56 Ga. 203 | Ga. | 1876
Is a note containing no negotiable words, transferred by indorsement before due, the indorsee paying value and having no actual notice of any defect in the consideration, subject, in his hands, to the defense of failure of consideration? This was the only question argued, counsel waiving all others presented by the record.
It is conceded that prior to the Code, negotiable words in the paper itself were necessary, even to enable the indorsee to sue in his own name: 1 Kelly, 77, 237. The Code, it is contended, altered this rule of law, not only so far as to make the indorsement or assignment pass title, but pass it free from all defenses that could not be set up against negotiable paper proper. All the sections of the Code supposed to bear in anywise on the subject will now be examined. Section 2244 declares: “ All choses in action arising upon contract may be assigned so as to vest the title in the assignee, but he takes it, except negotiable securities, subject to the equities existing between the assignor and debtor at the time of the assignment, and until notice of the assignment is given to the person liable.” This plainly alters the prior law as to passing title : See 44 Georgia Reports, 636; but not necessarily any further, because the words, “negotiable securities,” as here used, may be used in the restricted sense in which they were employed prior to the Code. The presumption is that way: 34 Geor
Both these definitions, it will be seen, as if the codifiers kept in mind the heading of the article, apply to negotiable bills and notes proper; that is, bills and notes with operative negotiable words in the instruments themselves. Here are the definitions: “ A bill of exchange is an order by one person, called the drawer or maker, to another, called the drawee or acceptor, to pay money to another, (who may be the drawer himself,) called the payee, or his order, or to the bearer.” “ A promissory note is a written promise made by one or more to pay to another, or order, or bearer, at a specified time, a specific amount of money, or other articles of value.” The next section, 2775, is'in these words: “A promissory note is negotiable by indorsement of the payee or holder; or, if payable to bearer, by transfer and delivery only. The maker may restrain the negotiability thereof by expressing such intention in the body of the instrument.” Both these provisions have been law ever since 1799, as will be seen by referring to 1 Kelly, 237, cited above, if we construe a negotiable promissory note to be such a note as has just been defined in the preceding section, that is, one payable “to another, or order, or bearer.” It is no late thing for such notes to be transferable in the precise manner here laid down; and the act of 1799 allowed the very same restraint on negotiability, by express declaration of intention, which is allowed here and in section 2777.
Only one more section seems sufficiently pertinent to demand consideration, and that is section 3471, which limits pleas of total or of partial failure of consideration to cases " between the original parties to the contract, or their privies or assignees, whose title has been acquired with notice, actual or constructive, or by operation of law.” This section is in accord with section 2244 and with the long recognized law, if all purchasers of paper not in terms negotiable, are held to buy at their peril, and to be chargeable constructively with notice of any and all defects and equities that originate prior to their purchase. The want of negotiable words on the face of the paper, should put purchasers on inquiry, and if they tail to discover defenses that exist, it is their own misfortune.
Our conclusion is, that title may pass under the Code which could not pass before, and in that loose sense, there may be now a class of negotiable paper which before was not called negotiable in any sense; that, however, the strict and proper sense of negotiable paper, is paper containing within itself operative words of transfer, the same character of paper called negotiable before the adoption of the Code; and that the law of defense, in respect to failure of consideration, etc., is, in substance, the same now as it was aforetime. There is some indication of an opposite view in the reasoning of Judge McCay, in 50 Georgia Reports, 109; but as the note in that case contained negotiable words, that part of his reasoning was not necessary to the judgment of the court. Such a note would carry with it a mortgage given to secure it, as is shown by the authorities which he cites.
Judgment affirmed.