Winston v. Westfeldt , 22 Ala. 760 ( 1853 )

GrOLDTEC WAITE, J.

The note sued on, at the time of the purchase by Westfeldt, was the subject of controversy in the Chancery Court; and the first question is, whether these proceedings operated as notice to him; or, in other words, does the doctrine of lis pendens apply to negotiable paper ? This is entirely a new question with us; and, so far as we can learn, has never been directly decided by any court. The doctrine, as it prevails at this time, seems to have had its origin in the common law rule which obtained in real actions, where, if the defendant aliened during the pendency of the suit, the judgment in the real action overreached the alienation, and the chancery ordinance of Lord Bacon, which provided “ that no decree bindeth any that cometh in bona fide by conveyance from the defendant, before the bill is exhibited, and is made no party by bill or order; but when he comes in pendente lite, and while the suit is in full prosecution, and without any color of allowance, or privity of court, there regularly the decree bindeth. But if there were any intermissions of suit, or the court made acquainted with the conveyance, the court is to give order upon the special matter according to justice.” Lord Bacon’s Works 2 vol. 479.

Erom the use of the term “ conveyance,” we think that the framer of this ordinance had in view its application to real property only, and that it was intended simply to operate as an adoption in the Court of Chancery of the common law rule which we have referred to; and this idea is supported by Mr. Powell, who, in his work on Mortgages, (2 vol. 618) says: “ There is no case in which equity has determined the property in goods to be affected by reason of a lis pendens, where possession is the principal evidence of ownership, as of personal chattels.” Chancellor Kent also, while he admits that the rule is well established, and applies it without hesitation to a sale of bonds and mortgages, as being outside of the ordinary course of traffic, and always understood to'be subject to certain equities, (Murray v. Lilburn, 2 John. Ch. 441, 444,) expresses a serious doubt whether it applies to money or commercial paper not due, and some question as to its application to moveable personal property — such as horses, cattle, grain, &c. The Vice Chancellor, in Scudder v. Van Amburgh, 4 Ed. 29, while he “ inclines" to the opinion that the rule applied to personal property, admits that the question is not decided. In our own court, in the case of Bolling v. Carter, 9 Ala. 921, the rule was applied to slaves; but the weight of that case as authority is somewhat diminished, by the fact, that the point was not made, and not alluded to by the court. It is, to say the least, highly improbable that a question of this novel and important character should have passed “sub silentio,” had the attention of the court been directed to it.

The question though, here, is not whether the rule applies to personal property, but whether it holds as to negotiable paper transferred before maturity.- Lord Eldon evidently doubted it in Jervis v. White, 7 Ves. 413, 414; and from the cautious manner in which he expresses himself, in the last paragraph of Hood v. Aston, 1 Russ. 412, more than twenty years after-wards, we do not think he had fully resolved this doubt. The leaning of Chancellor Kent was against it, on the ground that the safety of commercial dealing required a limitation of the rule; and it must be acknowledged that there is great force in the reason. Negotiable paper, representing, as it does in almost all civilized nations, a very large proportion of the commercial operations, and serving, to a great extent, as the representative of money, is justly a favorite of the law, and enjoys immunities and privileges which are extended to no other species of contracts. The tendency of the courts has been to uphold this description of paper, in the hands of the bona fide holder, against every species of defence which might exist as between the original parties. The credit and confidence due to it must be impaired, if the buyer was required to examine the courts of every county in the State before he could be sure of bis purchase; and such would necessarily be the case, if the doctrine of Its pendens applied to it. There are no adjudications to force us to this extremity; the strongest considerations of public policy seem to forbid the extension of the rule to money or bank bills; and we think that commercial paper, as. the representative of money, should stand on the same footing in this respect.

Neither does the fact, that an injunction against negotiating the note was in force, destroy its negotiability. "We do not understand any of the authorities to go to that length; and the same reasons exist to sustain it in the hands of a bona fide holder, as in the case of lis pendens. The party, it is true, would be placed by the injunction in a better condition, as the Chancellor could commit for the breach, until the party who negotiated the note had got it back into his possession, or paid the amount due upon it; but the injunction could not operate to destroy the qualities which the law attaches to the instrument itself.

It is, however, urged on the part of the plaintiff in error, that as "Westfeldt sues as the endorsee of Bliss, and the evidence shows that he did not become the holder of the note until after the rendition of the decree against Lacy, he is bound by it, as the privy of Bliss, who was a party defendant to the chancery proceeding. It is true, as a general rule, that a judgment or decree is binding on parties and privies; but, technically speaking, there can be no privity, where there is not an identity of interest. 1 Green. Ev. 523 § 190. Usually, as the assignee of a chose in action takes it subject to all the equities, he has precisely the same interest as the assignor ; but this is not the case with negotiable paper, taken before maturity, for value, and without notice. The holder, under such circumstances, may have very different rights from the party from whom he received it, and can recover while his assignor could not. This is the case here. Neither Bliss nor Murdock could recover, because they are not bona fide holders, while Westfeldt, upon the evidence, must be regarded as such; and in this respect, his interest is not identical with theirs, and he is not bound by the decree.

Our decision upon these points is conclusive of the case, and renders it unnecessary to consider any of the other questions presented in argument.

The judgment is affirmed.

GIBBONS, J., not sitting.