Court Opinion

ID: 7033136
Source: CourtListenerOpinion
Date Created: 2022-07-24 06:42:54.856286+00
Date Added: 2024-06-11T16:11:02.392758
License: Public Domain

Stuart, J.
Suit against Hathman, on a note of 50 dollars, commenced before a justice of the peace in February, 1853. Judgment in favor of the plaintiff for the amount of the note and interest. On appeal to the Circuit Court, the cause was tried on the merits, and judgment was rendered in favor of the defendant, Hathman. Leíais, suing for the use, &c., appeals.
The evidence is all made part of the record, in proper form. The trial in the Circuit Court was had in April, 1853, before the new practice act took effect. So that the *586cause is to be governed by the well-settled rules of practice prevailing under the old system.
The note in suit, dated December 23,1850, and due in eighteen months, was given for a patent right for cutting screws on the rails of bedsteads, of which Lewis, it seems, represented that he was the patentee. Sometime between the date and the maturity, the note passed into the hands of one Huffman without assignment, and was sold by Huffman to Ludy and Aker, the usees in this action.
This transfer was also without assignment; I/udy and Aker having no other evidence of title to or interest in the note, than simply possession.
Before the purchase from Huffman, Ludy, one of the usees, called on Hathman, the maker, to inquire about the note. The substance of Hathman’s answer, so far as it relates to this part of the case, will be best understood in his own words. At the instance of the plaintiff, he testified as a witness in the cause, thus: “ I gave this note to Spencer Lewis for a patent right. About a month after the note was given, Mr. Ludy called on me at Allen’s shop in Winchester, and asked me if he traded for the note, whether or not it would be good? I told him it was good, so far as I knew, and expected to pay it when due. Simultaneously with the making of this note (and another of like amount), a deed was executed to me for the county of Randolph. The letters patent to Lewis purported to be issued April 9, 1850, as recited in the deed to me. It seems that the patent right of Lewis was suspended by that of Gross and Campbell of Tiffin, Ohio. These gentlemen notified me of their prior right, and since then I have neither sold nor used the right. I also returned the notes given for the sale of it, disclaiming all right to Lewis’s patent, and refusing to pay for it. At the time of the conversation with Ludy, above referred to, I had not the least knowledge or intimation of the defect in Lewis’s title.”
The case is very fully presented in the evidence of Hath-man himself. The other witnesses, and the title papers, but go to the same points. The patent to Gross and Campbell, as set out in the record, bears date, April, 1851. *587The patent to Lewis is not in evidence, but only referred to in the deed to Hathman. It seems that the right of Lewis to the specified improvement, was contested at the patent office by Gross and Campbell. On the 17th of March, 1851, the commissioner of patents decided in favor of the latter and against Lewis.
The note in suit, dated, as we have seen, in December, 1850, must be governed by the law in force at that time. The suit was also instituted and tried under the former practice. So that it will not be necessary to inqfiire what changes, if any, the new revision has made in relation to usees.
Sections 6 and 7, E. S. 1843, pp. 576-7, gave the assignee of a promissory note the right to sue in his own name. The 8th and 9th sections save to the maker any legal or equitable defence which he might have had before notice of assignment. But the rights and liabilities created and defined in these sections, arise out of the relation of assignee and maker, when assignment was the mode by which the note was transferred. No provision seems to be made for usees. Such a case as that presented by the record, is not contemplated by the act. It does not seem to be embraced by either its terms or spirit. It saves the rights of the maker against the assignee before notice of assignment. It defines the rights of the assignee after notice. But the usee is not mentioned. He has no rights recognized or secured by the act. The statute leaves his rights and position precisely what they were at common law. What these rights are, is clearly pointed out by Chitty. In general, the action on a contract, whether express or implied, must be brought in the name of him in whom the legal interest is vested. If the party beneficially interested needs to use his name, it must generally be with his concurrence. Courts of law will not ordinarily invest the mere beneficial claimant with the ability to adopt legal proceedings in his own name, even though the exclusive interest in the benefit to be derived from the contract be in such beneficiary. 1 Chitt. PL 2, 3.
Such is the well-settled rule at common law. And the *588statute of 1843 has made no change favorable to the usees.
Ludy and Alter are therefore no parties to the record. Their names are merely directory to the officer who collects the money, to whom he is to pay it; and from whom in certain contingencies he is to collect the costs. The position of a usee, and that of a relator, are thus in many respects identical. The State v. Clark, 4 Ind. R. 315. Lewis, in this case, like the state in that, is the real party plaintiff. Whatever might have been the liability of Hath-man to Ludy and Alter, had they been assignees, and the suit in their own names, obtaining the notes as they did clearly on the faith of his assurance of payment at maturity, the case is entirely changed when Hathman is confronted in an action ■ by the payee of the note. In such a suit, Hathman is clearly entitled to any defence growing out of the transaction between the payee and maker. For as to this action, no legal rights of third parties have intervened. As mere usees, holding the note without assignment, Ludy and Aker have no legal rights which can be enforced in then- own names.
As between Hathman and Lewis, the case is a plain one. If the alleged patent for which the notes were given, has been rendered void by the establishment of a superior right, the consideration of the notes has clearly failed. That it has so failed, is sustained by the evidence, and is not disputed by the opposite party. The whole claim is rested on Hathmcm’s representation to Ludy, that the note was good, as far as he knew, and would be paid at maturity. But as this representation did not induce Ludy and Alter to acquire the legal title to the note, it imposed no additional obligation on Hathman, at least in this form of action. It could not affect his relations with Lewis. As to him, whether suing in his own name for his own benefit, or that of some one else, the failure of consideration being entire, the defence to the note was complete.
There can be no pretence of fraud, or even negligence, on the part of Hathman. He was necessarily ignorant -of the defect in Lewis’s title, at the time he told Ludy the *589note was good and should be paid. This representation to Lady was in January, 1851. The contest for the patent right, which resulted in the defeat of Lewis, was not determined till March, 1851, nearly two months after that representation.
B. Me Clell'and, for the appellant.
J. Brown, W. A. Peelle and T. M. Browne, for the appellee.
' Upon the case made in the record, Iiathman is clearly not liable on the note.
Per Curiam.
The judgment is affirmed with costs.