equitable assignment could not therefore create any new right, the usee in the judgment only perfected his right to recover that which the Commercial Bank had a right to recover. For it is the Commercial Bank prosecuting its rights at law, for the use of another. The Bank clearly has no right to recover anything better than its own bills, and it could not by law assign any greater right. The law of 1840, was in full force at the time, and the parties must be presumed to have contracted in reference to it. At the time when the usee received the paper, the law prohibited the assignment, and still further made the note payable in the bills of the bank. The assignee, undoubtedly cannot get anything more than the assignor was entitled to at the time of transfer.

Opinion:
Mr. Chief Justice ShaRKey
delivered the opinion of the court.
Suit was brought in 1843, in the name of the Commercial Bank of Columbus, for the use of the Merchants Bank of Mobile, on a promissory note. No plea was interposed but the general issue, on which judgment was recovered. In satisfaction of the execution, the defendants tendered to the sheriff the notes of the Commercial Bank of Columbus in payment, which he refused to receive. The defendants then brought the notes into court, and moved to have satisfaction entered, which motion was improperly sustained.
It is true that the banks of this state are not permitted to assign their negotiable securities; and it is also true that they are bound to receive their own notes in payment of all debts due them. Rut suppose they do transfer their notes, how does the maker avoid the transfer and still retain his right to pay in the notes of the bank 1 By plea in abatement, on which the action abates, so that the bank without his consent cannot defeat his right to pay in its own notes. Planters Bank v. Thomas Sharp, 4 S. & M. 17; Trigg v. Lanier, 6 S. & M. 641. The act prohibiting the assignment of notes, was intended for the benefit of the makers of the notes, and they may waive their right to insist upon it if they will. By failing to plead in abatement to a suit brought in the name of an assignee, the assignment is ratified. The statute points out the mode of making the objection, and declares that when made the action shall abate. But if the party fail so to plead, and permits the assignee to recover a judgment, it is then too late to insist upon a right which has been waived. The judgment,fixes the rights of the parties. The usee, being the real plaintiff, is not bound to submit to a payment in bank notes.
The judgment must be reversed.