Robertson v. Breedlove

| Ala. | Jun 15, 1838

GOLDTUWAITli, J.

— This note is payable to bearer, and is not within Use influence of the act of eighteen hundred and twelve — (Aik. Dig. 328, s. 6,) — which allows a defendant the benefit of all payments, discounts, and sets-off, made¿had, or possessed against other notes, previous to notice of the assignment. Such was the construction given to it, in the case. of Robinson vs. Crenshaw; (3 Stewart & Porter, 276,) and the legislature then passed the act of eighteen hundred and thirty-three, (Aik. Dig. 329, s. 18,) which extended the provisions of the first section of the act of eighteen hundred and twelve, to notes payable to bearer.

Ashdie note here sued on, was negotiated to the plaintiff, after it became due, it of course became subject to all the equities which, by the common law, attached to negotiable instruments, acquired under similar circumstances ; and it becomes the question, whether off-sets, acquired after the note came to possession of the plaintiff, but before notice to the defendant, of his right, can be allowed.

The general rule is, that a person who takes a bill or note, after it is due, takes it subject to all objections, in respect of want of consideration or illegality, and all other objections and equities affecting the instrument itself, and to which it was liable in the hands of the person from whom he takes it. — (Taylor vs. Mather—3 Term R. 83; Brown vs. Davis—3 ib. 80; Littledale vs. Brown—7 ib. 630 ; Burrough vs. Moss—10 Barn. & Cress. 558; Chitty on Bills, 244.) But this rule applies only to the equities arising out of the noto, or hill transaction itself and the holder is ' not subject to a set-off, in respect of a debt duo from the indorser loathe maker of the note, arising out of a collateral contract. — (Burrough vs. Moss; 10 B. & C. 558.)

In the case cited, the action was on'-a promissory note, negotiated to the plaintiff after it became due ; and the defendant insisted' he had a right to set-off against the plaintiff a demand which he held against the payee of the note so negotiated ; but the court decided otherwise, and laid down the qualification of the rule above quoted.

These authorities are decisive to shew, that the Circuit court mistook the law, when it gave the charge, that the defendant had the right to off-set all subsisting demands in his hands against the payee, before notice of the transfer of the note to the plaintiff. For this error, the judgment of the Circuit court is reversed, and the cause remanded.