129 P. 462 | Cal. | 1912
This is an action to enforce a stockholder's liability for his proportion of certain debts of the *420 corporation. The complaint charged in separate causes of action upon different items of indebtedness. One will serve as a type of all. After the allegations of the corporate existence and capacity of the corporation, the number of outstanding shares and the number of those shares owned by defendant Murray, it is alleged that the corporation became indebted to Alfred D. Bowen "for cash loaned and advanced for its use and benefit in the sum of $20,000"; that the corporation then made its promissory note as evidence of the indebtedness and promised to repay Alfred D. Bowen the sum of twenty thousand dollars on demand; "that Alfred D. Bowen thereafter and before the maturity of said note, for value received, indorsed the same to this plaintiff and duly assigned to this plaintiff the aforesaid indebtedness of said corporation. The other causes of action charge in similar language upon like indebtedness, also evidenced by promissory notes. Upon the trial the existence and validity of the indebtedness from the corporation to Bowen stood unchallenged. Defendant Murray, however, attacked the validity of the promissory notes. The trial court found in favor of the plaintiff on all the issues, saving that it found that the promissory notes were not duly or at all authorized by the corporation or the board of directors thereof. But still further the court found that the corporation was indebted to Bowen for moneys loaned to it in the amount sued for, and that Bowen duly assigned to the plaintiff this indebtedness. It found defendant Murray liable as a stockholder and gave judgment accordingly.
Appellant's attack is directed against the finding of the assignment by Bowen of the debt due the latter from the corporation. If this finding is supported there is an end to the controversy. Preliminary to the consideration of the question it should be noted that the invalidity of the corporation's notes arose from the fact that Bowen, creditor of the corporation and payee of the notes, was also a director, that as a director he voted for the issuance of the notes, and that without his vote the issuance would not have been ordered. A second fact is that the amounts mentioned in the notes were not, at the times when they were drawn, the full amounts of the indebtedness due from the corporation to Bowen, or phrasing it differently they were in the nature of orders for *421 a part of the indebtedness or fund due to the creditor at the time they were drawn.
The evidence, and all of the evidence, touching the equitable assignment by Bowen to plaintiff is that the notes were intended to cover the advancements made by Bowen to the corporation, that Bowen was indebted to plaintiff in the amounts evidenced by the promissory notes, and that he indorsed them to plaintiff and delivered them to plaintiff "for payment of advances." Appellant's contention is that "a bill of exchange or draft payable generally, and not out of any particular fund or debt, will not, before acceptance, operate as an assignment to the holder of the bill or draft of a debt due from the drawee to the drawer." (Lewis v. Traders' Bank,
"This doctrine is clearly correct in so far as it applies to legal assignments. The holder of the bill or order cannot sue the drawee-at-law in his own name, as he would thus divide the cause of action, and leave a balance due the creditor. He cannot sue in the creditor's name, except by his consent, as, at best, he is only entitled to a part of the debt due him. But it has been held in numerous cases, and we think should now be regarded as law, that a non-negotiable order for part of a fund operates as an equitable assignment pro tanto. Clearly this is the case when it has been accepted or assented to by the drawee. And when it has not been accepted, our own view is this: that a non-negotiable order for part of a fund does operate as an equitable assignmentpro tanto as between the drawer and payee, because obviously so intended. But as between drawer and payee on the one side, and the drawee on the other, it creates no obligation on the latter to pay it, as he has a right to insist on an integral discharge of his debt. And if the creditor give a subsequent order for the whole amount, he may pay it with impunity, as he thus discharges his debt in its entirety at once. But if the payee or indorsee goes into equity, or the parties are brought therein by any proceeding, so that all of them are before the court, the holder of the order may enforce it as an equitable assignment as against all subsequent claimants, whether by assignment from the drawer, or by legal process served upon the drawee.
"Mr. Justice Story has stated the principle, as we conceive it, more correctly in his treatise on Equity Jurisprudence, than in the cases hitherto cited; and he there declares that, while a draft for part of a fund operates no assignment at law, the same principle applies in equity to a draft for part of a fund that applies to a draft for the whole, and that `in each case a trust would be created in favor of the equitable assignee of the fund, and would constitute an equitable lien upon it.' We can perceive no sufficient reason for excluding a bill for a part of a fund, whether it be negotiable or not, *424 from operating as an equitable assignment within the limitations of the text. It would only carry out to its legitimate sequence the theory of the bill."
For these reasons the judgment and order appealed from are affirmed.
Melvin, J., and Lorigan, J., concurred.
Hearing in Bank denied.