Smoot v. Morehouse , 8 Ala. 370 ( 1845 )

GOLDTPIWAITE, J

The question raised here, as to the authority of the bankrupt, under the circumstances of this case to indorse the due bill, though entirely new in our Courts, seems to have often arisen in those of England. Thus in Smith v. Pickering, Peake’s Cases, 50, the drawers of a bill who were also its payers, delivered it to the plaintiff'for a valuable consideration, but forgot to indorse it. They afterwards became banlu’upt and then indorsed it. In a suit against the acceptor, it was held that the indorsement was valid. So in an anonymous case reported (1 Camp, 422, in notes,) the bill was delivered to the indorsee, more than two months before the commission, with intent to transfer the propei'ty in it, but the indorsement was not in effect written within the two months. Lord Ellenborough held, that the writing of the indorsement had reference to the delivery of the bill. In Watkins v. Maule, 2 J. & W. 243, it is said that the administrator of a bankrupt may indorse a bill under such circumstances, for the transfer for consideration is the substance, and the indorsement a mere form, which creates an equitable right, entitling the holder to call for that form. The case of Pease v. Hirst, 10 B. & C. 122, though not stated at length, in the American edition, seems to sustain the right of the payee under such circumstances to be discharged from a suit by the assignees. In addition to the cases cited, Mr. Chitty has collected many more bearing on the same question, and all seem to concur that the transferee for a valuable consideration, is entitled to have the paper indorsed, either by the bankrupt or the assignee, and that a suit can be maintained, though the indorsement is put on the bill or note after the bankruptcy. [Chitty on Bills, 227,723-4.J We think the same rule must obtain under our bankrupt act, which vests in the assignee the only beneficial interest of the debtor.

In relation to the second question presented by the bill of exceptions, it is said the delivery of the due bill was made in December, 1841, in accordance with the provision to that effect previously made, and possibly in 1840; that soon afterwards the debtor applied to be discharged as a bankrupt. The charge asked for is, that if the delivery was made in contemplation of bankruptcy, the payment was utterly void. The preference which is spoken of in the second section of the bankrupt act, is also inhibited by the English bankrupt acts, and under them, the uniform construction is, that the preference, to be void, must be a voluntary act of the debtor, and not arise in consequence of any previous agreement with his creditor for security. [Chitty on Bills, 235.] Under the circumstances in evidence, there was nothing before the jury from which a fraudulent preference could be presumed, and therefore the charge requested was properly refused for the reason that the question was not involved by the proof. This point is not much pressed in the brief submitted, but we have thought it best to give it this brief consideration, as it is not abandoned.

We can perceive no error in the action of the Court below, and its judgment is therefore affirmed.