Dillon, J.
1. Promissory notes: holder without indorsement. The appellant makes no question as to the form of the action, but denies his liability in law upon the • facts contained in the statement. Upon those facts it is the opinion of this, court that the defendant is not liable, the reasons for which we proceed to state as briefly as may be. Our statute in relation to the indorsement and transfer of bills and notes has not altered, but, on the contrary, it adopts the law merchant. Rev., ch. 73. Thus, by § 1794, it is declared, that “ notes in writing, made and signed by any person promising to pay to another person, or his order, or bearer, or to bearer only, any sum of money, are negotiable by indorsement, or delivery, in the same manner as inland bills of exchange, *145according to the custom of the merchants.” That is, if the note is payable to order, it is negotiable by indorsement; if to hearer, by delivery. And see, also, § 1795.
*1462. - action in name of payee. *145By the law merchant, the note in suit not having been. indorsed to Ralston, he could not have brought suit thereon in his own name, although he was the beneficial owner; but the action must have been brought in the name of the payee. Franklin Bank v. Raymond, 3 Wend., 69, 71, per Marcy, J.; Chitty on Bills, 5 Am. ed., 227; 2 Parsons on Notes and Bills, 44, 52, and cases cited in note. But this is changed by chap. 117 of the Rev., §§ 2757, 2760. These sections would give Ralston, as the equitable assignee and real owner of the note, a right to sue in his own name, but without prejudice to any set-off or other defense existing before notice of the assignment. Notes are choses in action, that is, things which must be recovered by action at law; and like all other things in action, they maybe assigned, and the title will pass without indorsement. Houghton v. Dodge, 5 Bosw., 326 ; 6 Id., 427. These sections simply substitute the rule of courts of equity which permitted the assignee of a chose in action, he being in fact the real owner, to proceed in his own name. (2 Parsons on N. & B., supra; Edw. on Bills, 251, note, 286 and cases.) But they do not otherwise enlarge the substantial rights of such assignee. The judgment of the court below overlooks (he radical distinction between the indorsement (using the word in its proper sense) and the assignment of a negotiable note. In a legal as well as mercantile sense, and within the meaning of § 1794 of the Revision, above cited, a note payable to order, to be negotiated by indorsement, must bp indorsed by the payee by proper writing, and by subsequent indorsers, if any, to the holders. And without such an indorsement the holder cannot insulate himself from prior equities. When thus indorsed for value, before due, and without notice, the holder stands free from *146all equities between tbe original parties. It is only by tbe law merchant, and our statute recognizing and adopting it, this being founded upon the policy of sustaining the credit of negotiable paper, that an indorsee may recover when the payee may not. 3 Kent Com., 79. But where such a note is transferred without indorsement, the holder, although he obtains title, is not an indorsee, but an assignee, the assignee of a chose in action, and, as such, hable to any “defense or set-off existing before notice of the assignment.” Rev., § 2760; Chamberlain v. Gorham, 20 Johns., 144, and authorities above cited.
It follows that if the facts are such, that the payee could not have recovered at the time the note was assigned to Balston, or at the time the latter gave notice of the assignment to the maker, then Balston cannot maintain an action. Therefore, as upon the facts found, Younker could not have maintained an action against the maker, (the note being without consideration, and obtained by fraud), so his assignee (Balston) cannot; conceding that the latter is entitled to the same rights that he would have had, if the action had been brought in his own name. Without quoting, see, as directly deciding or illustrating the principles above stated, Hedge v. Sealy, 9 Barb., 214; 2 Parsons on N. & B., 44 to 54; Edw. on B. & N., 286, 251, note; Franklin Bank v. Raymond, 3 Wend., 69; Jones v. Witter, 13 Mass., 305; Bocka v. Nuella, 28 Mo., 180; Id., 598; Temple v. Hays, Morris, 9; Long v. Long, Id., 43; Houghton v. Dodge, 5 Bosw., 326; Lackey v. Centes, 6 Id. (Eq.), 199; Sawgo v. King, 17 Mo., 301; Chitty on Bills and Notes, 227. Upon the facts found, the judgment should have been for tbe defendant. The cause will be remanded, that such a judgment may be entered.
Beversed.