Meadowcraft v. Walsh

HuNT, J. — An attentive examination of the testimony in this record fails to satisfy us that the findings of fact are against the weight of evidence. By the authority of this court they must therefore stand as approved by the trial judge. The issue of the statute of limitations is at once disposed by the fact that on December 20, 1890, defendant was given a credit of twenty-five dollars, with his consent, on the note of May, 1885. The assignment for the benefit of creditors, made by Jurgens & Price on June 7, 1889, included “promissory notes, debts, choses in action, etc., belonging to said parties of the first part (Jurgens & Price), or either of them, .... now due or payable, or to become payable.” Under its provisions it was the duty of Price, as a member of the insolvent firm, to deliver to the assignee, for the benefit of creditors, the notes involved in this action, and, failing to do so, doubtless the assignee could have brought suit in trover to recover them from him. The appellant’s authorities sustain this proposition. (Cooper v. Perdue (Ind.), 16 N. E. Rep. 140; Burrows v. Keays, 37 Mich. 430.) But as the case is presented, the assignee never received the notes, and never made demand upon either member of the firm of Jurgens & Price for them. Ben Price retained them in his possession until 1891, when they passed into the hands of these [549] plaintiffs as innocent purchasers for a valuable consideration. Whether Price’s conduct in failing to deliver the notes to Atkinson, assignee of the firm of Jurgens & Price, was intentionally wrong, is a close question, but, as its determination, depended upon the credibility of the witnesses, we cannot say that bad faith characterized his conduct. The apparent acquiescence of the assignee in Price’s claim to the notes for so long a time, and the fact that he has not intervened in this suit, tend to prove that the assignee neither asserted title to the notes, nor claimed any legal ownership of them. These facts also tend to sustain the bonafides of Price. But, appellant argues, Ben Price could not transfer the notes, because, by virtue of the assignment of Jurgens & Price in 1889, the firm of Jurgens & Price was dissolved. To support this contention appellant cites several cases which hold that a general assignment by a firm for the benefit of creditors by itself works a dissolution of the copartnership. Williston v. Camp, 9 Mont. 89, did not positively decide the point, but, as we construe the opinion of Justice De Wolfe in that case, the court lean to the doctrine that an assignment by a firm does not necessarily dissolve the copartnership, but is only prima facie evidence of a dissolution. A discussion of the question is unnecessary, however, in this case, for we are of the opinion that whether the firm was entirely dissolved or not is quite unimportant in view of the positive evidence of Jurgens, who, on the witness-stand, ratified every act of Price, not only in indorsing the firm’s name, but also in transferring the noteSj and applying their proceeds in payment of Price’s individual debts. Under such a state of facts the defendant herein cannot complain of the transfer of the notes by Price, for he is amply protected against any possible subsequent claim the firm or Jurgens may have against him. (Coney v. Wheelock, 33 Me. 366; First Nat. Bank of Mankato v. Parsons, 19 Minn. 289; Major v. Hawkes, 12 Ill. 297; Bates on Partnership, § 698; Graves v. Merry, 6 Cow. 701.) Defendant finally contends that the notes became the property of the assignee by virtue of the assignment. This is substantially a plea that plaintiffs are not the real parties in interest, but that the notes belong to and are the property of [550] the assignee. But as against the defendant, the maker, the argument is not tenable. The holders of the notes are presumptively the owners, and their possession is presumptive evidence of their title, until rebutted by the defendant. (Whiteford v. Burching, 1 Gill. 127; Pomeroy’s Code Remedies, § 128, et seq; Palmer v. Nassau Bank, 78 Ill. 380; New Orleans Banking Co. v. Bailey, 18 La. Ann. 676; 2 Randolph on Commercial Paper, § 707; Daniell on Negotiable Instruments, §§ 1191, 1192 b; Story on Promissory Notes, § 381.) And until this presumption is overcome plaintiffs are bona Ude purchasers for value, have a right to sue, and are the real parties in interest. (Klein v. Buckner, 30 La. Ann. 680; Robertson v. Dunn, 87 N. C. 191; Hesser v. Dran, 41 Iowa, 468; Herrick v. Bromside, 56 Md. 439; McCann v. Lewis, 9 Cal. 246.) We adopt the construction placed upon section 4 of our Code of Civil Procedure by the court of appeals of New York, in Hays v. Hathorn, 74 N. Y. 486, where the question of who is the real “party in interest,” as applied to promissory notes, is ably discussed by Judge Hand. The action was on a promissory note made by Hathorn et al., payable to the order of defendant, and by him indorsed and transferred to plaintiff. The answer denied the transfer to plaintiff, or that he was the legal owner or holder thereof, or that he was the real party in interest. The court review the earlier New York cases, and conclude as follows: “From this glance at the cases it appears that it is ordinarily no defense to the party sued upon commercial paper to show that the transfer under which the plaintiff holds it is without consideration, or subject to equities between him and his assignor, or colorable and merely for the purpose of collection, or to secure a debt contracted by an agent without sufficient authority. It is sufficient to make the plaintiff the real party in interest if he have the legal title, either by written transfer or delivery, whatever may be the equities between him and his assignor. But, to be entitled to sue, he must now have the right of possession and ordinarily be the legal owner. Such ownership may be as equitable trustee; it may have been acquired without adequate consideration, but must be sufficient [551] to protect the defendant upon a recovery against him from a subsequent action by the assignor. As we understand the scope of the offer in the present case, it went to entirely disprove any ownership or interest whatever, or even right to possession as owner, in the plaintiff. It should therefore have been admitted. It may be true that the plaintiff, if this note had been delivered to him with the intent to transfer title, might have lawfully overwritten the blank indorsement with a transfer to himself; it is also true that the production of the paper by him was prima fade evidence that it had been delivered to him by the payee and that he had title to it, but the defendants’ offer was precisely to rebut this very presumption, and, for aught that we can know, the evidence under it would have done so.” In Lockwood v. Underwood, 23 N. Y. Sup. Ct., the rule laid down in Hays v. Hathor, supra, is approved. And the decided weight of authority is that a note indorsed merely for collection passes such title as enables the indorsee, to sue in his own name, as the real party in interest. (Roberts v. Parrish, 17 Or. 583; Cummings v. Cohn, 12 Mo. App. 585; Roberts v. Snow (Neb.), 43 N. W. Rep. 241; Winterwrite v. Torrent (Mich.), 47 N. W. Rep. 359; Wilson v. Tolson, 79 Ga. 137; Daniell on Negotiable Instruments, § 698 d, and cases cited; Moore v. Hall, 48 Mich. 143; Cottle v. Cole, 20 Iowa, 481; Freeman v. Falconer, 45 N. Y. Sup. Ct. 383; Maxwell on Code Pleading, § 48.) Plaintiffs having bought the notes after maturity, they were, of course, transferred without prejudice to any setoffs or other defenses existing at the time of or before notice of the assignment. But no such setoffs or defenses are claimed, other than that the plaintiffs are not the lawful holders of the notes, with a right to sue. Accordingly, it is of no importance to defendant who owns' the notes, provided he is not liable to a second suit founded on the same claim. As was said in Gage v. Kendall, 15 Wend. 640: “ Why should the defendant give himself the trouble to investigate the plaintiff’s title? He owes the money to some one.” (Woodbury v. Hinckley, 3 Col. App. 210; Rohrer v. Turrill, 4 Minn. 407; Caldwell v. Lawrence, 84 [552] Ill. 161; 1 Parsons on Notes and Bills, § 262; Bliss on Code Pleading, § 51.) It was decided in Fultz v. Walters, 2 Mont. 165, that promissory notes are to be regarded themselves as only personal chattels, collectible by and in the name of the holders and owners thereof. The possession, therefore, of the notes involved in this suit being in plaintiffs, who became purchasers in good faith, subsequent to the assignment of Jurgens & Price, by section 226, division 5, of the Compiled Statutes, any assignment of them as chattels, to be valid as against these plaintiffs, must have been accompanied by the immediate delivery, and by an actual and continued change of possession. The facts being that the notes never were delivered to the assignee, but did pass to the plaintiffs in good faith, and without knowledge of the assignment, plaintiffs are the real parties in interest. Our conclusions are that defendant owes the notes; that he is thoroughly protected against any further liability upon them; that there is no merit in his defense, and that he must be held to his obligations. The judgment is affirmed; Affirmed. De Witt, J., concurs.