Court Opinion

ID: 3584035
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:34:30.489118+00
Date Added: 2024-06-11T07:41:40.244659
License: Public Domain

The point mainly relied upon by the appellant is that the draft and indorsement upon which this action is brought do not on their face import a consideration. The draft was drawn by the defendants testator upon the treasurer of an incorporated company, payable to the drawer's own order and purported to be for value received. It was indorsed by the drawer by a special indorsement "Pay to the order of Mrs. Mary Hook, for the benefit of her son Charlie." The appellant claims that this is one of those restrictive indorsements which do not purport to be made for a consideration, and do not entitle the indorsee to maintain an action on the bill, without proving a consideration.
As a general rule an indorsement of a negotiable bill which purports to pass the title to the bill to the indorsee, imports a consideration, and the burden of proving want of consideration rests upon the party alleging it. The restrictive indorsements which are held to negative the presumption of a consideration are such as indicate that they are not intended to pass the title, but merely to enable the indorsee to collect for the benefit of the indorser, such as indorsements "for collection" or others showing that the indorser is entitled to the proceeds. These create merely an agency, and negative the presumption of the transfer of the bill to the indorsee for a valuable consideration. *Page 375 
But where the indorsement purports to pass the title to the bill therein from the indorser, and divest him of all beneficial interest, a consideration for such transfer is presumed. All the cases cited by the counsel for the appellant rest upon these principles. The citation from 3 Kent Com., 92, states the principle to be that when the indorsement is a mere authority to receive the money for the use or according to the directions of the indorser, it is evidence that the indorsee did not give a valuable consideration for it and is not the absolute owner. This accords with the statement of the principle by WILMOT, J., inEdie v. E. India Co. (2 Burr., 1227). So an indorsement "Pay to S.W. or order for our use," (Sigourney v. Lloyd, 8 B. 
C., 622; S.C., 3 Y.  J., 220), was held to create a mere agency, and the addition even of the words "value received" to such an indorsement has been held not to vary its effect. (Wilson v.Holmes, 5 Mass., 543.) In Edie v. East India Co. (2 Burr., 1221), the examples of restrictive indorsements put by way of illustration are, "Pay to my steward and no other person," or "pay to my servant for my use." These show that there was no intention to pass the title to the bill; and the same effect has been given to an indorsement, "Pay to P. only." It was held that these words indicated that the indorsee was agent only, and paid no consideration for the bill, as a purchaser would not have accepted such an indorsement. (Power v. Finnie, 4 Call [Vir.], 411.) But an indorsement to one person for the use or benefit of another, affords no such indication. The indorser parts with his whole title to the bill, and the presumption is that he does so for a consideration. The only effect of such an indorsement, by way of restriction, is to give notice of the rights of the beneficiary named in the indorsement, and protect him against a misappropriation. When a bill is indorsed, "Pay to A or order for the use of B," A cannot pass the bill off for his own debt, but he can by indorsing it transfer the title, and will hold the proceeds for the benefit of B, and be accountable to him for them. (Evans v. Cramlington, Carth., 5, affirmed in the *Page 376 
Exchequer Chamber, 2 Vent., 309.) In Treuttel v. Barandon (8 Taunt., 100), cited by the appellant, drafts payable to the drawer's own order were indorsed by him to De Roure  Co. or order "for the account of Treuttel  Wurz." It appeared that De Roure  Co. were the agents of Treuttel  Wurz, and the latter were held entitled to maintain trover for the drafts against a party to whom De Roure  Co. had pledged them for their own debt. There is nothing in this case to sustain the proposition that a draft thus drawn and indorsed does not import a consideration, or that the indorsee could not maintain an action upon it against the drawer and indorser without proving a consideration. The effect of the special indorsement was simply to give notice of the interest of Treuttel  Wurz, and prevent De Roure  Co. from appropriating the drafts to their own use. Blaine v. Bouine
(11 Rh. I., 119), is to the same point. In the present case the indorsement did not purport to restrain the indorsee from negotiating the draft, for it was "Pay to the order of Mrs. Mary Hook," for the benefit of her son Charlie. She was constituted trustee of her son and held the legal title. (3 Kent's Com., 89.) The indorsement gave notice of the trust, so that if she had passed it off for her own debt, or in any other manner indicating that the transfer was in violation of the trust, her transferee would take it subject to the trust, but there was nothing reserved to the drawer and indorser. He retained no interest in it. The presumption is that the draft was drawn and indorsed by him for a consideration received either from the indorsee or the beneficiary. If the youth of the beneficiary should be deemed to afford a presumption that no consideration was paid by him, the presumption would be that it emanated from his mother. The facts admitted on the trial do not establish that the consideration was illegal. They show that the boy lived with his mother and was taken care of by her. There is nothing illegal in an undertaking by a putative father to support his illegitimate child, or to pay a sum of money in consideration of such support being furnished by another, though it be *Page 377 
the mother of the child. If such was the consideration of this obligation, and it was furnished by Mrs. Hook, she was at liberty to take it, payable to herself in her own right, or for the benefit of her child. (Hicks v. Gregory, 8 C.B., 378; Smith
v. Roche, 6 C.B. [N.S.], 223; Nichole v. Allen, 3 C.  P., 36; Jennings v. Brown, 9 Mees.  W., 496; Knowlman v.Bluett, 9 L.R. [Exch.], 1, 307; Bunn v. Winthrop, 1 J. Ch., 337, 338.)
The judgment should be affirmed.
All concur.
Judgment affirmed.