Quigley v. Mexico Southern Bank , 80 Mo. 289 ( 1883 )

Sherwood, J.

Action by Quigley to recover from the bank the amount due on a promissory note, which had been collected by the bank from Woolwine, the maker, Quigley being the payee and the note payable to his order. The bank claimed to be an innocent holder. There was testimony that the note in question was left with H. S. Clark, an attorney, for collection, and for no other purpose. There was testimony also that the note was not indorsed by the payee, and there was testimony of a contrary effect. The testimony also tended to show that the bank was a purchaser of the note before maturity, and for value, and that the name of Quigley was indorsed on the note.

The court instructed the jury, on the part of plaintiff, in substance, that if the note was left with Clark for collection only, and without plaintiff's indorsement, and Clark, without authority from plaintiff, indorsed the name of the latter on the note and sold the same to the bank, and afterward the latter collected the note and never paid the proceeds to plaintiff, then the jury should find for the plaintiff', although they should believe from the evidence that the bank was ignorant respecting such unauthorized indorsement, and purchased the note in good faith for a full consideration and before maturity.

The instructions in behalf of the bank were to the effect that if the note was purchased by it, in good faith and for a valuable consideration of Clark, and the note at the time of the purchase was indorsed either by the plaintiff, or by his authority, that the finding should be for the defendant, even though the evidence showed that Clark had no authority to sell the note. And the third instruction for the defendant told the jury that the burden of proof was on the plaintiff to show, by a preponderance of evidence, that the indorsement of Quigley’s name was a forgery. These instructions put the case very fairly to the jury. Perhaps, the last instruction went further than the law warrants, but as the judgment went in favor of plaintiff, it is unnecessary to comment on any supposed error which it may contain.

I.

Where a principal clothes his agent with apparent title to a negotiable security, as, ex. gr., by indorsing such a note in blank, and the agent, contrary to the . commands of his principal, negotiates the note to one who purchases in good faith, before maturity, and for a valuable consideration, the act of the agent, though wholly unauthorized, will bind the principal as effectually as if no defect of authority existed. Story on Agency, § 443. Eor in such cases where one of two innocent persons must suffer, ilie one must be the sufferer who gave occasion to the commission of the wrong, lb.

But if the testimony offered on behalf of the plaintiff be true, Clark had neither real nor apparent authority to transfer the note. If the indorsement was a forgery, the case stands here as if the instrument bore no indorsement at all. An attorney, who receives a note merely for collection, has no authority to make any other disposition of it. Goodfellow v. Landis, 36 Mo. 168; Smith v. Johnson, 71 Mo. 382. So that taking the testimony offered by plaintiff as true, the bank bought the note from one not authorized to sell it, and from one not possessing an apparent title. When a note payable “ to order” is not indorsed by the payee, the transferee does not acquire the legal but only the equitable title, (1 Dan. on Neg. Inst., §§ 664 a, 741) ; and the transferee takes it as a new chose in action, and must aver and prove the consideration, and takes it subject to all the equities which attached to it in the hands of his transferer. Ib; Bocha v. Nuella, 28 Mo. 181. And though under our code the transferee may maintain an action on the note in his own name, where the transfer occurs by mere delivery, this ability to sue in bis own name cannot confer on him tbe rights or tbe status of him who has purchased an instrument transferable by mere delivery, or one payable to order and indorsed in blank. 1 Daniel Neg. Inst., supra; Ib., §§ 321, 573. In short, such purchaser is not to he regarded as an indorser in the usual course of business, Ib., §§ 621, 781 a. For these reasons tbe instructions on which we have commented furnish defendant no just ground for complaint.

II.

Nor was there any'error in the instruction which the court gave, that nothing contained in the record of the suit of Woolwine v. Quigley estopped the plaintiff in this action, and withdrew such record evidence from the consideration of the jury. The hank was not a party to that suit, and “ it is a general principle fundamental to the doctrine of res judicata, that personal judgments conclude only parties to them and their privies,” (Bigelow on Estop., 59 ; 1 Greenleaf Ev., § 535); and cannot be invoked by strangers nor pleaded by them. Freeman on Judg., § 154; Henry v. Woods, 77 Mo. 277; McDonald v. Matney, (decided present term).

in.

Nor can the bank be regarded as made a party to that suit, because of tbe publication made, and, tbe petition filed being insufficient. The petition alleges that the “ notes are either lost or destroyed, or that said notes have been assigned and delivered by'defendant Quigley, or his agent, to and are held by parties to this plaintiff unknown,” and that “ the residence of the unknown defendants herein are unknown to plaintiff.” This petition, it will be observed, does not comply with the provisions of section 3499, Revised Statutes 1879. Nor does the order of publication show any better compliance with that section, since it merely notifies “non-resident defendant Quigley and others unknown.” See State v. Staley, 76 Mo. 158.

IV.

Furthermore, that publication only relates to the last two of the notes, and not to the one in suit.'

7.

Moreover, the section of the statute referred to requires that in cases of this sort, where there are persons whose names are unknown to the plaintiff, he must make the proper allegation under oath. This was not done. His attorney made oath to the petition. It will be observed that the section in question differs from section 3494, for there the affidavit may he made by the “plaintiff’ or some person for him.” “ In all cases where constructive notice is' substituted for actual notice, strict compliance is required.” Schell v. Leland, 45 Mo. 289.

For these reasons the judgment should be affirmed.

All concur.