Opinion
(December Term, 1840.)
1. Where A., the payee of a bill of exchange, indorsed it to B., and B. to C., and C. then indorsed it "without recourse to him," but not saying to whom he indorsed it, it then became an indorsement in blank, and the bill became payable to bearer; and notwithstanding D. and E. afterwards indorsed it in full or specially, yet when it came again to C. by delivery, he had a right to demand payment of the bill from any prior indorser.
2. C. being the holder of the bill, the law implies, until something be shown to the contrary, that he gave value for it, or came fairly and legally by it.
3. To make an indorsement of a bill special or in full, it must direct payment to be made to some particular person, firm, or corporation.
4. A bill once indorsed in blank, becomes payable to bearer against the acceptor, drawer, and all prior indorsers.
CASE, tried at Spring Term, 1840, of CHOWAN, before Pearson, J. The jury rendered a verdict for the plaintiff, subject to the agreement of the parties, that if, upon the law of the case, the judge should be of opinion for the defendant, the verdict should be set aside and a nonsuit entered. Upon argument, the judge set aside the verdict and ordered a nonsuit, from which judgment the plaintiff appealed. The following is the case sent up by the judge:
This was an action on the case by the plaintiff as indorsee against the defendant as indorser of a bill of exchange. A copy of the bill and the several indorsements is sent as a part of the case. After the bill was indorsed by the defendant, it came to the hands of the plaintiff as indorsee. He indorsed it "without recourse." It went through several other indorsements, and was duly protested by the last indorsee, and due notice given to the defendant. After this the bill came to the possession of the plaintiff (the testimony did not show in what way), before this action was brought. Defendant insisted that as plaintiff had indorsed "without recourse," the bare possession of the bill does not entitle him to sue in his own name as indorsee. This question was reserved, and, under the charge of the court, the jury returned a verdict for the plaintiff.
Upon the question reserved, the Court was of the opinion that (220) the plaintiff could not maintain the action. The bill could only pass by indorsement, where, however, an indorsee indorses over, and afterwards takes up the bill, in discharge of his liability, he is remitted to his former right, and may strike out the subsequent indorsements and sue as indorsee; and the fact of his having possession of the bill raises the presumption that he has taken it up in discharge of his previous liability. But in this case the indorsement being "without recourse." repels that presumption, for he was under no liability, and the possession of the bill simply raises a presumption that he is owner by purchase or otherwise, and he stands in the condition of a stranger who had purchased the bill without indorsement to himself. It was agreed by the parties that the subsequent indorsements should be considered as stricken out, provided the court thought that the action could be maintained.
BILL AND INDORSEMENTS REFERRED TO.
Exch. $637.50. EDENTON, N.C. 30 April, 1836.
Twelve months after date of this first of exchange (second unpaid of same tenor and date) pay to the order of George W. Barney, Esq., six hundred and thirty-seven 50/100 dollars, for value received, and charge the same to account of Your obedient servants,
HAUGHTON BOOTH.
TO MESSRS. HAUGHTON, BOARDMAN NOBLE,
New York.
Accepted. HAUGHTON, BOARDMAN NOBLE.
(Indorsed)
Pay Thomas J. Charlton or order. G. W. BARNEY.
Pay Rodney French, Esq., or order. THOMAS J. CHARLTON.
Without recourse to me. RODNEY FRENCH.
GEORGE BOWEN.
Pay H. E. Hudson, Esq., cashier, or order.
GEORGE S. WEAVER, Cashier.
Pay H. Baldwin, Esq., cashier, or order.
H. E. HUDSON, Cashier.
(221) A. Moore for plaintiff.
Kinney and Heath for defendant.
This was an action by the second indorsee against the first indorser of a bill of exchange. The execution of the bill by the drawer, the acceptance, due demand and notice were all admitted to be complete. The defendant, however, contended that as the plaintiff had once owned the bill as second indorsee, and had assigned it "without recourse," he could not again obtain a title to it, so as to give it in evidence on this declaration, and of this opinion was the judge: because, he said, as the plaintiff had once made a restrictive indorsement, and by it had escaped from liability on the bill, he could not again obtain a title, so as to enable him to sue on it as indorsee. The judge said that when an indorsee indorses over, and afterwards takes up the bill in discharge of his liability, he is then remitted to his former right, and may strike the subsequent indorsements and sue as indorsee, and the fact of his holding the bill raises the presumption of his having taken it up in discharge of his previous liability; but, in this case, the indorsement by the plaintiff being "without recourse," repelled such a presumption, and he had no title. The same arguments have been pressed upon us in this Court by the defendant's counsel. But the authorities cited only show that an indorser in full, who takes up the bill, is remitted to his former title, and may strike out his indorsement and sue as indorsee those standing before him on the bill. The law presumes that he has given value for it, therefore will permit him to strike out the names of persons who apparent own and have the legal title to it. But the restrictive indorsement of French in this case was in blank; it directed payment to be made to no particular person, firm, or corporation, which is necessary to make an indorsement special or in full. The next indorsement was also in blank. The bill, after it was so indorsed in blank, assumed the character and had the effect thereafter of a bill payable to bearer. Chitty on Bills, 136; Byles on Bills, 84; Peacock v. Hodges, Douglass, 633; Francis v. Mott, Doug., 612. The two first and two last (222) indorsements being special or in full, did not prevent the bill assuming the character of a bill payable to bearer, after it had been once indorsed in blank, Smith v. Clarke, 1 Esp., 180; Holmes v. Hooper, Bay., 158; Chitty on Bills, 136; for it then became payable to Bearer as against the drawer, the acceptor, the payee, the blank indorser, and all indorser before him. Byles on Bills, 85. The bill passed as currency in the market, and French had as much right to purchase it as anybody else. He being the holder, the law implies, until something be shown to the contrary, that he gave value for it, or rather came fairly and legally by it. Byles on Bills; 60; 3 Kent Com., 77. The plaintiff had therefore acquired a legal title to the bill by delivery. The restrictive indorsement by French did not break the chain of title. The idea of the judge, that French must have been once liable, as indorser on the bill, and that he must have taken it up in consequence of that liability, before he could gain a title to sue on it, we think is erroneous. He, being impliedly the bona fide holder, had a right to strike out all the indorsements below that to himself, and declare as the second indorsee. Smith v. Clarke, 1 Esp., 180.
PER CURIAM. Nonsuit set aside, and judgment for plaintiff on the verdict.
Cited: Pugh v. Grant, 86 N.C. 45; Bank v. Bridgers, 98 N.C. 72.
(223)