210 F. 857 | 3rd Cir. | 1913
This case involves a dispute between the National Bank of Tarentum, Pa., and Justus Mulert, trust.ee in bankruptcy of M. K. Salsbury, as to the ownership of some $3,600 nqw held by the bank, subject to the order of the court below. The referee, and the court on his certificate, awarded the money to the bank. Thereupon the trustee took this appeal.
Restricting ourselves to a statement of the facts pertinent to the question before us, we note that on November 30, 1904, Salsbury exr ecuted a negotiable demand note payable to his own order, indorsed the same in blank, and in consideration of $17,000 delivered it, together with certain collateral, to the Bank of Pittsburgh. The note was in form following:
<‘17,000.: , • Pittsburgh, Pa., Nov. 30, 1904. '
“On demand, after date, for value received, I promise to pay to the order of- myself-with interest-seventeen thousand-' dollars, having deposited herewith as collateral security for payment of this or any other liability or liabilities of the undersigned to the holder hereof, now due or to become due, or that may be hereafter contracted, the following property, viz.:
175 shares Midland Coal Co.
50 “ Ü. S. Steel Corp. Pfd. delivered 11/17/08,
with the further right to call for additional security and on failure to respond this obligation shall be deemed to be due and payable without demand ,or notice, with full power and authority to the holder hereof to sell- and 'assign 'and' deliver the whole of the above-mentioned security, or any part thereof, ór any substitute thereof, or any additions thereto or any other propérty at any time given unto or left in possession of the holder hereof, at any broker’s board, or at public or private sale, at the option of the holder hereof, on the nonperformance of this promise, or the nonpayment of any of the liabilities above mentioned, at any time or times hereafter, without demand, advertisement or notice, and with the right to purchase as any other bidder at any public sale thereof held by virtue hereof. And after deducting all legal or other costs and expenses for collection, sale and delivery, to ap■ply the residue of the proceeds of such sale or sales, so to be made, to pay any, 'either or all of said above-mentioned liabilities, as the holder hereof shall deem proper, returning the overplus to the undersigned.
“[Signed]- M. K. Salsbury.
“Payable at
“The Bank, of Pittsburgh, N. A.”
Indorsed: “M: K. Salsbury.”
He subsequently paid the interest thereon, part of the principal, and lifted. the steel stock. In the meantime he became liable to the bank on another note, for the security of which his collateral concededly stood, the total of his indebtedness being, on August 6,1909, some $10,600; with collateral worth over $15,000. On August 6, 1909, the Bank of Pittsburgh sold the said two notes to' the Third National Bank for the amount unpaid thereon, and delivered therewith Salsbury’s collateral. Three days thereafter the Third National Bank bought from the National Bank of Tarentum a note for $2,800, and from the First National Bank of Natrona another for $4,300, on both of which Sals-bury was liable as indorser. At the time of these purchases the latter banks' .agreed to repurchase the notes on request of the Third Na
“deposited herewith as collateral security for payment of this or any other liability or liabilities of the undersigned to the holder hereof, now due or to become due, or that may be hereafter contracted.”
On the other hand, it was contended by Salsbury’s trustee that the only liabilities secured by the collateral were those of Salsbury to the Bank of Pittsburgh, the original holder of the note. This question, be it observed, is the only one here involved and decided.
The case turns on the meaning and scope of the word “holder.” In ascertaining that meaning, we must bear in mind that the instrument in which it is here used is a promissory, demand note, negotiable in form, payable to the order of the maker, who has conferred negotiability upon it by an unconditional indorsement. Such indorsement imparted to the note the possibility of passage by delivery and of ownership without assignment. Possession, the mere holding of such a note, without assignment, created title and ownership, and conferred on such holder the legal capacity to bring suit and enfoixe payment. Indeed, the possession or holding, the sanctity of the holding, and the integrity and incontestability of such held paper, constitute the foundations on which the whole superstructure of negotiable paper, and the legal principles applicable thereto, stand. When applied to negotiable paper, the word “holder” has a recognized meaning. Thus in Bowling v. Harrison, 47 U. S. (6 How.) 248, 12 L. Ed. 425, it is said: .
“The term ‘holder’ is properly applied to the person having possession of the paper.”
In Crocker-Woolworth Bank v. Nevada Bank, 139 Cal. 564, 73 Pac. 456, 63 L. R. A. 245, 96 Am. St. Rep. 169,
“The term ‘holder’ is properly applied to the person having possession of the paper and making the demand, whether in his own right or as an agent for another. * * * ‘Holder’ is a word of the same import as ‘bearer.’ * * * ‘Holder’ is a general word applied to any one in actual or constructive possession of the bill, and entitled at law to recover or receive its' contents from the parties to it.”
So in Rice v. Hogan, 38 Ky. (8 Dana) 133:
“The ‘holder’ of a bill is he who is in possession of the bill, and is legally entitled to the benefit of it.”
“A bill is properly said to be negotiated, when it bas passed into tlie hands of the payee, or indorsee, or other holder for value, who thereby acquires a title thereto.”
In National Exchange Bank v. Wiley, 195 U. S. 257, 25 Sup. Ct. 70, 49 L. Ed. 184, the Supreme Court quotes with approval Byles on Bills, that:
“Holder is a general word, applied to any one in actual or constructive possession of the bill, and entitled at law to recover or receive its contents from the parties to it.”
Recognizing, therefore, as Salsbury must be held to have recognized, the legal principles applicable to the creation, currency, and ownership of negotiable paper, and invoking, as he did, the application of such principles by indorsing and negotiating a negotiable note payable to his own order, and thus conferring upon it the possibility of others holding it, it would seem that by the use of the words “the holder hereof,” “liability or liabilities of the undersigned to the holder hereof,” “with full power and authority to the holder hereof to sell and assign and deliver .the whole of the above-mentioned security,” and “to apply the residue of the proceeds of such sale or sales, so to be made, to pay any, either or all of said above-mentioned liabilities, as the holder hereof may deem proper, returning the overplus to the undersigned,” he meant to give to the word “holder” in this note -its well-understood, broad, inclusive, legal meaning, and to enhance the negotiability of his paper by conferring on every subsequent purchaser thereof all the advantages enjoyed by holders of such paper. There is nothing in’the note itself to evidence an intent on his part to restrict the word “holder” to the Bank of Pittsburgh, and to so restrict it we must make it read “the holder, to wit, the Bank of Pittsburgh.” This, we think, would be to write into the note a change for which we have no warrant. The mere fact that the note is made payable at that bank serves no more to limit the word “hoLer” than it would have broa.:~ned it if the note was made payable at some other bank.
After mature consideration, we are of opinion the court below committed no error, and the appeal should be dismissed.