Court Opinion

ID: 6578046
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:36:02.396782+00
Date Added: 2024-06-11T15:56:54.199546
License: Public Domain

Hinhan, c. J.
The note in question was given for the price of spirituous liquors sold by the payee to the maker in 1859, and as between those parties was undoubtedly void, under the 27th section of the act for the suppression of intemperance. But the plaintiff took it in good faith, paying for it a full and valuable consideration, and as he had no notice of any illegality in its inception or transfer, he claims that it became a valid security in his hands, under the provision in the same section of the statute, which declares that “ nothing in this section shall affect in any way negotiable paper in the hands of a bona-fide holder thereof, who may have given valuable consideration therefor, without notice of any illegality in its inception or transfer.”
Had the plaintiff taken the note in the regular course of business before it was due, he would have been right in his claim. It is true that the negotiable" character of the paper was not changed by its having been over due when the plaintiff took it, in such a sense as to prevent the legal title from being transferred to him ; but we think that the principle that the indorsee, receiving negotiable paper after due, is considered *50as receiving dishonored paper, and takes it subject to every infirmity, equity and defense to which it was liable in the hands of the payee, applies to the case. It is not enough that he paid value for it, and had no notice of its illegal character originally. He was bound to know the law applicable to dishonored paper, and that he ran the risk of its having been paid, or of any infirmity which attached to it. The object of the proviso most obviously was to protect that description of negotiable paper which passes in the ordinary course of business, and to so great an extent supplies the place of money or currency; not to give credit to that which was over due, because it might in form be negotiable, and at the same time give a vitality to it which it had not between the original parties. - Such a construction would place paper given for liquor on a higher footing in some respects than any other negotiable paper; which will hardly be claimed to have been intended. The superior court for these reasons must be advised to render judgment for the defendant.
This renders the question whether the suit was properly brought in the name of the holder of the note, rather than in the name of the payee, immaterial in this case; and as the authorities on this point, so far as we have been referred to them, appear to be conflicting, and we have nothing directly on the subject in our own reports, it is perhaps not advisable for us definitely to determine it. If the cases read to us can be reconciled, it would seem to be upon the ground that the special guaranty that the note was good and would be collectible till a particular future day, was not negotiable, since it does not come within the definition or description of a note payable to any person, or to his order, or to bearer, and is not of course a bill of exchange,in any sense, and therefore does not come within the statute or the custom of merchants, making such paper negotiable; and therefore no suit could be sustained upon it in the name of any indorsee except the first, with whom alone that contract or that part of the contract was made; while the payee’s signature on the back of the note would imply an assignment of it that would transfer the legal title to the first assignee or to any subsequent assignee to whom he *51might deliver it. And this seems the more reasonable doctrine, since otherwise there would be an inconsistency in holding that the legal title to negotiable paper will not pass by a written assignment, which, if made of a note not negotiable, would be in law a power of attorney, authorizing the indorsee or assignee for his own use to demand and receive the money of the maker, and would also amount to an authority to sue for and collect it in the payee’s name, if not paid upon demand; and would therefore be an assignment of the note itself in equity; and the only reason why an equitable assignment does not also transfer the legal title being, because notes of that description are not made assignable or negotiable by statute, which of course can have no application to notes like the one in suit, which is negotiable by statute. However this may be, the decision upon the other point must dispose of the case.
The superior court is advised to render judgment for the defendant.
In this opinion the other judges concurred.