Lee v. Kimball

The opinion of the Court was drawn up by Cutting, J. In the celebrated case of Lickbarrow v. ■Mason, (reported in 6 East, 21,) it was settled that “the consignor of goods may stop them in transitu, before they get into the hands of the consignee, in case of the insolvency of the consignee; but, if the consignee assign the bill of lading to a third person, for a valuable consideration, the right of the consignor, as against such assignee, is divested.” Such, now, is the established rule of commercial law in England, and in this country. • It appears, from the facts agreed upon by the parties in the case presented, that while the cargo of coal was in transit, and previous to the insolvency of the consignees, they indorsed and delivered the bill of lading to the defendant, “ who had purchased the coal in good faith, in the usual course of business, and without knowledge that the same had not been paid for.” But it is contended that a part of the consideration, being the payment of a pre-existing debt due from the consignees .to the defendant, rendered the transfer ineffectual to limit the plaintiff’s right of stoppage in transitu. This Court have held that a pre-existing debt constitutes a valuable consideration in the transfer of negotiable paper. Holmes v. Smyth, 16 Maine, 177; Norton v. Waite, 20 ib., 175. Vide, also, Bank of Sandusky v. Scoville, 24 Wend. 115, and Swift v. Tyson, 16 Pet. 1. And we think there is no distinction in principle between those cases and the one under consideration. A debt due from a person solvent at the time of the negotiation should be considered, when surrendered, equivalent- to the payment of money; for, as was well remarked by Bronson, J,, the maker could have paid his note, and then in lieu thereof received back the money. “It is not the case of a note received in security of a pre-existing debt, [175] without parting with any thing at the time.” So here, the coal was received in payment and discharge of the debt, and not as security; and the authorities cited by the plaintiff’s counsel apply only to the latter, as does also the second section of R. S., c. 31, which refers to “ security for an antecedent demand,” and is in affirmance of the commercial law upon that subject. Plaintiff nonsuit. Tenney, O. J., Hathaway, Goodenow, May, and Davis, J. J., concurred.