Henley v. Holzer

Hall, J. It is settled law in this state that the transferee of negotiable paper, to whom it has been transferred after maturity, acquires nothing but the actual right and title of the transferrer; and if the paper had been paid he cannot recover. Wheeler v. Barrett, 20 Mo. 573; Cutler v. Cook, 77 Mo. 388; Barnes v. McMullins, 78 Mo. 263; 1 Daniels on Negotiable Instruments, sect. 724 a, and vol. 2, sect. 1233 a; Story on Promissory Notes, sect. 190. The trial court made a special finding of the facts. To the facts so found we shall limit ourselves, and simply determine whether the court correctly applied the law to those facts. The plaintiff, by the purchase of the note, acquired the title and right of the then holder, from whom he purchased; that and nothing more. But he acquired all that right and title. If, at the time the bank acquired its title and right, which it conveyed to plaintiff,, the defendant had not paid the note, the subsequent payment of it by the defendant would not deprive the plaintiff of such right or title. And this is so, although the bank obtained the note after maturity, and the plaintiff, at the time of his purchase knew that, after the bank had so obtained the note, the defendant had paid it. 1 Daniels on Negotiable Instruments, sects. 803 and 726 a; Funkhouser v. Lay, 78 Mo. 459. Because, if, at the time the bank obtained the right and title to the note which it sold to plaintiff, the note had not been paid, by the subsequent payment of the amount due on the note to the original payee, the bank lost none of the right and title already acquired by it (2 Daniels on Negotiable Instruments sect. 1233 a), and this right and [249] title the hank might retain or sell. Sect. 803 and 726 a, supra. Now, it is true that the note was originally placed in the hands of the First National Bank as collateral security, and at that time defendant had made none of the payments ; and that the bank became and was entitled to the rights of a holder of the note for value. This is true. But it is also true that the bank did not transfer the right and title, then and thereby acquired by it, to plaintiff. In transferring the note as collateral security to the bank, the payee therein endorsed it in blank. The bank acquired the rights mentioned. Those rights the bank could keep or part with, as it saw fit to do. The bank parted with those rights, by exchanging them for other rights. The bank held the note as collateral security ; by a new arrangement with the payee on the note the bank became absolute owner of the note. To carry out the new arrangement the payee endorsed the note anew, “without recourse.” After this endorsement the bank sold the note to plaintiff. The plaintiff acquired, not the right and title the bank first had, and which it had abandoned, but the right and title last acquired by it under the new arrangement, and by reason of the endorsement “withoutrecourse.” But between the two points of time the defendant had paid the note in full to the payee. The original right and title of the bank were not affected by the payment, but the new right and title, acquired after the maturity of the note and its payment in full, were rendered of no effect thereby. The bank had no title or right to sell. The plaintiff obtained none. Judgment affirmed. Ellison, J., concurs ; Philips, P. J. absent.