Gray v. Real Estate Bank

By the Court, Ringo, C. 3. The correctness of the judgment is questioned by the plaintiffs in error, on two grounds: 1st, that the Court erred in adjudging their plea filed puis darrien continuance insufficient, and sustaining the demurrer thereto; and, 2d, that said judgment was given against them, without any valid service of process on some of them to appear, or their appearance to the action being voluntarily entered. The latter ground is untrue in fact, as the transcript of the record shows a joint plea, Sled by, or on behalf of, all of the defendants below, and therefore is untenable. It is, therefore, only necessary to determine whether the plea filed puis darrien continuance is a good bar to the further'maintenance of the suit, by or in the name of the bank. The general rule, that actions at law can only be maintained by, or in the name of, the party in whom the legal interest in the subject matter of the suit is vested, is certainly too well established to be now controverted; nor has it been, in this case, questioned, but seems to be admitted by both parties. But, the defendant in error insists, First, that a note, after it is sued upon, is not negotiable; that it is then taken out of the world of commerce, and cannot be considered as commercial or mercantile paper; that an assignment of it gives only an equitable interest, authorizing the assignee to have the suit, proceeded in for his benefit. Second, that, if the note is assigned, the assignment operates to assign, also, the right of action existing. Third, that the plea, in this case, does not allege that the instrument was endorsed. There is no exclusion of the conclusion, that it was assigned by deed; and this Court judicially knows that all the assets of the Bank were assigned, by deed, on the day named in the plea, to the persons named in it. The principle that a right, otherwise transferable, cannot be transferred while a suit for its recovery, or founded upon it, is pending and undetermined, we consider as not only novel and unprecedented, but also opposed to the practice and policy adopted in all civilized communities. And such, more especially, we believe it to be, in respect to bills of exchange, the free and active circulation of which is almost everywhere encouraged. We admit it to be true, as it is abundantly shown to be by the authotities' cited in the defendant’s brief, that, anciently, the transfer of rights or choses in action generally was-'" prohibited in England. But the policy which dictated this restraint upon the rights of property, has long since been essentially changed. and greatly enlarged, even there; and never was, either in England or the United States, applied to bills of exchange, the legal interest in which, from the time of their first introduciion, has always been transferable by proper endorsement, and the indorsee has uniformly been held to acquire thereby the right to maintain an action at law thereupon, in his own name; nor are we aware of the existence of any principle of law, nor any adjudication, or even dictum, (except that of Judge Rowan, expressed in his dissenting opinion in the case of Hall vs. Gentry, decided by the Court of Appeals of Kentucky, and reported in 1 Marshall, 556,) inhibiting the right to transfer bills of exchange, or indeed any chose in action, or other property legally transferable, pending a litigation upon or concerning them, unless in cases where the plea of non est factum is interposed; and hence, we are clearly of opinion, that the bill of exchange, upon which this action is founded, did not cease to be negotiable upon the institution of the suit, but could, by a proper endorsement or assignment thereof, be transferred so as to vest the legal interest therein in the indorsee or assignee, together with the right to maintain an action at law thereupon in his own name. And this we understand to be the rule of law in respect to bills of exchange, without the aid of our statute concerning assignments. And here it may not be improper to remark, that the instrument in question has not, as stated and urged by the attorney for the defendant, become a part of the record, the same not having been even so much as filed, or oyer thereof prayed; but if it was expressly made a part of the record, its negotiability would not, in our opinion, be thereby destroyed, so long as it continued under the control of the parly, and prior to judgment being given upon it. And it appears to us equally clear, that a plaintiff", who has divested himself of the legal interest in any right of action, either before or after the institution of the suit, cannot, where such fact legally appears upon the record, whether shown by plea or otherwise, recover either to his own use, or that of the person in whom the legal interest is vested. This principle is not controverted; but it is contended that, “if the note is assigned, the assignment operates to assign, also, the right of action existing.” This is doubtless true. But the conclusion attempted to be drawn from it by the attorney for the defendant in error, that the suit may proceed to judgment in the name of the bank, ■for the use or benefit of the assignee, cannot, upon any legal principle, be maintained» In, many cases, suits at law may be instituted, and recoveries obtained, in the name of the party in whom the legal interest in the thing sued for is vested for the use or benefit of some other person or party in whom the right thereto is vested in equity; but it surely cannot be pretended that a party, in whom there is neither- the legal nor equitable interest, but who is divested of all right to, or control over, the thing demanded, can maintain any suit whatever for its recovery. And such is the condition of the bank in respect to ■the present suit, if the bill of exchange, upon which the action is faunded, was, in fact, legally assigned or transferred by her to some third party, prior to the judgment; and the result must be the same, whether the transfer is made under, and by virtue of, the law merchant, or of our statute in relation to assignments. In either case, both the legal and equitable interest passed from her to the indorsee or assignee, who theréby acquired the exclusive right of maintaining a suit upon it, or for its contents, in his own name. Chitty on Bills, 6. Rev. St. Ark., ch. 11, p. 107. Gamblin et al. vs. Walker, for the use of, &c., 1 Ark. Rep. 220. Block vs. Walker, 2 Ark. Rep. 4. Purdy vs. Brown & Taylor, 4 Ark. Rep. 535. In these cases, it is ■expressly adjudged that the assignor could not maintain any action ■whatever upon dioses in action, assignable under the statutory provisions then in fierce, which, in respect to the question now in discussion, were, if not identically the same, at least substantially the same as those now in force. ' The propriety or authority of these decisions we are not disposed to question. Consequently, the assignor cannot now maintain any action upon any instrument assignable, and assigned under, and according to, the statutory provisions relating thereto now-in force. But it is also urged, that the legal interest in the instrument in question can only be transferred by indorsement, whether the transfer be made by virtue of the law merchant, or of our statutory provisions on the subject; and that an assignment by deed does not give the assignee the right of suing in his own name; and, in support of the latter proposition, the case of Hopkirk vs. Page, 2 Brock. 41, is cited, in which Mahshali., C. Jo5 held that the legal interest in a bill of exchange, according to the law merchant, could not be transferred otherwise than by indorsement, and that the indorsement must be upon the bill, or, at least, must accompany it; and that a general assignment, by deed, of all the debts of an individual, “ cannot be considered as a negotiation of the bill upon mercantile usage, so as to authorize the holder to sue in his own name,” though it may very properly be considered as conveying the equitable interest, and the right to receive the money. Whether the principles above stated by C. J. Marshall be, in every respect, consonant with other adjudications upon the subject, or otherwise, we deem it unnecessary to inquire; because, from the view which we have taken, they could not, in the present aspect of this case, have any influence upon its decision, as the attorney for the Bank, in his brief, expressly admits that “ the instrument sued in this case was made assignable by our statute,” which declares that “ all bonds, bills, notes, agreements, and contracts, in writing, for the payment of money or property, or for both money and property, shall be assignable,” and that “the assignee of any such instrument as specified in the first section of this act, may sue for the same in his own name, as assignee thereof, in the same manner that the original obligee or payee might or could do.” Rev. St. Ark., ch. 11, sec's 1, 2. The fourth section of the same statute provides, that the assignee, in any suit by him upon such assigned paper, shall not be required to prove the assignment, “ unless the defendant shall annex to his plea an affidavit denying such assignment, and stating, in such affidavit, that he verily believes that one or more of the assignments, on such instrument of writing, was forged;” and the fifth section declares, that “it shall not be necessary for any assignee to set forth the consideration of any of the assignments on any such assigned paperThese provisions, it is urged, require the assignment to be written or indorsed on the instrument assigned, in order to transfer the legal interest in, and right of action on it, to the assignee; and it is contended that the plea in question is insufficient, because it fails to show that the instrument in question was assigned by such indorsement upon it, and that it was not assigned by deed. These questions, as to the legal mode of making an assignment of dioses in action, under the statutory provisions above quoted, we do not conceive to be presented by,the pleadings in this case, so as necessarily to require their decision, and therefore we express no opinion upon them. The plea, it is true, does not allege that the assignment was written or endorsed on the bill, or show whether it was by deed or by parol, but it does expressly aver the assignment and delivery of the bill by the bank to James S. Conway, (and several other persons named in the plea), on the 2d day of April, 1842, for value received; and the defendant in error, by omitting to assign specially, as cause of demurrer, the objections now urged against the plea, cannot take advantage thereof, according to the decision of this Court in the case of Davies vs. Gibson, 2 Ark. Rep. 115; and the Court is bound to disregard or amend these defects in the plea, and proceed to give judgment according to the very right of the cause, provided sufficient appear in the pleadings to enable it to do so. Rev. St. Ark., ch. 116, sec. 60, 61. The plea in this case shows, unquestionably, an assignment and delivery by the bank, to third persons, of the bill of exchange on which the suit is founded; and this is, surely, enough to enable the Court to proceed to give judgment according to the very right of the cause, although the precise manner of making the assignment is not specially set out; yet, if it be true, as stated, that the bank has assigned, transferred, made over, and delivered the bill to a third party, the presumption is a legal one, and must be indulged, that the transfer or assignment was made according to law, or mercantile usage and custom in such case. The plea; therefore, in this aspect of the pleadings, if the facts stated in it be true, as they are admitted to be- by the demurrer, constitutes a good legal bar to the further maintaining of this action by the bank against the plaintiffs in error. Judgment reversed.