Birch v. Tillotson , 16 Ala. 387 ( 1849 )

CHILTON, J.

This was an action of assumpsit upon a promissory note made by defendant to James Crawford & Son, endorsed by the payees to Crawford & Gandy, and by Ihe latter endorsed in blank. The pleas were non-assumpsit, payment, and set off Upon the trial the defendant was allowed to prove, against the plaintiff’s objection, that the payees of the note, James Crawford & Son, had 1aken the benefit of the bankrupt law; that the note now sued on was embraced in the assets rendered in by them and turned over to the assignee in bankruptcy, and that it was sold by him on the 19th January 1846, and purchased at said sale by one Daniel Iverson. It was further shown, that the note was endorsed to the firm of Crawford & Gandy solely for the purpose of collection, and that said firm had not at any time any interest in said note, but merely endorsed it for the purpose of collection, and handed it so endorsed to the attorneys of the plaintiff in January 1846. This evidence was objected to by the plaintiff on two grounds: 1st — Because, he insisted, it was irrelevant under the issues: and 2d — Because no claim, offset or equity was alleged to exist against the assignee in bankruptcy or other person. The court having overruled the objections, charged the jury that if they believed the evidence, the legtd title to the note was still in the assignee in bankruptcy, and the plaintiff could not maintain this suit.

On the part of the defendant in error, it is insisted that no one can acquire the legal interest in a note under an endorsement from the payee who becomes bankrupt, and makes the ■endorsement after he is so declared.

The objection on the part of the plaintiff in error, that the assignment could not be taken advantage of, as passing no legal title, unless upon plea supported by affidavit, is not tenable. It is certainly incumbent upon every plaintifF at law to show that he has the legal title to that which he seeks to recover, and the want of such legal title is fatal upon the plea of non-assumpsit to an action in which this is the appropriate issue. In Pinkerton v. Adams & Milner, 2 Esp. Rep. 611, it was objected that the proof of the endorsement of the note sued on after the endorser had become a bankrupt could not be admitted under the general issue; but Lord Kenyon said he was clearly of opinion it could be given in evidence under the general issue, non-assumpsit, for the defendant did not undertake to pay that to which the plaintiff had no legal title, which was the case here. This decision results as a consequence from the bankrupt act, which declares such transfers void, and vests the legal as well as equitable title of the bankrupt’s property in his assignee. Our act of 1841 gives to the decree in bankruptcy the effect of transferring to the assignee all the bankrupt’s dioses in action and effects of every kind; so that it is very clear, if after a decree in bankruptcy and before a sale of this note by the assignee, the bankrupt payee had attempted to negotiate it by endorsement or otherwise, it would have been a fraud upon his creditors, and the legal title having passed to the assignee in bankruptcy, could not have been transmitted by the bankrupt to his endorsee. Such is the opinion above refered to.

The cases of Thompson et al. v. Underhill & Guest, 10 East. 417, and Pinkerton, assignee, &c. v. Marshall, 2 H. Bla. Rep. 334, present controversies between the assignee of the bankrupt and those claiming under him by a negotiation subsequent to the act of bankruptcy, and are all distinguishable from the case at bar. In this case the bankrupt returned the note sued on in his schedule, and the assignee duly sold it under the decree; so that no question is raised as between the pláin-tiff and the bankrupt’s assignee or creditors. The only question raised is, do the facts set out in the bill of exceptions slow that the legal title to the note is in the plaintiff? By the decree the bankrupt’s title, as we have said, vested in the as-signee. The law required Mm to make sale, and thereby he becomes divested of the title. We will not say that the purchaser of a note at the assignee’s sale may sue in Ms own name upon it in the absence of an assignment by the assignee The facts before us do not call for such a decision.. But in our opinion, the note having been assigned by the payee, after the assignee in bankruptcy had sold it, we must intend that it was purchased by the payee from Iverson, the purchaser at the bankrupt’s sale, and being the payee, and thus remitted to his original legal title, that he could have sued upon it in his own name. If this be true, then it follows he could transfer it by his endorsement. Suppose he had regularly transfered it before his bankruptcy, and afterwards had acquired it— would it not have been perfectly competent for him to have stricken out the assignments which had previously divested him of his title, and relied upon his original right to maintain his suit ? Clearly so. How then, is the ease altered by the decree in bankruptcy? This only vests the title in the assignee, whose sale divests his interest, and when the bankrupt again becomes the bona fide, holder of the paper, we see no. reason why the intermediate process through which the note has passed should prevent his original right of action from reviving, any more thau a transfer by his endorsement would when he afterwards acquires the note. The case in 1 Camp. B.ep.279, to which we are refered, does not militate against this view. In that ease, one of two purchasers, after the commission, of a secret act of bankruptcy by his copartner, transfered in the firm name a negotiable security, and the acceptors being notified by the assignee in bankruptcy not to pay the bill, relus-ed payment. Held, that under the English statute,, the transfer was invalid and the plaintiffs were not entitled to. recover.

We must presume that the firm of James Crawford & Sou acquired the note after the sale made by the assignee-; this being the case, we see no consideration of public policy, nor any principle of law, which forbids them to indorse it so as to pass the legal title. By the recovery and satisfaction, ©f the judgment, the note is cancelled and discharged,, arid this is the main. •consideration, so far as the defendant is concerned, who does not gainsay the debt, but only insists that the holder of the legal title must sue.

Let the judgment of the Circuit Court be reversed, and the caus.e remanded.