Buckner v. Real Estate Bank

By the Court, Lacy, J. The question to be decided here, arises upon the demurrer to the plaintiff’s replication, which is an answer to the defendant’s plea,puis darrien continuance. The replication avers that the bill of-exchange upon which the suit is brought, was assigned and transferred upon the 2nd of April, 1842, by deed of that date duly executed, whereby the Real Estate Bank of the State of Arkansas conveyed the same with all her estates, real and personal, choses in action and assets to certain trustees therein mentioned for the payment of all her debts and liabilities. This assignment is shown by the plea to have been made subsequent to the institution of the suit, and the enquiry now is: does the deed of assignment pass the legal estate in such manner as to divest the corporation of her right of action, and convey the same to the trustees? It is by force of the custom of merchants that a bill of exchange is assignable. Our statute only confirms the negotiability of such instruments as it existed by the lex mercatoria. It changes no principle of the law merchant in regard to the manner of assignments, but expressly recognizes them. The jurisprudence which regulates bills of exchange is founded upon and embodies the usages of merchants in different commercial countries, and the general principle of natural law, as applied to their respective rights, duties and obligations. Story on Bills of Exchange, 25. A bill payable to a person or his order, is properly transferable by endorsement. “ Properly,” says Justice Story, “because in no other way will the transfer convey the legal title to the holder, so that he can at law hold the other parties liable to him ex delicta, whatever may be his remedy in equity.” “If there be an assignment without endorsement, the holder will thereby acquire the rights only that he would acquire upon an assignment of a bill not negotiable Story Bill Ex. sec. 201. A plaintiff who sues upon a bill of exchange must show title in the same manner as every other plaintiff. The title of an original payee is immediate and apparent upon the face of the bill. He who takes by assignment, takes a derivative title which the common law does not acknowledge. He takes title by the lex mercatoria, and the custom in such cases directs that the manner of assignment should be made by a writing called an endorsement, purporting that the contents of the bill are to be paid to a third person. And in respect to bills drawn in favor of a person or bearer, the assignment is to be made by delivery. In such a case the bill is not negotiable or payable to order, but to the person or bearer; it is then transferable only by delivery. Either actual or constructive delivery is indispensable to constitute a legal title to such a bill. In cases where an endorsement is necessary to pass the bill, no particular form of words are required. The word endorsement, in its strict sense, imports a writing upon the back of the bill, but it is now settled that this is not essentially necessary to pass the bill. On the contrary, it would be a good endorsement if it were made upon the face of the bill, or in another paper annexed thereto, (which is called in France Allonge,) and which is sometimes necessary, where many successive endorsements are to be made. Chitty on Bills, ch. 5, p. 147. In Hopkirk vs. Page, 2 Brock. 41. Chief Justice Marshall held “that the legal interest in a bill of exchange, according to the law merchant, could not be transferred otherwise than by an endorsement, and the endorsement 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 a bill upon mercantile usage, so as to authorize the holder to sue in his own name.” The doctrine here laid down conclusively shows that the deed of assignment we are here considering, does not transfer the legal interest in the bill to the trustees, in such manner as to authorize them to sue in their own names. In other words, that it is no't a good endorsement or assignment. Chitty on Bills, ch. 5, 178, 179; ch. 6, 218, 219, 252. Kent Com. 4 Ed. p. 78. Story on Bills, 221. Gibson & Johnson vs. Merrit & Fento, 1 H. Bla. 562. Waters vs. Miller, 1 Dall. 269. Douglass vs. Wilkison, 6 Wend. 639. The authorities already cited, prove that by the law merchant, there is a positive and fixed meaning to the word “order” in a bill of exchange, and that it means, generally, an order endorsed on the bill, and can mean nothing else: and that the words “assignment” and “endorsement” are frequently used interchangeably by all the writers on the subject. By the first section of the chapter of assignment it is provided 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.” This makes many instruments negotiable which were not so by the common law. This act does not purport or intend to change the law merchant as to the instruments before assignable. But merely adds to their number by including a class of agreements which were not before negotiable. This undoubtedly would be the true meaning of the act, if it contained no other provisions bearing upon the subject, for in construing it, we would be bound to look to the former mischief, the proposed remedy and the reasons for the change. Hayden's case, 3 Coke 7. If a statute makes use of a word, the meaning of which is well known, and has a definite sense at the common law, the word shall be expounded and restricted to that sense. 2 Mod. 43. Dwarris on Stat. 637, 640, 712. 2 Ins. 200. 1 Ins. 211, 215. By reference to the 4th section it is perceived, that the assignee in bringing his suit on any instrument of writing made assignable, shall not'be required to prove the assignment, unless the defendant annex to his plea an affidavit stating that he believes that the assignment on such instrument was forged. Section 5 speaks of assignments on such assigned paper, and section 7 speaks of blank assignments; section 9 uses the words “endorsers” and “assignors,” but this must be understood in reference to the true meanings of assignment. The words “assignor” and “assignment” relate to bilk and notes not negotiable, but payable to bearer; and the words “endorser” and “endorsement,” to all other instruments made negotiable. By sections 7 and 8 of the chapter upon bills of exchange, no damages are given, except upon such as are payable to order or bearer; and the 10th section gives an action against the drawer, acceptor and endorser. These several sections clearly show that the endorsement must be made upon the instrument assigned, or on some paper accompanying it at the time the bill passes. In the present case the replication avers, that the bill of exchange, together with all the other property, real, as well as personal, and assets of the Bank, was transferred by deed to certain trustees for the payment of the debts of the Bank. This is an affirmative averment, and is wholly inconsistent with the idea that the 'assignment was made by endorsement upon the bill, or by any other instrument of writing attached to it. If the facts alleged be true, and the demurrer admits them to be so, it inevitably follows that 'the bill was not endorsed or assigned in the manner required by the law merchant and statute. It would have been impossible that such a deed as the one averred to be executed, could have been made upon the bill. The plea avers that the assignment was made after suit brought by the Bank, and the replication equally contradicts the supposition that the deed of assignment accompanied the bill, or was attached to it. It may be said that the replication does not exclude the hypothesis that the bill might not have been assigned by some other instrument (other than the deed) accompanying it. We think otherwise. It avers affirmatively that it passed by the deed of assignment, and “in no other manner whatsoever.” This allegation expressly negatives the intendment that it might have been endorsed or assigned by some other instrument which was attached to the bill. The affirmative averment in this instance is equivalent to an express negative, and to us is conclusive upon the point. “Nothing,” remarks Chief Justice Mashali, “ can be more anti-commercial than the idea of transferring negotiable paper by a deed conveying a vast number of bills, bonds, notes and accounts.” Such an instrument may be very properly considered as conveying the eqnitable interest and the right to receive the money, but cannot be regarded as the negotiation of a bill upon mercantile principles, so as to authorize the holder to sue in his own name. We, therefore, regard the replication as a sufficient answer to the plea, and consequently, the demurrer to it was properly overruled. The judgment is therefore affirmed; and as this case was submitted before there was a seizure pronounced against the corporation of the Real Estate Bank of the State of Arkansas, the judgment here given is ordered to be entered as of the 18th day of July, of this term.