Court Opinion

ID: 6575926
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:34:17.008408+00
Date Added: 2024-06-11T15:57:05.798512
License: Public Domain

Williams, Ch. J. and Waite, J.,
concurred upon all the points presented by the motion, except one ; and that is, whether this defendant can defeat the suit, on the ground that the note was not indorsed to the plaintiff. Their views on this point were substantially as follows.
it is said, that the simple act of putting the name of the payee on the note, is not an indorsement, but it must be accompanied by a delivery. Such, no doubt, is the law. But there may be a constructive delivery of a note, by any act which puts it in the power or under the controul of the in-dorsee. 5 Mete. 201-3. And this seems to be a case of that kind. It is as important that a note should exist, as that it should be delivered when made. But if a person gives his name to another, the person receiving it, may fill over it a note or indorsement to any amount. Russel v. Langstaffe, Doug. *525514. Violet v. Patton, 5 Cranch 151, The question here is, whether there was not sufficient evidence of a complete indorsement shown by the plaintiff. He proved the handwriting of the payee and indorser; and he proved possession in himself, procured by actual payment to the holder, and a delivery by the only person authorized to deliver the note. He has thus shown a title, which a court of equity, and even a court of law, will protect.
But it is said, he cannot sustain an action in his own name, at law; because the note was in the possession of Caldwell, at the time of his death; and so there is no evidence of a delivery.
We are to keep in mind, that it is a settled fact, that it is the duty of the defendant to pay this note, and to pay it to the plaintiff. His rights, then, are not affected, whether the suit is brought in the name of the plaintiff, or in the name of the administrator of Caldwell. The objection, therefore, is strictly technical. Ought it to prevail ?
Had this note been negotiated before it was due, under circumstances otherwise similar, could there have been a doubt as to the right of the plaintiff to recover ?
In such cases, the bona fide purchasers of a bank note, or bill of exchange, or negotiable promissory note, have been allowed to recover, although they could have their title only through a thief or a robber. Miller v. Race, 3 Burr. 1516. and Peacock v. Rhodes, Doug. 633. In the last-mentioned case, the defendant drew a bill payable to Wm. Ingham or order, by whom it was indorsed to John Daltry, and by Daltry to Joseph Fisher, from whom it was stolen. The plaintiff received it in the usual course of business, and declared upon it as indorsee of Ingham, and recovered. In fact, Ingham no more delivered that bill to the plaintiff, than Caldwell delivered this to Clark. There was no connexion between the plaintiff, in that case, and the indorser, but by a felony. Here, the connexion between the plaintiff and Caldwell, is through the legal representative of the latter, in whose power Caldwell has placed this note, with his name upon it, and by whom, thus enabled, it has been bona _/«fe'delivered to the plaintiff.
If it be said, that the bill, in the case cited, had once been delivered, and this has not ; that can make no difference in principle. The danger to the public is as great, in the one *526case as in the other; and there is less excuse for a payee keeping his notes with his blank indorsements upon them, than there is for the indorsee of a note. In the latter case, it is evidence of his title to the property ; in the former case, it only renders his title less secure, and in case of loss or robbery, endangers the rights of others. There is no intimation, in those cases, that the decisions would have been different, if the bank note had been stolen from the banking-house, or the bill from the acceptor. The fact that the bank note was signed and ready for delivery, or the bill of exchange was indorsed, gave the opportunity to pass it off as delivered.
In the case on trial, in consequence of the indorsement by Caldwell, if the note was lost or stolen, a bona fide purchaser might have been imposed upon, as much as in the cases cited ; and it is a maxim of universal application, that if one of two innocent persons are to suffer, he who by his negligence has been the cause of the loss, shall sustain it. And Lord Mansfield says : “ The law is settled, that a holder, coming fairly by a bill or note, has nothing to do with the transaction between the original parties, unless in case of money won at play.” He adds, “ I see no difference between a note indorsed blank, and one payable to bearer: they both pass by delivery, and possession proves property in both cases.” Doug, 636,
From these authorities, therefore, it seems clear, that had this note been taken by the plaintiff, before it was due, this objection to the want of delivery, could not have prevailed : in other words, that as the plaintiff had the equitable title and possession, under an apparent legal title, the defendant could not be permitted to set up this defence ; for courts will not readily listen to objections about forms, when the real merits and honest title are clear and plain.
If it be so that the plaintiff could have recovered, notwithstanding the want of proof of a delivery, had he taken the note before it was due, it is incumbent upon the defendant to show, that an indorsement after due, does not convey the legal title, as well as if made before. This he claims to have done, by insisting that the person taking a note over-due, takes it with all its defects as to title, &c. Now, if there was no defect of title in the party who took the bill before it was due, then the question recurs, is it a defect in the title, in consequence of its being negotiated after due ?
*527It has been repeatedly holden, that a note or bill, when taken up by the indorser or drawer, maybe negotiated long-after it became due. Callow v. Lawrence, 3 M. & S. 95. Hubbard v. Jackson, 4 Bing. 390. (15 E. C. L. 12.) Bond v. Storrs, 13 Conn. R. 412. Guild v. Eager, 17 Mass. R. 615. So too, an accommodation bill may be negotiated long after it becomes due. Charles v. Mendon, 1 Taun. 224. Sturdevant v. Ford, 4 M. & G. 101. (43 E. C. L. 61.)
But although the legal title is not affected, it has been held, upon sound principles of equity, that notwithstanding such transfer, the defendant shall be allowed to make any defence he could have made against the original holder. Such was the law, as laid down in Brown v. Davis, 3 Term R. 82. received with much hesitation by Lord Kenyon, but since acquiesced in, as a rule framed to exclude fraud, founded injustice, and not to be used to promote injustice. Boehm v. Sterling, 7 Term R. 430. And in the former case, Butter, J., says, a fair indorsee can never be injured by this rule; for if the transaction be a fair one, he is still entitled to recover: — that is to say, he who purchases a note after it is due, has the same title as if he purchased it before due, except that the defendant shall not be prejudiced by such transfer. This affords the party all the protection that justice requires. In some more modern cases, it is said, the plaintiff takes the bill with all its infirmities ; but the cases are such as show that the same thing is meant as in the former case, Crosby v. Ham, 13 East 499. Bowman v. Wood, 15 Mass. R. 534. The only exceptions to the rule that a bill over-due, maybe negotiated as if not due, are those cases where such negotiations operate to the prejudice of any of the parties. Beck v. Roby, 1 H. Bla. 89. Hubbard v. Jackson, 4 Bing. 390. (15 E. C. L. 12.) So in Down v. Halling, 4 B. & Cres. 330. (10 E. C. L. 347.) where a check over-due was stolen and negotiated, it was held, that as the rights of the bona fide owner would be affected, a person who took it without proper enquiry, could not hold it against the real owner. In such a case, says Abbott, Ch. J., it is incumbent on the party who takes the instrument, to show that the party from whom he took it, had a good title. The former cases proceeded upon the ground, that if they were not admissible, injustice would be done to the defendant. This case proceeds upon the ground, that the former *528owner, having been guilty of no negligence, shall not be deprived of his property by a felony, when the person taking it had been guilty of some negligence.
In the case before us, there is no doubt as to the title of the person from whom this plaintiff received the bill. She had both the legal and the equitable title. But the objection is, that the form of conveyance does not vest the legal title.
But when there has been a fair transfer for value of a bill or note, the indorsement is considered very much a matter of form. Thus, where a deceased person had, during his life, delivered a note, as security for a debt, but forgot to indorse it; the holder, many years after, took out administration, and indorsed it to himself; the master of the rolls said, there is no doubt that when the note was remitted, it was intended it should be a security ; and when a note is handed over, the indorsement is mere form. The transfer for consideration is the substance, it creates an equitable right, and entities the party to call for the form. The other is bound to do that formal act, in order to substantiate the right of the party to whom he has transferred it; and as he is bound to do it, the indorsement, by his representative, is undoubtedly as good as if it was by himself; nor is it important, that the indorsement was by a person holding the double character of administrator and indorsee, because it was a mere form, not possessing any thing substantial. Watkins v. Maule, 2 Jac. & W. 243. The facts in this case are the reverse of the facts in that case ; but the reasoning seems to apply. The plaintiff having the equitable title, the indorsement is matter of form.
The name of Caldwell on the back, might have been placed there to negotiate the note, and it may have been in fact nego* tiated ; or it may have been placed there for the very purpose of aiding in its negotiation ; and the note is now negotiated fairly, by the person authorized by law for that purpose ; and the defendant excepts to the form in which it is done. He does not claim, that any one has a better title than the plaintiflq or that he would not be safe in paying it to him ; but he says, that the signature on the back was by the deceased, and the delivery was by his representative.
In such a case, the language of the court in Little v. O’Brien, 9 Mass. R. 423. is applicable. “ This objection has very little weight in it. As the plaintiff came to the possession of *529the note indorsed in blank, fairly, and without fraud, it is in his power to give the defendant a good and legal discharge.”They therefore gave judgment for the plaintiff. . That was a note given by the defendant to Joseph O'Brien, or order, and by him indorsed. When the action was commenced, the plaintiff had no interest in the note, other than as an agent of the insurance company, oras an individual stockholder; but it was delivered to him after it became due, without consideration, or indorsement, or legal transfer thereof, for collection for the company ; but the court held the plaintiff might recover.
For the purpose of making bills negotiable, the right of property passes with the bills. “ Every holder, with the bills, takes the property; and his title is stamped upon the bills themselves.” Per Eyre, Ch. J. in Collins v. Martyn, 1 B. & P. 651.
This remark was made in relation to bills not due ; but unless the rights of the defendant, or a former holder, are to be affected thereby, it can make no difference whether the bill was taken before due, or after. In the case of Sturlevant v. Ford, 4 Man. & Gran. 101. (43 E. C. L. 61.) the acceptor of an accommodation bill, was sued by an indorsee, to whom it was indorsed two years after it became due. Tindal, Ch. J. says : “ Upon these pleadings, the plaintiff must be taken as a holder for value, without notice of any defect of title of his indorser.” “I do not see much force in the argument that the circumstance of the bill being over-due when it is endorsed, puts the indorsee in the same position as the indorser, who, in the case of a bill drawn for his accommodation, cannot sue at all. I do not think that the holder is precluded from suing in all cases of accommodation bills indorsed after the time at which they purport to be payable : — nothing dehors the bill, as payment, &c. ought, I think, to affect an indorser for value.” It is true, that in these cases, there was an actual indorsement. But the argument goes to show, that where the bill or note comes bona fide into the hands of a bona fide purchaser, the rule is the same, whether the note is over-due or not, unless some third person is to be prejudiced thereby. In the case referred to. Coliman, J. says : “ There is no reason why a bill may not be negotiated after it is due, unless there was an agreement for the purpose of restraining it.” “ I see nothing in the transaction prejudicial to the acceptor.” And *530C re swell, J. says: “ By the law merchant, an indorsement -may give to the indorsee a better title than the indorser,had. It is said, the indorsee of a bill which is over-due, takes it subject to all the equities. Perhaps a better expression would be, that he takes the bill subject to all its equities.”
The case before us is that of a purchaser, who has paid value for a note over-due, to the person who had a legal and equitable right to dispose of the note, with the name of the deceased owner by him indorsed upon it. The plaintiff, therefore, has the equitable title, and the apparent legal title; and the question is, whether the title shall fail, because the plaintiff cannot show an actual delivery to some one, by the deceased, during his life.
It is clearly shown, that this could have no effect, had the bill been negotiated before it was due ; and it seems to us, that the cases cited show, that a bill or note negotiated after due, stands upon the same ground, unless such negotiation is to prejudice the rights of the defendant, or some other persons having an interest in the bill or note.
New trial to be granted.