Court Opinion

ID: 8630501
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:36:54.216473+00
Date Added: 2024-06-11T16:55:45.132117
License: Public Domain

HUGHES, District Judge.
These exceptions raise a question between different lien creditors of the bankrupt and not between the Virginia Eire & Marine Insurance Company and the bankrupt I can treat it only as between different lien creditors. The three negotiable notes which are the subject-matter of this controversy were due from Snyder to Dunlop, Moncure & Co. They were never indorsed to a third person by the payees. They remained to tlie date of their maturity evidences of indebtedness from Snyder to Dunlop, Moncure & Co., the payees named in them. They could become evidences of indebtedness from' Snyder to a third person only by the payees’ indorsement of them before maturity, or their assignment of them after maturity. They were not indorsed over by Dunlop, Moncure & Co. They were placed in bank by them for collection on their own account. They were so collected by the bank on account of Dunlop, Mon-cure sk Co. As to Dunlop, Moncure & Co. they were paid. As to the payees holding the notes at maturity they were paid. The checks which were used for paying them were presented by Snyder; and the notes were delivered to Snyder on payment. As to the only persons having the property in the notes at the time of their maturity, the notes were paid. If they, as notes, were paid to the only persons having a right to demand payment when they became payable, they were paid as to all the world. When received from the bank by Snyder they ceased to be notes due according to their tenor. They ceased to be obligations to any one according to their tenor. They ceased to be the property of the only persons who 'could own them, as obligations of Snyder according to their tenor; and they became the property of Snyder, not as his notes due according to their tenor and purport, but only-as vouchers or evidence ’ of a past transaction and an extinguished debt As to effect of payment, *915see Daniel, Neg. Inst 250-253; Byles, Bills, 262; Story, Prom. Notes, § 453; Clevinger v. Miller, 27 Gratt 740; Bank v. Winston [Case No. 944].
If they had not been paid at maturity, they would have remained the property of Dun-lop, Moneure & Co.; and then Dunlop, Mon-cure & Co. might have assigned them tp a third person. But they had been paid, and on their payment it had ceased to be competent for Dunlop, Moncure & Co. to assign them to a third person. The payment of them destroyed Dunlop, Moncure & Co.’s privity and property in them. They were never assigned by Dunlop, Moncure & Co., who were the only persons competent to assign them, and as evidences of debt according to their tenor, from Snyder to Dunlop, Moncure & Co., they were extinguished on the dates of their maturity. The present obligation of Snyder to the Virginia Fire & Marine Insurance Company arises upon the papers, of which Exhibits A, B, and C are copies. If Snyder’s obligation to the Virginia Fire & ' Marine Insurance Company could have rested upon the three notes in question, then it would have been unnecessary to take these obligations, A, B. and C. The fact that it was necessary to take the stipulations, A, B, and C, shows that the notes themselves could not represent an indebtedness from Snyder to the company. The notes were attached to the papers really representing Snyder’s obligation to the company only as a part of the res gestae of the new transaction, and as explaining the consideration of the new obligations. The checks of the company given to Snyder constitute the consideration of the new assump-sit; the paid notes do not.
The complainant’s theory of a constructive assignment by Dunlop, Moncure & Co. of the three notes, being implied in their indorsement of them to the bank for collection, is not admissible. The holder of such paper has a right to indorse for collection without being held for the notes if paid or taken up by any one whomsoever acting without their knowledge or privity. An assignment in such a case must be express, so that the payee may assign with or without recourse, as he may choose.
For these and other reasons which might be stated, the exceptions of the trustee to the register’s report in regard to the three notes are sustained and allowed.