Howland v. Spencer

It appears from the case, that the note which furnishes the foundation of the present action, was payable to Bellows "&> Peck, or order, and although indorsed and delivered to May, so that he could institute a suit in his own name, the indorsement was merely in trust, that he might collect the note for their benefit. It is suggested, however, that this transferred the legal title in the note to May, so that Bellows & Peck could not, and of course the plaintiff, acting in their right, cannot maintain an action of indebitatus assumpsit for the recovery of the money. Whether the payee who had thus indorsed a note for collection, could maintain a suit upon it in his own name, after a mere revocation of the authority of the agent by a demand of the note, we need not decide. If he could not, it must be'because the indorsement of the note still subsisted in the hands of the agent, by reason of which the agent might commence a suit upon it in his own name. There might, perhaps, be some technical difficulty in holding that a suit might be maintained on a negotiable instrument, by the payee in his own name, at the same time that one could be maintained by an indorsee; but this difficulty does not press us in this ■case. The debt was due to Bellows & Peck, although the evidence of it was placed in the hands of an agent, with authority to collect in his own name. The plaintiff having •succeeded to the rights of Bellows & Peck, demanded the note, and thus revoked the authority of the agent; and if he may not- thereupon maintain an action upon the note as assignee, on account of the indorsement, still, if the money is in fact due to him as assignee, there seems to be no objection to the maintenance by him of any other action suitable to his case, in which the technical difficulty does not arise. Such is this action of indebitatus assumpsit, in which the •existence of a debt due upon a promissory note may be given *585in evidence. The authority of the agent being revoked, if the money" is due to the plaintiff, the fact that there is an indorsement in blank upon the note wrongfully withheld by the agent, will form of itself no objection to the maintenance of the action. We must see, of course, that the maker of the note is not liable to be prejudiced without his fault by the indorsement.

To the plaintiff’s right to recover upon the merits, several objections have been raised.

The note is no longer in existence, having been paid by the defendant to jWay, the indorsee. If this had been before this suit, or without notice that the indorsement was in trust, the payment, having been made to one apparently the owner of the note, must undoubtedly have protected the defendant. But the case shews that the defendant had full knowledge that May was but an agent of Bellows & Peck. It appears from the evidence introduced by the defendant, that a suit commenced by May was withdrawn, and the attachment released, by an arrangement with Bellows & Peck. May subsequently called on the defendant for payment, who exhibited evidence that he had made payments to Bellows & Peck, and nothing farther was done. While matters remain in this state, Bellows & Peck become bankrupts, and the plaintiff, as assignee, commences this action against the defendant, who subsequently pays the amount of the note to May. There is nothing to show that he had any reason to suppose that there had been any transfer to May, by which he became entitled to receive the payment against the claim of Bellows & Peck, or their assignee, as shown by this action.

The defence, then, must rest upon the ground that May had the right to receive the payment, notwithstanding the plaintiff had demanded the note, and that the demand was not a revocation of his authority. This depends upon the effect of the trustee suits instituted against May, in the state of Vermont, and this is the main question in the case.

Those suits were commenced in October, 1843, prior to, *586the decree in bankruptcy, whether prior to the petition does not appear. If they bound the note in - the hands of May, and constituted a lien upon the debt, so that May was liable by reason of it as trustee, then he had the right to receive the payment, notwithstanding the demand by the plaintiff and the institution of this suit, and the suit must fail. It must have failed without the payment. But if, on the other hand, the trustee suits constituted no lien upon the note, and May was entitled to be discharged as trustee, then this sui.t was well instituted, being for a debt due the plaintiff as assignee; and the subsequent payment by the defendant to May cannot defeat the plaintiff’s rights. If it was the intention of the parties to that payment to place the money in May’s hands, so that the creditors in those suits might be placed in a better situation, and enabled ,to maintain these actions when they must otherwise have failed, it is clear that such an intention could not have availed ; and if all the parties acted with full notice, the case must be settled according to the legal rights of the parties upon the institution of this suit, and before the payment, whatever may have been the intention.

In relation to the suit of Bardwell, it might be sufficient to say, that he could have no lien upon the debt due to the partnership, his claim being against Bellows alone. But the writ of Foster was against Bellows & Peck, and the question still remains, whether a holder of a note or other chose in action, in trust, may be held as a trustee of the owner of it, in a process of foreign attachment. Upon this question, however, there seems to be no reasonable doubt. The authorities cited by the plaintiff’s counsel seem to settle it conclusively. We do not perceive how May could have been charged as trustee when this suit was instituted; and of course he had no authority, the note having been demanded by the plaintiff, to receive payment afterwards. It was the folly of the defendant, (unless he has an indemnity,) while this suit was pending against him, to pay the money to May, *587who was not then calling upon him for it. And if May may now be charged as trustee in Vermont because he has the money in his hands, that can not alter the rights of the plaintiff, whose action was previously commenced. Probably, however, such will not be the final issue there; but if it should be, we could not take notice of it.

Judgment on the verdict.