his drawer could not." 523 And an indorsee who is the original taker from an accommodated payee, may sue the accommodation maker. 524 An indorsee may sue his indorser in the federal courts, although neither he nor his indorser could have sued the maker there.525 Under the statute, the holder of a note payable to "A. or bearer" might formerly bring suit in the federal courts against the maker (a citizen of another state) as bearer, although really holding as purchaser from A., who could not have brought the suit.526 This is now expressly forbidden by statute, and the holder of such note is put on the same footing as an indorsee.527 pose of giving jurisdiction, Lanier v. Nash, 121 U. S. 404, 7 Sup. Ct. 919; and a transfer for value to a bona fide holder is not collusive, Cross v. Allen, 141 U. S. 528, 12 Sup. Ct. 67; although as collateral for a smaller debt, Lipsmeier This statute has been applied to municipal bonds. New Providence Tp. v. Halsey, 117 U. S. 336, 6 Sup. Ct. 764. 323 Superior City v. Ripley, 138 U. S. 93, 11 Sup. Ct. 288. v. Velslage, 29 Fed. 175. 524 Holmes v. Goldsmith, 147 U. S. 150, 13 Sup. Ct. 288; Id., 36 Fed. 484. 525 Young v. Bryan, 6 Wheat. 146; Mullen v. Torrance, 9 Wheat. 537; Evans v. Gee, 11 Pet. 80; Gaylord v. Johnson, 5 McLean, 448, Fed. Cas. No. 5.285; Dennison v. Larned, 6 McLean, 496, Fed. Cas. No. 3,798; Campbell v. Jordan, Hemp. 534, Fed. Cas. No. 2,362. 526 Halsted v. Lyon, 2 McLean, 226, Fed. Cas. No. 5,968; Bank of Kentucky v. Wister, 2 Pet. 318; Bank of British North America v. Barling, 46 Fed. 357; Jones v. Shapera, 6 C. C. A. 423, 57 Fed. 457; Thompson v. Perrine, 106 U. S. 589, 1 Sup. Ct. 564, 568. So, on a county warrant to bearer, Adams v. Commissioners, 23 Fed. 211; or on a municipal bond to bearer, Ackley School v. Hall, 113 U. S. 135, 5 Sup. Ct. 371; Newgass v. City of New Orleans, 33 Fed. 196; without averment that the nominal payee could have sued, Varner r. Vest, 1 Woods, 493, Fed. Cas. No. 16,885. So, the bearer of a note payable to the "order of " Steel v. Rathbun, 42 Fed. 390. But a holder who is a mere agent, and has possession only for the purpose of such suit, cannot sue in the United States courts. Welles v. Newberry, 4 McLean, 226, Fed. Cas. No. 17.378. 127 "Nor shall any circuit or district court have jurisdiction of any suit, except upon foreign bills of exchange, to recover the contents of any promissory note or other chose in action in favor of any assignee or of any subsequent holder, if such instrument be payable to bearer, and be not made by any corporation, unless such suit might have been prosecuted in such court to recover the said contents if no assignment or transfer had been made." Act I. S. 1887, c. 373, § 1. And this act has been applied to the assignment of a County warrant which was payable to order, Rollins v. Chaffee Co., 34 Fed. 911; or nonnegotiable, Wilson v. Knox Co.. 43 Fed. 481; or of a county bond, McLean v. Valley Co., 74 Fed. 389. And see Skinner v. Barr, 77 Fed. $16. If a note is nonnegotiable by statute, it is not within the provision of the act of congress as to "notes negotiable by the law merchant," the statute of the state where the note was made being part of the contract.528 And the purchaser of bank notes may bring a replevin suit for them in the federal court, although his assignor could not bring such suit," ,529 such suit not being brought to recover the contents of a note, and therefore not being within the provisions of the statute. So, the assignee of a bankrupt holder may bring suit against a collecting agent for negligence, 530 Action by Pledgee. § 1638. The indorsee of a bill or note may bring an action upon it. although he holds it as collateral only, provided that the legal title is in him." 531 And he may sue in New York as the trustee of an express trust under the statute,532 even without an indorsement made to him.533 So, while the debt secured remains unpaid, action may be brought by one who holds under a special indorsement from the pledgee, or even, without the pledgee's indorsement, under a prior blank indorsement.535 And, where a note secured by mortgage is assigned as collateral, the entire legal estate in the mortgage is in the pledgee, although it exceeds in amount the debt secured, and the mortgage may be foreclosed by the pledgee as the legal holder. 534 536 In an action brought by the pledgee in possession of a note by indorsement, the maker cannot set up the defense that the pledgor has tendered payment of the debt secured, and brought an action of trover 528 Gregg v. Weston, 7 Biss. 360, Fed. Cas. No. 5,800; Windsor Sav. Bank v. McMahon, 38 Fed. 283. But see, contra, where the note was not in terms negotiable. Shuford v. Cain, 1 Abb. U. S. 302, Fed. Cas. No. 12,823. 529 Deshler v. Dodge, 16 How. 622. 530 Barney v. Globe Bank, 5 Blatchf. 107, Fed. Cas. No. 1,031. 531 Sheldon v. Middleton, 10 Iowa, 17; Mechanics' & Traders' Ins. Co. v. Lozano (La.) 1 South. 608; White v. Phelps, 14 Minn. 27 (Gil. 21). As to actions by a pledgee, see § 796 et seq., supra. 532 Clark v. Titcomb, 42 Barb. 122. 533 Van Riper v. Baldwin, 19 Hun, 344. 534 Marine Bank of New York City v. Vail, 6 Bosw. (N. Y.) 421. 535 Lindsay v. Chase, 104 Mass. 253. 536 Dundas v. Bowler, 3 McLean, 397, Fed. Cas. No. 4,141. against the pledgee for the note. 537 And, even where the debt secured by the pledge of a note has been subsequently discharged, the pledgee may still sue as trustee for the pledgor, and may recover as such, provided that no equitable defense available against the pledgor is prejudiced by the suit.338 But if a negotiable bond is deposited with a bank for the benefit of a pledgee, and he takes a certificate to that effect from the bank, the bank will be estopped by its certificate from afterwards setting up ownership in another prior pledgee. 539 540 Action by Assignee. § 1639. At common law the assignee of a bill or note without due indorsement must bring suit upon it in the name of his assignor. But, if the note has been paid to and surrendered by the payee without indorsement, his name cannot afterwards be used in an action brought for the use of the party paying, notwithstanding the payee's subsequent consent to the suit.541 Where a note is in the hands of a depositary, however, who refuses to surrender it, suit may be brought by the assignor in trover by consent of the assignee. But without a formal assignment the purchaser of a bill will only acquire an equitable interest in collateral securing it, and cannot bring suit for its conversion in his own name.543 542 In many of the states, however, an assignee may bring suit, by force of the statute, in his own name.544 So, although the assignment was made upon a separate paper, and the note assigned was at 537 Tarbell v. Sturtevant, 26 Vt. 513. 538 Logan v. Cassell, 88 Pa. St. 288. But see, contra, New England Trust Co. v. New York Belting & Packing Co., 166 Mass. 42, 43 N. E. 928. 539 Gibson v. Lenhart, 111 Pa. St. 624, 5 Atl. 52. 540 See § 791, supra. So, a note cannot be taken up at maturity by the indorser, and so assigned afterwards that the assignee can sue in his own name. Swann v. Scholfield, 2 Cranch, C. C. 140, Fed. Cas. No. 13,676 541 Merrimack Bank v. Parker, 7 Pick. (Mass.) 88. 542 Day v. Whitney, 1 Pick. (Mass.) 503. 543 Batchelder v. Jenness, 59 Vt. 104, 7 Atl. 279. 544 See § 1631, supra. So, Callahan v. Crow, 91 Hun, 346, 36 N. Y. Supp. 225. But even under the Code in NORTH CAROLINA an assignee cannot sue in his own name, if the assignment is without consideration, and for the benefit of the assignor (or in effect a power to collect). Abrams v. Cureton, 74 N. C. 523. RAND.C.P.-147 (2337) the time in the hands of an unlawful holder. 545 And the assignee of a bank may bring suit in equity, without the aid of the statute, under the general assignment to him, upon notes held by the bank, and indorsed by it in blank.546 The assignee of a note payable to bearer cannot bring suit against a maker, who has been discharged in bankruptcy, on a new promise made by the bankrupt to the plaintiff's assignor.547 But, if a bill is taken up by an accommodation acceptor, his assignee may bring suit against the drawer in his own name on an express promise of payment made to him.548 And the assignee of an insolvent payee may reassign the note to the payee, and bring suit upon it for his use. And even where the payee assigns a note in fraud of creditors, and indorses on the note the amount alleged to be due to his assignee, the latter may recover against the maker in his own name, and hold the balance as trustee for the payee.559 On the other hand, where two notes are assigned to different parties, their interest is separate, and they cannot sue jointly upon the notes, although secured by one mortgage.551 § 1640. 549 Where a note is not transferable, as in the case of a note made to a public officer for public dues or fines, an assignment confers no right of action upon the assignee.552 But making a note payable to A., guardian of B.," for an individual debt due to A., will not prevent its subsequently passing to A.'s assignee in bankruptcy.553 545 Morris v. Poillon, 50 Ala. 403. 546 Lenox v. Roberts, 2 Wheat. 373. And the maker cannot question the validity of the assignment by the bank. Shryock v. Basehore, 82 Pa. St. 159. And it is sufficient if such assignment is valid by the lex loci contractus, though invalid by the lex fori. Freeman's Bank v. Ruckman, 16 Grat. (Va.) 126. So, a bank receiver may sue, and the irregularity of his appointment is no defense. Case v. Marchand, 23 La. Ann. 60. And the assignee of a corporation may sue under an assignment by its agent without seal, and, if the assignment is not impeached, he need not prove the authority of the agent. Garrison v. Combs, 7 J. J. Marsh. (Ky.) 84. 547 Moore v. Viele, 4 Wend. (N. Y.) 420. 548 De Barry v. Withers, 44 Pa. St. 356. 552 Bates v. Butler, 46 Me. 387. So, a note taken to a sheriff by order of the court, and ordered to be paid to his successor. Ranney v. Brooks, 20 Mo. 105. 553 A subsequent transfer to his bondsmen or his ward will not enable them 554 So, a note may be transferred by a foreign executor, and his assignee may sue. But a foreign assignee in insolvency has no power, in In North Carolina an as general, to bring suit in his own name.555 signee could not formerly bring suit in his own name.556 So, action must be in the payee's name on a nonnegotiable order for goods, 557 or on a note under seal.558 And, after judgment has been rendered upon a note against the principal, it is no longer negotiable, and the assignee cannot bring suit upon it in his own name against a surety.559 But in Massachusetts suit may be brought by an indorsee on a judgment by confession rendered in his favor in another state on a note made there, and containing a warrant to confess judgment, although such a note is nonnegotiable in Massachusetts.500 Action by Drawer. § 1641. The drawer of a bill may take it up and bring suit against the acceptor.561 And he may sue in an action of debt.562 So, he may transfer it by indorsement, and his indorsee may sue in his own name. Or the drawer may bring suit, or have suit brought for his to bring suit. Beeson v. Shively, 28 Kan. 574. And see §§ 724, 1009, supra, as to restrictive indorsements. 554 Campbell v. Brown, 64 Iowa, 425, 20 N. W. 745. 555 Brush v. Curtis, 4 Conn. 312. 556 Sutton v. Owen, 65 N. C. 123. And see § 791, supra. Although now an assignee or an owner may sue without written assignment. Wilcoxon v. Logan, 91 N. C. 449. 557 Fahnestock v. Schoyer, 9 Watts (Pa.) 102. But the acceptance of a nonnegotiable draft implies a promise to pay the assignee, and he may sue the acceptor for money had and received. Weston v. Penniman, 1 Mason, 306, Fed. Cas. No. 17,455. 558 Thompson v. Malone, 13 Rich. Law (S. C.) 252. Or in Delaware, unless he takes an assignment under seal in the presence of two witnesses. Kinniken v. Dulaney, 5 Har. (Del.) 384. 559 Sawyer v. Bradford, 6 Ala. 572. 560 Richards v. Barlow, 140 Mass. 218. 1 Chit. Bills, 609; 2 Daniel, Neg. Inst. 238; 2 Pars. Notes & B. 453; Simmonds v. Parminter, 1 Wils. 185, 2 Brown, Parl. Cas. 43; Louviere v. Laubray, 10 Mod. 36; Zebley v. Voisin, 7 Pa. St. 527; Rice v. Hogan, 8 Dana (Ky.) 134. 562 Regnault v. Hunter, 4 W. Va. 257. 563 Chit. Bills, 608; Callow v. Lawrence, 3 Maule & S. 97; Bacon v. Searles, 1 H. Bl. SS; or in the drawer's name, Titcomb v. Thomas, 5 Me. 282. |