Root v. Irwin

Caton, J. On the 21st of June, 1852, Irwin made his promissory note, payable to one Pencake, on the 17th of April, 1853. Pencake indorsed the note to Twombly, and Twombly indorsed it to Newby, who indorsed it to the plaintiff below. The plea is that the note was indorsed to Newby after it became due, and that after said indorsement, and before the maker had notice of the indorsement to the plaintiff below, Newby became indebted to the maker, on a promissory note given to one Stewart, by whom it was indorsed to Irwin, which he offers to set off, etc. To this the plaintiff below replied, that the note made by Newby was not indorsed to Irwin before, nor at the time, that this note was indorsed to the plaintiff. To this replication a demurrer was sustained, and judgment rendered in bar of the action. The sustaining the demurrer to the replication, and not carrying it back and sustaining it to the plea, are assigned for error. The errors are well assigned. The plea is bad. The claim against Newby was not a proper subject of set-off in this action, either at the common law, or under our statute. The claim was not against the plaintiff in the action, nor against the payee of the note, and is not made by the statute a subject matter of set-off. The 8th section of the 73d chapter of the revised statutes, page 385, is this “ If any such note, bond, bill, or other instrument in writing, shall be indorsed after the day on which the money or property therein mentioned becomes due and payable, and the indorsee shall institute an action thereon, against the maker and signer of the same, the defendant, being maker and signer, shall be allowed to set up the same defense that he might have done had the said action been instituted in the name, and for the use, of the person or persons to whom the said note, bond, bill, or other instrument in wilting, was originally made due and payable.” Surely there is no mistaking the meaning of "this statute. It is as plain as language can make it, that when the action is brought by the indorsee of a dishonored note, the maker may set up the same defense that he could have done had the action been brought by the payee. We have only then to inquire whether this would be a good plea, were the action brought in the name of the payee. The statute intends to place the defense in the same position that it would be had there been no assignment of the note. Were Pencake the payee of the note, still the holder and plaintiff in this action, Rewby would be a stranger to it, and no claim of the maker against him could be set-off against the payee’s claim on the note. Ro payment made to Rewby, or claim against him, could in that case bring it within the provisions of this statute. The statute does not provide for .the case of a payment made to, or a sehoff against, an intermediate indorser of the note. At the common law, if the maker paid the note to an intermediate indorser, while in his hands, at or after its maturity, that might be a good payment, and available to the maker in the hands of any one to whom it might subsequently be assigned; but it would not then come within the provisions of this statute. But here there is no such plea of payment, but there is a mere claim shown against Rewby, an intermediate indorser, which is not even shown to have existed while he was the holder of the note, but only before the maker had notice of the transfer to the plaintiff below. Ror does it appear that the payee ever knew that Rewby was the holder of the note, while he did hold it, or previous to the time when he had notice that it was transferred to Root. The plea was bad, and the demurrer should have been sustained to it. Judgment is reversed and cause remanded. Judgment reversed.