Court Opinion

ID: 6598633
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:05:45.035044+00
Date Added: 2024-06-11T15:57:56.285085
License: Public Domain

PAINE, J.
I am unable to concur in the opinion of the court sustaining the demurrer to the return. It is fully admitted in that opinion, that the question now presented is entirely different from that previously decided on the motion to quash the alternative writ. That motion was equivalent to a demurrer to the relation, and admitted the allegation that the order in question was given by Judge Cothren to the Iowa County Bank for a valuable consideration. Ejión that state of facts we held, as the law undoubtedly is, that it would operate as- an equitable assignment of the fund for which it was drawn. But the return now avers that no consideration was paid by the Iowa County Bank for the order, but that it was given as a mere authority to that bank to collect the money as the agent of Judge Cothren and pay it over to him. It is conceded that the paper was not negotiable ; it is conceded in the opinion of the'icourt, that upon the facts stated in the return, and which are mow assumed to be true, it was not an assignment of the fund either legal or equitable. Yet the court hold that an agent holding an authority of this kind, not negotiable and giving him no title to the fund, may transfer a perfect right to'-any one who *87chooses to purchase the paper of him for value, without notice of any thing farther than what appears on its face.
If such a conclusion can be sustained at all, it is clear that it can be done only on the ground on which it is placed by the court, that the drawer is estopped from setting up the real truth as against such purchaser.
Why should he be estopped ? It is said, because he has entrusted the holder of the order with a, prima fads assignment of the fund, and therefore should not be allowed to deny that he had the real title as against purchasers in good faith. I admit there are many cases speaking of such orders as prima fade assignments. And the expression, though not entirely accurate, is sufficiently so for ordinary purposes.
They mean nothing more than that they axe prima fade evidence of an assignment. For it is certain that such an order does not purport to be an assignment. The instrument is equally as consistent with the fact that there was only a mere authority to receive, as agent, as with the fact that there was a sale of the fund drawn on. And it is for this reason that the law, although, for the sake of having a certain rulfe as to its first effect as evidence, it has been said that such an order shall be sufficient prima fade to show an assignment, still allows this inference to be rebutted, and on proof that it was not given for value holds it to be no assignment, but a mere authority. If the instrument were a proper assignment in itself, this could not be done without violating the rule that the writing could not be contradicted. Such a rule would then be clearly liable to the criticism suggested in the opinion of the court. jBut when the law has prescribed that an instrument which, by its terms, is equally as consistent with one state of facts as with another, should he prima fade evidence of one, that certainly cannot be held to give the writing such an absolute character that to allow the other state of facts to be shown would be to contradict it. I think, therefore, it is entirely consistent for the law to give to such an order, which does not purport to show the real contract between the parties, a prima fade effect as evidence of what that contract was, and still allow that inference to be rebutted by extrinsic evidence that the real transaction was different, *88and that this is no violation of the rule prohibiting a written contract from being contradicted or varied by parol, for the reason that such an order does not purport to show the contract, and is as consistent with the one state of facts as with the other.
Still, whether it would violate that or not, the court concedes that the law is established, as stated by Chief Justice Shaw, in Bourne vs. Cabot, 3 Met., 307, “that being prima facie only, it is always competent to rebut the presumption of consideration by proof, in which case such order should be construed to be an authority only, without interest in the payee, and so not an assignment.” The question then is, whether one who entrusts another with prima facie evidence of title to his property, is estopped from showing that such other had no title as against any one choosing to purchase from such other on the strength of that prima facie evidence. That he is so estopped certainly cannot be asserted as a general proposition. For if it were so, then any one who entrusted another with the possession of his property, might lose it through an unauthorized sale by the bailee. For possession is prima facie evidence of ownership, and I am wholly unable to see why the same argument urged in the opinion of the court in favor of an estoppel in this case, might not as well be urged in every such case. For if one purchaser has the right to buy on prima facie evidence of title, and then insist on an estoppel, why not another ? The same argument is true in each case, that the owner has entrusted another with that which was prima facie evidence of title in him, and thus enabled him to deceive the purchaser. But that was never heard of as a ground .for estoppel when a bailee wrongfully sells the property of another. On the contrary, the same law which informs the purchaser that possession is prima facie evidence of title in the bailee, informs him also that it is oviiy prima facie, and that if he buys on the strength of that alone, he buys it at his risk. I can see no reason why the law should not say the same to the purchaser of a non-negotiable chose in action. And I had always supposed it to be well settled that such was the rule, and that such a purchaser could get no better right than his ven*89dor. But if the doctrine of estoppel, as applied by tbe court to this case, is to be established, I cannot see why it does overturn this long established rule, and enable a party to purchase non-negotiable paper with the same effect that he would negotiable. Eor suppose Judge Cothren had in this ease, instead of this order, given to the Iowa County Bank a non-negotiable note. That would have been a prima facie evidence of debt against him as much as though it had been negotiable. He had then entrusted the bank with prima fa-'cie evidence of a debt against him. Such claims are as much the subject of assignment and sale as is an interest in a particular fund to become due in the future on a contingency. If then the State Bank could purchase a supposed interest in such fund, and estop Judge Cothren from showing that such supposed interest was really no interest, on the ground that he had entrusted his agent with a prima facie evidence of title, why might it not as well have purchased the supposed claim against him evidenced by the non-negotiable note, and estop him, from showing that there was really no debt upon the samé ground ? I cannot see why the principle would not extend to such case as well as to the one now presented.
But there has never been held to be an estoppel in such cases, for the reason that the law told the purchaser when he bought, that the evidence on which he relied was only prima facie, and therefore liable to be rebutted, so that it was his own folly to buy upon such evidence without further inquiry. It seems to me the same answer is good here. Indeed I can see no reason why the law should then tell him that if he does purchase, relying on such evidence alone, the law will, through the means of an estoppel, convert it into conclusive evidence in his favor. With what injustice can he who was told beforehand that the evidence on which he relied was only prima facie, insist afterwards on its being held conclusive ?
The case of Pickering vs. Busk is much relied on in the opinion of the court. But I understand that case to have been decided on the ground that the facts showed an actual implied authority in the broker to sell the property in dis*90pute. The possession, was actually entrusted to the broker, . whose business was to sell, and the title was entered in his name in the wharfinger’s books, where the owners’ names were recorded. I do not care to question the correctness of that decision, for I think its facts were so different from the present case as to make it inapplicable. There the broker’s business was to sell, and the judges said it must be implied that the property was sent to him to sell. But banks are as often employed to buy claims as to sell them. Ho authority to sell could therefore be implied necessarily from the business of the bank. There the actual property itself, as well as the evidence of title, was with the broker, and capable of delivery; while here the fund drawn on was not in the possession of the Iowa County Bank, and not even due to the drawer of the order. The bank had nothing but the order itself, and even if it had authority to sell, it could only sell it for what it was, that is, as prima facie an assignment of the fund, but liable to be shown by extrinsic proof to be mere authority.
It seems to me impossible to make it anything more than a purchase of a non-negotiable draft or order, falling within the long settled rules of law applicable to such paper.
The difference between this case and cases falling within the general principle stated by Lord ELLBNBOROUGl-H,that as to the public, the apparent authority is the real authority, is this : In that class of cases the public have a right to rely on the authority of the agent as being absolutely what the evidence submitted to the public would indicate it to be, until notified to the contrary; while in a case like this the law refuses to attach any absolute effect to such an order, but informs all purchasers that it may be one thing or another according to extrinsic facts. There is no hardship in saying that whoever purchases after such information, takes the paper subject to having its real character shown.
Uor can I at all assent to the position in the opinion of the court, that the drawer of such an order, who places it in the hands of his agent to collect the money, is as much estopped by the mere issuing of it in that way, as he would be if, after it was issued, he had been applied to by some one contemplating a purchase, and had informed such person that the *91agent was tTie owner of the fund. The latter would be a clear case of estoppel, but the former is so widely that it cannot be assimilated to it. A party putting into circulation non-negotiable paper, has a right to do so relying upon the well known rule of law that no purchaser 'of such paper can get any better rights as against him than the party had to whom he originally gaye it. It makes no difference that the paper itself contains prima fade evidence of a claim. He still has a right to rely on the rule, and to assume that every purchaser knows such to be the rule. He is not bound, therefore, to attach to such paper a notice of what defenses he has against it, or what are the real rights which it confers as against him, on pain of being estopped from showing such defenses if any body buys, but may justly assume that whoever purchases it, relying upon the paper alone, takes it with that risk. But if after such paper is afloat, some person applies to him to know its true character, and whether it is good for what it purports to be, with a view to purchase, he is then bound by every principle of justice to state the real truth, and if he answered falsely, that the paper was valid for the purposes for which the purchaser wished it, he would be estopped from afterwards denying it. The very object of such a special inquiry would be, to remove the uncertainty as to the value of the paper growing out of the rule making it subject to the equities between the original parties. The party is then bound by his representations as to the fact, the purchaser having relied on them. But to say that the mere creation of the paper and putting it into circulation, was equivalent to a subsequent special representation that the real rights between the original parties were such as the paper would indicate, is a position which I think it impossible to sustain. If the doctrine of estoppel is to be carried to this length, I am unable to see why it does not reduce nonnegotiable paper to the same position held by negotiable paper, by preventing the maker from showing the rights of the holder to be at all different from what the paper itself would indicate.
I think the demurrer to the return should be overruled.