Court Opinion

ID: 3617135
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:59:56.24478+00
Date Added: 2024-06-11T13:59:00.965193
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 445 
[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 446 
The controversy in this case arises between different claimants of a debt owing by the assignors to one of *Page 447 
their creditors. The single question involved upon this appeal is, whether the respondent was a purchaser in good faith of the claim of the judgment debtor against Miller  Allen within the provisions of subdivision four of section 2469 of the Code of Civil Procedure. The appellant was not appointed receiver until the seventeenth day of October, 1889, while the notes were purchased by the respondent on the fifth day of the preceding August. The section of the Code referred to provides that where the receiver's title to personal property has become vested, as prescribed in section 2468, it extends back by relation for the benefit of the judgment creditor, so as to include the personal property of the judgment debtor at the time of the service of the order, but does not affect the title of a purchaser in good faith without notice and for a valuable consideration.
In this case it was proved by undisputed evidence that the respondent purchased the notes or claim in question in good faith, without any notice of the proceedings in which the appellant was appointed receiver, and that he paid a valuable consideration therefor. The trial court held that, to the extent of the consideration paid, he was a purchaser in good faith and entitled to have that amount paid to him from the assets of the insolvent firm.
The contention of the appellant, however, is that the respondent was not a purchaser in good faith without notice for the sole reason that the notes, except one for one hundred dollars, were past due when he purchased them, and that that fact is conclusive evidence that he was not such a purchaser. There was no evidence of bad faith or of notice, and that he paid a valuable consideration stands uncontradicted. Therefore, the question is narrowed to this: Is the rule in regard to a purchaser in good faith of commercial paper, with its exceptions and limitations, controlling in this case? One of the limitations of that rule is that, if the transfer is after the maturity of the paper, the purchaser takes it as dishonored, and is affected by such equities between the parties as were attached to it. It is to be remembered that the issue in this *Page 448 
case is not between the parties to the notes, but relates only to a sale of choses in action to a third person by the holder and apparent owner. It was an independent and collateral contract, and the only relation it had to the notes was that they were the subject of the sale. If the makers of the notes were contesting their liability thereon, another question would be presented, and that rule might apply. But, in determining whether the respondent had a title which was protected by the statute, the fact that most of the notes were past due could, at most, be only a circumstance which might, perhaps, be considered as bearing upon the question of the good faith of his purchase. We think it is quite obvious that the rule which is invoked by the appellant is not controlling here.
The question in this case is dependent upon and involves the construction and application of a statute which, in substance, provides that the title of a receiver appointed in supplementary proceedings shall not relate back to the time of his appointment so as to affect the title of a purchaser in good faith. Hence, the proper inquiry is, not whether the respondent acquired a good title under the law merchant, but whether he was such a purchaser as this particular statute protects.
The respondent purchased of the judgment debtor certain notes against an apparently insolvent firm, of which his brother was a member, and which had made a general assignment for the benefit of its creditors. The purchase was in pursuance of a request of the members of the firm, and was obviously to assist them in the adjustment of their financial difficulties. The respondent at the time had no notice of the supplementary proceedings, or of any other fact that would impeach or affect the title of the payee, or that would naturally provoke inquiry or excite any suspicion as to his right to dispose of them. He paid the same consideration proportionately that he subsequently paid for the remaining debts of the firm. It is true that all of the notes purchased, except one, were past due, yet that fact was in no way inconsistent with a good title in the holder, or with his right to transfer them. It was a situation *Page 449 
reasonably to be expected under the circumstances, as the firm had already suspended payment and made a general assignment for the benefit of its creditors. The fact that most of the notes had previously matured would not naturally have indicated that the holder was not the owner, nor would it have suggested that any proceeding was pending against him which would affect his title. There was no evidence or circumstance which tended to show that the respondent knew or even suspected that the holder was embarrassed or in debt. If the claim had been in the form of an account, then it seems to be admitted that the purchaser would have been protected to the extent of the consideration paid. We do not think the fact that the debt was secured by notes, most of which were due, was sufficient to charge the respondent with bad faith, or with notice. Moreover, whether the respondent was a purchaser in good faith, without notice and for a valuable consideration, was, at least, a question of fact, and the determination of the trial court was justified by the proof.
The decision in this case was clearly right, and the judgment should be affirmed.
All concur.
Judgment affirmed, with costs.