Argued February 7, 1879
Decided March 18, 1879
Nathaniel C. Moak, for appellants.
A.R. Dyett, for respondent.
The plaintiffs' appeal must rest for success upon the soundness of this proposition put forth by them. That in order to pass a good title to the check, so as to make N. Blun Sons holders thereof against the plaintiffs, it should have been indorsed over to them in writing by M. Oppenheimer Sons, the payees named in it; and that the defendant had no right to certify and pay it, until it was so indorsed. We have considered this proposition; and are of the opinion that it does not hold good in this case; and that the plaintiffs' appeal is without merit.
The check was an instrument in writing, which gave to the lawful holder, a right to demand and have a sum of money, or to recover damages for the non-payment thereof from some of the parties to it. It is, therefore, a chose in action. Such a chose in action is assignable; that is, the right which any lawful holder has thereby, may be transferred to another. This may be done as prescribed in the written instrument, if the chose in action be embodied in writing, and there is therein prescribed a mode. It may be done in any other mode known to the law for the transferring of such rights; as by an independent written instrument, or by parol with manual delivery: ( United States v. White, 2 Hill, 59; Briggs v. Dorr, 19 J.R., 95.) And, as between the assignor and assignee, the transaction is then complete and effectual, without notice to the debtor. ( Muir v. Schenck, 3 Hill, 228.) At common law, the assignment of a chose in action, is regarded as an authority to the assignee to bring action upon it, in the name of the assignor. ( Welch v. Mandeville, 1 Wheat., 233; S.C., 5 id., 277.) Nor is there any difference, in this respect, between bills of exchange, promissory notes, bankers' checks and the like instruments, and other chose in action. ( Jones v. Witter, 13 Mass., 304; Titcomb v. Thomas, 5 Greenl., 282.) Bills and notes payable to order or bearer, and thus made negotiable by the terms of them, are thereby made " assignable," i.e. transferrable with the quality of carrying with the transfer the legal title to the transferee, and enabling him to sue upon them in his own name. ( Grant v. Vaughan, 3 Burr., 1516; Douglass v. Wilkeson, 6 Wend., 637.) Whereas, choses in action which did not have this quality, were once not transferable so as to pass the legal title in them. The transferee got an equitable title only, and must have sued upon them, at law, in the name of his assignor. He was an assignee, not an indorsee. Yet, though negotiable instruments were not indorsed, nor otherwise transferred according to the terms of them, they still were choses in action, transferrable by delivery or other mode of assignment, and the transferee took an equitable interest, at the least, in them. Canfield v. Munger, 12 J.R., 346-347; Taylor v. Bates, 5 Cow., 376.) Since the adoption of the Code of Procedure, it matters not whether the assignee gets the legal as well as the equitable title. If he gets the whole interest, he may maintain an action in his own name. (Code [old], § 111; Code [new], § 449; Hastings v. McKinley, 1 E.D. Smith, 273; affd., 4 Seld. Notes, 19.)
Doubtless there should have been upon the check the written indorsement of the payees, to have saved to it, in the hands of Blun, its original character and quality of negotiable paper. Having been transferred without indorsement, Blun got the right only that he would have taken, had it been not negotiable at the start. But whatever right the payees had in the check, at the time when it was transferred to Blun Sons, that right they could assign, and by the act of assignment did transfer. The effect of the transfer of the check, it having been without written indorsement, was no more than that the drawers of it had such right to refuse or prevent payment of it, as a maker of a non-negotiable instrument would have had, under the same state of facts. Grant, that such right was so much as that it would prevail against every one but an innocent transferee for a good consideration: Were not Blun Sons, on the facts, such holders? The check was delivered by the drawers to the payees, for them to use as they saw fit, for their own good. Grant, that before it was used in any way by Oppenheimer, it could have been reclaimed by the plaintiffs, or the payment of it effectually forbidden. It was used by him, with Blun, for the good of the payees. Grant, that it could have been reclaimed from Blun Sons, before they had acted on the strength of it. It was not so reclaimed. By reason of the possession and seeming ownership of it in Oppenheimer, and the right in him, then existing, to have the money named in it from the defendant, Blun had taken it and applied it in payment, in part, of goods sold to the payees. Grant further, that the check was not at that time an assignment in law by the makers of so much of their funds on deposit with the defendant, so that they could by forbidding to the defendant the payment of it, have prevented the latter from paying it at the maker's charge. Before notice to stop payment, the defendant, on the presentation of it by Blun, had certified it as good. If Blun Sons were then the holders and owners of it, with such right as that they could enforce it against the makers, the certification of it by the defendant had all the legal effect which the same certification would have had, had it been indorsed by the payees. That legal effect is the same as if the defendant had paid the money upon it, with the proper indorsement upon it of the payees. By the certification of a negotiable check, properly negotiated, the depositary of the fund checked upon becomes liable to the owner of the certified paper, and is bound to have in readiness the money to meet it, from the fund drawn upon. When the check is not negotiable, or has not been indorsed, but has by assignment come into the hands of a lawful owner, who has a right to enforce it against the maker, the effect is the same. When a debtor has notice of the assignment of the chose in action, he may not make valid payment after that to the assignor. He has the right to promise to pay to the assignee. How do the relative rights of the plaintiffs and defendant and Blun Sons, in the case in hand, differ in principle from the case stated? So that our case is narrowed to the question, whether Blun Sons did acquire such a right in this check. It seems plain that they did. The rule to govern the transactions with this check, so far as it was accommodation paper, is not different from that which would control doings with an accommodation note. It is settled, that a holder of an accommodation note, without restriction upon him as to the mode of using it, may transfer it either in payment, or as collateral for an antecedent debt, and that the maker will have no defense against it, in the hands of an indorsee. The existing debt is a sufficient consideration for the transfer; and a new contemporaneous consideration need not be shown: ( Grocers' Bank v. Penfield, 69 N.Y., 502.) The facts of this case brought this check within this rule. It was given by the plaintiffs to Oppenheimer, to use as money. There was no restriction upon the use of it by him. Even if the debt upon which it was applied was not contemporaneously, but before that, contracted, it furnished a good consideration for the transfer of the check. To be sure, the note in 69 N.Y. ( supra) was negotiable, and was properly negotiated. But we have already shown in what respects the lack of that quality affects the position of the parties. It does not turn aside the rule above stated from an application to this case. Blun Sons became the lawful assignees and owners of the instrument, and entitled to have and enforce payment, and after the certification by the defendant, to have payment from it, at the charge of the plaintiffs.
The judgment appealed from should be affirmed, with costs.