18 Iowa 202 | Iowa | 1865
It commences by alleging that John and Wesley Chesire held and owned the Moore note and mortgage, describing them; that, January 20,1860, the said Chesires, for a good and valuable consideration (but not alleging what), sold and assigned said note to their co-defendant, Griffith, whereby they falsely warranted the said note to be genuine, unpaid and unsatisfied in any way; that afterwards Griffith, assignee as aforesaid, sold and assigned said note to the plaintiff for a good and valuable consideration, whereby he, Griffith, falsely warranted, &c., as above; that plaintiff relied upon said warranties and paid Griffith for said note; that the said note, at the time the same was assigned by Chesires to’ Griffith, and by Griffith to the plaintiff, “ had been fully paid, extinguished, and nothing was due. thereon from the said Moore to the defendants or either of them; ” whereby
To this the court sustained a demurrer, both in behalf of the Chesires and of Griffith.
We will consider the case, with respect to the Chesires, separately and first.
Upon consideration, we think the demurrer was rightly sustained.
It is only by treating this count as founded upon the indorsement, that the plaintiff's action against the Chesires has any color or plausibility.
There is, except through the indorsement, no privity between the plaintiff and the Chesires. The latter sold the note to Griffith, and not to the plaintiff. The plaintiff purchased of Griffith, not of the Chesires. No transaction is alleged between the plaintiff and the Chesires. Hence, the plaintiff’s right to sue the latter, if it exists at all, must exist by virtue of the contract of indorsement.
Now if this count be treated as one ex contractu upon the indorsement, it is not maintainable, because the indorsement, on its face, negatives and rebuts any personal liability on the part of the Chesires. This is the object and effect of an indorsement “ without recourse.”
Such an indorsement transfers title, but stipulates for exemption from the ordinary responsibility of an indorser. It will not, however, protect the assignor from liability over from fraud and misrepresentation in the assignment of the note. In point, see Welch v. Lindo, 7 Cranch, 159; 2 Curtis’ ed., 496; Epler v. Funk, 8 Penn. (8 Barr), 468, 469; Prettyman v. Short, 5 Har. (Del.), 360; Richardson
Suppose it to be true that, in the transfer of the Moore note by Chesires to Griffith, the latter was deceived and defrauded. This would give Griffith his right of action-against the former. Suppose it to be true, also, that the plaintiff was deceived and defrauded by Griffith.' This would give him a right of action against the latter. He could not sue the Chesires for the fraud they practiced upom Griffith.
So that the reasoning drives us back to the point at which we started, viz., the plaintiff cannot sue Chesires ex contractu, having had no transaction with them except upon the indorsement. If the first count is treated as being founded upon that, it fails, because the indorsement itself not only does not create, but expressly avoids, a cause of action. ( Vide authorities above cited,.)
It is a clear and well-settled doctrine, that such a transfer does not make the party liable as indorser. . When he indorses paper without recourse, or transfers it (if payable to bearer or if indorsed in blank) by delivering merely, without putting his name upon it, he ceases to be a party to the paper. He cannot be made liable as a party to or upon the instrument.
There may be a liability in such cases, but it arises upon the transaction, upon the facts of the case, to be asserted in
The accepted doctrine on this subject may be thus stated: Where a note is transferred without recourse, equally as when it is transferred by delivery only, the transferrer is exempted from all the ordinary responsibilities which attach to such a transfer. (See authorities first in this opinion-cited.)
But he does not, unless such is the agreement, understanding or contract of the parties, stand free from all obligations. Thus, unless otherwise agreed, he warrants' that the paper so transferred is genuine, and not forged or-fictitious. (Jones v. Ryde, supra; Fuller v. Smith, Ryan & Mood., 49; 1 C. & P., 197; Chitty on Bills, 245; Story on Notes, § 118; Aldrich v. Jackson, 1 R. I., 218; 2 Parsons on Notes and Bills, ch. 2, § 2, p. 37, and authorities; Lyons v. Miller, 6 Gratt., 247; Morrison v. Currie, 4 Duer, 79; Cabot Bank v. Morton, supra; Rieman v. Fisher, 4 Am. Law Reg., 433.) He warrants by implication, nothing to the
So there is an implied warranty, unless it is otherwise agreed, that the parties to the instrument are sui juris, and capable of contracting. (Theall v. Newell, 19 Verm., 202; Lobdell v. Baker, 1 Metc., 193; 3 Id., 469; Jones v. Crosthwaite, 17 Iowa, 893, and cases; 2 Pars, on Notes and Bills, 39; but no implied warranty of their solvency. Chitty on Bills, 245; 2 Parsons on Notes and Bills, 41; Epler v. Funk, 8 Penn., 468; Burgess v. Chapin, 5 R. I., 225.) So there is an implied warranty that the instrument transferred has not been paid. And, generally, it is laid down by Mr. Parsons (2 Notes and Bills, ch. 2, p. 41), who follows and closely copies Mr. Chitty (Chitty on Bills, 247), that, “in all cases where the assignor” (we may add, whether by delivery or by indorsement, made “ without recourse”), “of a bill or note knows it to be of no value, and the assignee receives it in good faith (not aware of the fact), paying a valuable consideration of any kind, the assignor may be compelled to repay or return the consideration thus received.” And see Burgess v. Chapin, 5 R. I., 225, which holds an assignor without indorsement to be
Forms of actioBut, in all such cases, tbe action is not upon the paper transferred, but against the vendor or transferrer upon and for the original consideration or its value, or for , , - tvi . ,. 7 the n. fraud practiced; and tue latter is “ liable to the vendee,” to use the language of Ames, Ch. J., in Aldrich v. Jackson, 5 R. I., 218, “for what he has received from him on the ground of failure of consideration.” (Without quoting, see 2 Parsons on Notes and Bills, 87, and note; Kephart v. Batcher, 17 Iowa, 240; Chitty on Bills, 246, and authorities cited; Story on Notes, § 117 (5th ed.), and cases cited in notes 4 and 5; Welch v. Lindo, 7 Craneh, 159; Prettyman v. Short, 5 Harring. [Del.], 860; Eaton v. Mellas, 7 Gray, 566, holding that, in the absence of fraud in the assignor, the assignee can only recover of him the amount of the consideration paid for the assignment, with interest.)
And if we are right in considering it as being intended as one upon the indorsement, and not as one intended and
This clearly set out a cause of action — a case of fraud. Issue was taken on this count, and the cause was tried thereon by a jury, who found for the defendants.
The plaintiff complains of the charge of the court, but, as we think, without foundation. The court charged, in substance, that, if the fraud alleged was proved, the plaintiff should recover against all the defendants, or those who committed the fraud. The charge defined the elements or’ ingredients necessary to constitute fraud. No complaint on this head is made. The court charged that if the defendants, or either of them, fraudulently suppressed or withheld facts material to be known, this would be, in law, a fraud, and actionable, if any injury to the-plaintiff resulted therefrom.
From a careful examination of the charge and instructions of the court, in connection with the testimony, we think the cause was most fairly and intelligently put to the jury.
If the directions to the jury are exceptionable at all, we think the defendants, rather than the plaintiff, have the better right to complain. We see no reason to interfere, on the ground that the verdict was against the weight of evidence.
The error assigned is, that it is not permissible to allow a witness to testify as to bis belief, especially in reference to a question upon which, in a case of fraud, the whole cause usually turns. .
We admit that it is going a great way to allow this to be done, especially where tbe witness is a party to the suit, testifying at bis own instance and in his own behalf. Yet tbe authorities do bold, that when tbe knowledge, belief or intention of the witness is a material fact, it may be testified to tbe jury, the same as any other fact; giving to tbe opposite party a liberal scope in the cross-examination. Thatcher et ux. v. Phinney, 7 Allen (Mass.), 146, 149; Lombard v. Oliver, Id., 155; Fisk v. Chester, 8 Gray, 506. So in Seymour v. Wilson, 14 N. Y. (4 Kern.), 567, it was held, that, on an issue of fact as to whether a transfer of property was fraudulent, and in a case where the facts did not necessarily prove fraud, but only tended to that conclusion, it was competent, where tbe transferrer is a witness, to inquire of bim whether, in making tbe transfer, be intended to delay or defraud bis creditors. • “Such evidence,.” says tbe court, “ should be received for what it may be considered worth.”
It follows that the court did not err in permitting the questions to be answered.
Affirmed.