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Lewis v. Robertson.

to obtain a discount to be applied to payment of his subscription, although he was not bound for the stock. Much more would this be the case where the subscription itself, and the acts concurrent with it, had created a valid contract for stock.

The dissolution of the bank by judgment of forfeiture, makes no difference in the result. The trustee appointed upon such judgment succeeds to all the rights of the bank. He is to collect all debts due to the bank, and apply them to the payment of debts due from the bank. The amount due for stock is as much a debt as any other liability. However it might be, if there were no creditors of the bank, it is clear the stockholders are bound to pay up all the arrearages due for stock, if necessary, to form a fund for the payment of the debts of the institution.

The case of Spear v. Grant, (16 Mass. 9,) has no bearing on this question, at least to the prejudice of this conclusion. It holds, “ that where a banking corporation, at the expiration of its charter, had divided its capital stock among the stockholders, leaving corporate notes in circulation, an individual stockholder who had received his share of the stock so divided, was not liable in an action at law to a holder of the notes of the corporation.” The same case, however, states, “that if the stock is withdrawn before the debts are discharged, there would seem to arise an equitable obligation on the part of the stockholders to account for so much as they originally consented to pledge."

The case of Wood v. Dummer, 3 Mason, R. 308, grew out of the same transaction of the same bank. The court held the stockholder liable in equity to repay to a creditor the amount of stock so withdrawn. It says: “The capital stock of banks is to be deemed a pledge or trust fund for the payment of the debts contracted by the bank. The individual stockholders are not liable for the debts of the bank in their private capacity. The charter relieves them from personal responsibility, and substitutes the capital stock in its stead. If the stock be withdrawn by the stockholders, they are, to all intents and purposes, privy to the trust, and receive it cum onere."

It is the same thing where the stock has not been paid, as where it has been paid and withdrawn. King v. Elliott, 5 S. & M. 428.

Scott et al. v. Metcalf.

The judgment of the court below was in accordance with these views, and the same is affirmed.

THOMAS J. ScoTT ET AL. vs. Amos METCALF.

- the

An assignment" of the money due upon a note,” is not such an assignment of

the note itself as to vest the assignee with a legal title to the note, so as to enable him to sue upon it at law in his own name; but the perfect legal title remains in the assignor, who may prosecute a suit in his own name against

the maker. Therefore, in an action on a note by the payee against the maker, the plea, that since the commencement of suit the payee had assigned to a third person money

due

upon the note sued on, so that the plaintiff had no right, title, claim, or interest in, or to the money due, on the notes, would be bad

on demurrer. Yet it seems that if the assignment had been by indorsement of the note itself,

a plea to that effect would be a good bar to the action ; for such indorsement would transfer the legal title, which the plaintiff must have as well at the

trial as at the commencement of the suit. The assignor of the money due on a note, holds towards the assignee a trust

relation, by which the former, with a perfect legal title, is to collect the money for the latter ; yet if the latter is doubtful of the faithful execution of the trust by the former, he may, by bill in equity, compel a direct payment by the maker of the note to him.

In error from the circuit court of Madison county; Hon. Robert C. Perry, judge.

Amos Metcalf sued Thomas J. Scott and others on two notes; to a plea of the defendants, set out in the opinion, the plaintiff demurred, and the demurrer was sustained; the jury, on the other pleas, found for the plaintiff, when the defendants sued out this writ of error.

Mayes, for plaintiffs in error,

Contended that the demurrer should have been overruled. There can be no legal remedy, if there be no legal right. For a

Scott et al. v. Metcalf.

legal remedy is only given to put a party in possession of that to which he has a legal right, and which is illegally withheld from him. It is a plain sequence, that if a party divest himself of legal right, he thereby divests himself of capacity to pursue a legal remedy. Any fact, therefore, which shows that the right has passed from him, will defeat his action. Hall v. Gentry, 1 A. K. Marsh. 556.

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Clifton, on same side,

Cited 1 Tom. Law. Dic. 106; Co. Litt. 215; Greenl. Ev. 222, 223; Wright v. Campbell, 4 Burr. 2046; Waring v. Cox, 1 Campb. 369; Abb. on Ship. 227; Dick v. Lumsden, Peake, 189; Wilson v. McElroy, 2 S. & M. 241; Bacon v. Cohea, 12 Ib. 516 ; Moore v. Anderson, 3 Ib. 325.

S. Scott, on same side.

Wm. G. Thompson, for defendants in error,

Contended that the plea might be strictly true, and yet the assignment not have passed the legal title, so as to have enabled the assignee to sue in his own name; that could only be done by indorsement, which is not alleged in the plea.

1

Mr. Justice Smith delivered the opinion of the court.

This was an action of assumpsit founded on two promissory notes, made by plaintiffs in error, payable to the order of the defendant, Metcalf. Several distinct grounds of defence were presented under different pleas, one of which was to the effect, that after the commencement of his suit, plaintiff had transferred and assigned away to J. S. Chinowith & Co., the sum of money then due and owing on said notes; and "that said plaintiff had not now any right, title, claim, or interest in or to the money yet due and owing on said notes, having parted with the same by said assignment. To this plea the plaintiff below demurred, and the demurrer being sustained, verdict and judgment were rendered for the amount due on the notes with interest. The exception to the judgment on the demurrer, raises the only question in the case.

Scott et al. v. Metcalf.

In Waggoner v. Colvin, (11 Wend. R. 27,) the plaintiff declared, as indorsee of a promissory note, against his immediate indorser. The defendant pleaded, that, before the commencement of the suit, the plaintiff had indorsed and delivered the note to J. S. and others. The plaintiff demurred, and the plea was adjudged good, but the court said, if the suit is brought by J. S. and others in the name of the plaintiff, that should be shown by replication, and it would be a good answer to the plea. And in the case of Mauran v. Lamb, (7 Cow. 176,) it was holden that a mere agent without legal title to, or interest in, the money of a note payable to bearer, could sue on it for the use of the real owner. It is difficult to reconcile these decisions with principle, and if they are regarded as entitled to any weight as authority, they must be held exceptions to the rule repeatedly recognized by this court, that a legal title in the plaintiff to the matter in controversy, is the necessary foundation of every action at law. Wilson v. McElroy, 2 S. & M. 249.

As a legal title is the necessary foundation of every legal action, it is unimportant at what point of time that title has been divested. It is essential that the plaintiff, at the trial, should be able to show a good cause of action. Accordingly, in Hall v. Gentry, (1 A. K. Marsh. 556,) it was held, that a transfer of the legal title to the bond on which the action was founded, pending the suit, barred a recovery.

The question, then, which we have to consider is, whether the transfer and assignment of the money due on the notes, was a transfer of the notes themselves, or an act equivalent thereto, by which the legal title to the notes became vested in Chinowith & Co.

The position assumed in support of the affirmative of this proposition is, if we understand it, that the legal title to an instrument for the payment of money, is an incident attached to and comprehended by the beneficial ownership of its contents. Hence it is inferred that an assignment of all the interest, right and title which one may have to the money due on a note, by necessary legal implication transfers the right and title to the

Scott et al. v. Metcalf.

note itself. And in support of the argument, the cases of Harper v. Butler, and Bledsoe v. Fisher, (in 2 Peters, and 2 Bibb,) are referred to. These cases do not apply. In the former case, it was decided that choses in action were assignable by the statute of Mississippi, and the assignees could sue at law in their own names. It is not said in what mode the transfer in that case was made; but is fairly inferrable, that the assignment was made by indorsment on the note. In the latter, the question was whether the assignment, which was evidently indorsed on the note, was sufficient in point of legal form, under the statute of Kentucky, to transfer the note; and not, as it is insisted, whether the mere assignment of the money due on it, would convey the legal title. The argument inverts the true position. The party holding the legal title is primâ facie the beneficial owner of the contents of a note, and these are always presumed to pass with a transfer of that title, as the obligation to pay the money is the result of the contract between the maker and payee, the evidence of which is the note.

The right to dispose of this species of property, and the mode in which it may be transmitted, are regulated by the positive provisions of the law. Under the law merchant, negotiable instruments were assignable by indorsement. These, with some few other securities, constituted the only exceptions to the general rule of the common law, that choses in action were not assignable. Fonb. Eq. b. 1, ch. 4, s. 2, note g; 2 Story, Eq. 305. Thus stood the general law on this subject, until the adoption of the statute of Mississippi, which is found in Hutch. Dig. 641, sec. 9. The notes in question were not assigned by indorsement. Chinowith & Co. therefore did not acquire the legal title to them by any provision of the law of merchants, nor by any principle of the general law recognizing the assignment of these securities.

It is true, however, that before the adoption of any statutory regulation on the subject, either here, or in England, assignments of the various classes of choses in action were recognized and upheld by courts of equity. The ancient restrictions imposed by the common law, were, in effect, repealed within the

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