Hall v. Bowker

The opinion of the court was delivered by Barrett, J. It is assumed, upon the facts reported, that the claimant banks discounted and received the notes in question in good faith. It is found that it was done in the ordinary manner of doing business at the banks, and that the banks had no knowledge of the existence of the trustee process. The notes were underdue at the time of the discount, and payable to Bowker or bearer. In the hands of Cummings and as against him the notes were subject to the trustee process, by reason of notice not having been given by him to Webster of the transfer of the notes to him before the service of that process. After the service of such process Cummings got the notes discounted, and with his endorsement transferred them to the banks. The question is, Can they be held under- that process as against the banks ? It is to be noticed that neither Cummings nor the banks were party to the trustee suit. It is also to be noticed that the process does not designate or indicate in what the “ goods, effects or credits ” of the defendant in the hands of the alleged trustee consist, either in substance or form. They may be anything falling within the meaning of any or all of those terms, and answer the exigency [83] of tbc process. It could hardly be, and indeed it is not really claimed, that the banks should or can be affected by any of the doctrines of Us pendens. The case as to the banks, then, must rest upon the construction and application of the statute. The subjection of cui'rent commercial paper to the trustee process is in derogation of the common commercial law which insures for such paper the freest and most unembarrassed circulation for business purposes. Upon general considerations, therefore, no countenance is found for giving our peculiar statutes in this behalf any broader construction and effect than their terms and obvious purpose require. At the same time it seems obvious that the statute itself indicates that its provisions as to current paper were designed to be specific and precise, and to make the plain and direct import of the language the very rule of the subject. It is not our purpose to discuss questions of policy involved in such innovations upon the settled body of commercial law, but only to state the meaning and application of the statute to the subject in hand. It may be remarked that the matter of reaching “ the goods, effects and credits ” of a debtor by trustee process is not of natural, inalienable right, to which all creditors are born in Yer-mont: but is altogether a matter of specific and arbitrary statute, and that statute prescribes just what, and under what conditions, and in what way certain specified things may be thus reached. Among other things, it provides as to the reaching of promissory notes by the creditors of the payee, and therein provides that under certain conditions they may be thus reached, though in fact negotiated and held Iona fide by persons who have paid full value for them. In that class of cases it is the right of the creditor to avail himself of the law in that behalf. The trustee in the present case would have been held by this process, if the notes given by him to the principal debtor had remained in the hands of Cummings, to whom the debtor transferred them for value, or had not gone into the hands of banks ; because the case would then have fallen within the conditions of the statute to that effect. But the same statute, in the same section and immediately following in the next clause, provides “ that any negotiable paper which shall be [84] actually assigned, negotiated, and transferred to any bank in this State before it becomes due, shall become exempt from attachment by the trustee process.” We understand this to mean that tho fact of such transfer has the active operation of exempting the paper from the process, and that in-this respect it makes no difference whether, previous to such transfer, process had been served that would hold the debt if the paper had not been transferred to a bank. This is the plain import of the language. It is also in the accomplishment of the obvious ideas of policy entertained by the legislature, viz: to enable banks to take current negotiable paper in the usual course of their business, without the hazard of being trapped by some lurking process in which the terms “ goods, effects and credits ”• might cover and hold such paper in the hands of others besides banks. What is thus said, sufficiently for the present purpose, indicates the leading idea of this court. The judgment is reversed, and judgment that the trustee be discharged, claimants to be allowed costs since filing their claim.