185 Ky. 20 | Ky. Ct. App. | 1919
Opinion of the Court by
Affirming.
The appellants, in this action are the same as those in the action of Graeme McGowan, et al. v. Alvin Wells’ Trustee, decided on June 17, 1919. ■ The issues are the same and the facts are the same in both cases, except
The appellee, Peoples Bank, in its petition, alleges, that it assigned the notes, by its endorsement upon the hack of each of them, to Mrs. Sallie B. Newman, who,' thereafter and before the bringing of the action, assigned the notes back to the bank, by and through her agent, John E. Newman. The notes, which are filed with the petition, show, that they were assigned to the bank by John E. Newman, in his own name,-as though he was the owner and holder of same, .and that he made, upon the notes, a guaranty of their payment. Mrs. Sallie B. Newman became a party to the suit, by an intervening petition, in which she alleged, that the assignment, by the bank, was to her, and that the re-assignment to the bank, was by her, through her agent, John E. Newman, and that she had no further interest in the notes, and no interest in the action, except as a guarantor of their payment, through her agent.
The appellants, by their answers, denied that, the hank ever assigned the notes to Mrs. Sallie B. Newman, or that she ever re-assigned them' to the bank, or that the bank, was now the owner of the notes, or entitled to maintain an action thereon, and, affirmatively, alleged, that the bank had, in the first instance, assigned the notes to John E. Newman, who becoming fearful, that the assignment to him did not carry with it the benefits of the guaranty, and with the purpose of trying to secure the benefits of the guaranty, had pretended to assign the notes back to the bank, which in collusion with him was lending to him the benefit of its name as the plaintiff, in the action, but, he was the owner of the notes. The
Section 18, Civil Code, provides, that every action must be prosecuted in the name of the real party in interest, except as provided in section 21. Section 21, among other things, provides, that a person, expressly authorized to do so by statute may bring an action without joining, with him, the person for whose benefit it is prosecuted. The notes sued on, are negotiable instruments. The petition shows, and it is undenied, that the notes were endorsed by the bank, without recourse, and the name of Sallie B. Newman, nowhere, appears thereon, but the re-assignment to the bank, was made by John E. Newman, as though he was the then owner of same. When considering the demurrer, the allegations that the bank assigned the notes to Sallie B. Newman, and that she re-assigned them to the bank by her agent, must be considered as untrue, and the allegation of the answer that the bank assigned the notes to John E. Newman, and that he assigned them back to the bank, must be taken as true, but, it, also, has to be taken as true, that the bank is not the real owner of the notes nor the real party in interest, but, that although Newman has assigned and delivered them to the bank, together, with a guaranty of their payment, he is still the real party in interest, and he is not a party to this suit,
While the bank, under the averments and denials of the answer, is not a holder of the notes “in due course,” and they are subject to any defense, which might be made as against non-nego'tiable instruments, the legal title to the notes, is in the bank, and as holder thereof, the statute authorizes it to maintain a suit thereon. Under the allegations and denials of the answer, a payment of the notes to the bank could not be complained of by any one, except John E. Newman, and his written assignment of the notes to the bank would estop him from any assertion of title, as against a payor; The only claim, he would have, would be against the assignee. The statute, supra, which authorizes the holder of a negotiable instrument to maintain a suit upon it, is declaratory of the rule of the common law, which was to the effect, that the right of action, at law, upon a bill or note, was in the party, who had the strict legal title, and such an action should be prosecuted in the name of the legal owner, that is in the name of the holder of the legal title. When a holder of a negotiable instrument is authorized tp maintain a suit upon it, it can be no kind of concern to the payors, as to what kind of an arrangement existed between the holder with the legal title and his assignor, who had vested the legal title in him, and if the legal title has been vested in the holder merely to enable him to collect' it for the benefit of the real owner, the payors, by showing this fact, may then offer any defense, which they might have, if the suit was in the name of the beneficial owner. The answer of appellants does not disclose any defense, which they would have, if the suit was by John E. Newman. Farwell v. Tyler, 5 Ia. 535; Fears v. Jones, 6 Ia. 169; Felch v. Beandry, 40 Cal. 439; Frost v. Harford, 40 Cal. 165; Manley v. Park, 68 Kan. 400; Newton v. Turner, 5 La. 46; 3 R. C. L. 991.
It is, also, urged, that the guaranty of payment of the notes made by Newman, when he transferred and assigned the notes to the bank, worked a novation, and had the effct of discharging the appellants from liability upon the guaranty. The guaranty of Newman was only an additional security given to the bank for the payment of the notes, and it is impossible to see, how it, in any way, affected the guaranty of appellants, in the absence of any stipulation to that effect, as it could not have, by any possibility, worked any prejudice to their interests.
The judgment is therefore affirmed.