Action by Owner without Indorsement.

§ 1653. At common law the beneficial owner of a bill or note without indorsement cannot sue in his own name, unless the paper is transferable by delivery, and cannot even recover on the common counts.690 He may, however, bring his action in the name of the payee or last holder of the legal title." And it has been held that he may do so even without the authority of such former holder. 692

691

693

If there is no legal holder (e. g. where the last legal holder transferred the note without indorsement, and afterwards died intestate, and no legal representative has since been appointed), the owner may sue in equity in his own name. And the real owner by delivery without indorsement may intervene, in Indiana, by a cross complaint in a suit brought against the maker by a subsequent indorsee, and have his rights determined in such suit.694 When such owner sues in equity in his own name, he must prove his title,95 and he may make his transferror a party to the action.696

But at common law the owner of a bill may bring trover against a wrongful holder, although he is not a party to it.697 So, one who pledges a note without indorsing it may bring suit for negligence

659 Byles, Bills, 157; Chit. Bills, 275; 2 Daniel, Neg. Inst. 233; 2 Pars. Notes & B. 439; Marsh v. Hayford, 80 Me. 97, 13 Atl. 271. And see §§ 790, 791, supra.

€90 Royce v. Nye, 52 Vt. 372.

691 Chit. Bills, 608; 2 Daniel, Neg. Inst. 233; 2 Pars. Notes & B. 448; Pease v. Hirst, 10 Barn. & C. 122, 5 Man. & R. 88; Freeman v. Perry, 22 Conn. 617; Amherst Academy v. Cowls, 6 Pick. (Mass.) 427; Mechanics' Sav. Bank v. Goff, 13 R. I. 516; Benson v. Abbott, 95 Ga. 69, 22 S. E. 127; Dunn v. Meserve, 58 N. H. 429. And he may sue in the same manner upon a note taken by the sheriff to such nominal plaintiff for his benefit in the original suit. Harriman v. Hill, 14 Me. 127. If the payee is dead, a holder without indorsement from his widow should sue in the name of his legal representatives, at law and not in equity. Nash v. Hogan, 45 N. J. Eq. 108, 16 Atl. 433.

692 Wilson v. Clark, 11 Ind. 385.

693 Taylor v. Reese, 44 Miss. 89.

694 Clark v. Brown, 70 Ind. 405.

695 Caldwell v. Meshew, 44 Ark. 564.

696 Heartman v. Franks, 36 Ark. 501. And this has been held to be necessary. Perry v. Seitz, 2 Duv. (Ky.) 122.

697 Byles, Bills, 412; Treuttel v. Barandon, 8 Taunt. 100, 1 Moore, 543.

against a collecting agent, in whose hands it had been placed by his pledgee.698 And the owner of a note without indorsement may take judgment under a warrant to confess judgment in favor of the holder. 699

702

§ 1654. Under the statutes already referred to, requiring the action to be brought by the real party in interest, such a holder, although without formal indorsement, may sue in his own name,700 especially where his title is admitted by the answer.701 And it is sufficient if the note is payable to a partnership and delivered to the plaintiff by one partner, or is indorsed to the plaintiff after the beginning of the action, 703 or is delivered by the payee with an express refusal to indorse it,704 or even if it was payable to a corporation, and still held by it at the time of its dissolution.705 And one who purchases in Massachusetts at an assignee's sale acquires the legal title without indorsement, and may sue in his own name.70€ But the holder of a check

698 McKinster v. Bank, 9 Wend. (N. Y.) 46, 11 Wend. (N. Y.) 473. 699 Clements v. Hull, 35 Ohio St. 141.

700 Savage v. Bevier, 12 How. Prac. (N. Y.) 166; Central Bank v. Lang, 1 Bosw. (N. Y.) 202; Billings v. Jane, 11 Barb. (N. Y.) 620; Andrews v. McDaniel, 68 N. C. 385; Willey v. Gatling, 70 N. C. 410; Jackson v. Love, 82 N. C. 405; Robertson v. Dunn, 87 N. C. 191; Kiff v. Weaver, 94 N. C. 274; Boeka v. Nuella, 28 Mo. 180; Lewis v. Bowen's Adm'r, 29 Mo. 202; Willard v. Moies. 30 Mo. 142; Harvey v. Brooke, 36 Mo. 493. So, the wife may sue on a note made to her husband for purchase money of her separate property. Grantham v. Payne, 77 Ala. 584. So, where the note sued on was delivered to the plaintiff in renewal of a note held by him. Moore v. Miller, 6 Or. 254. So, where the plaintiff holds for collection with authority to pay himself out of the proceeds an amount due from the payee. Gillispie v. Railroad Co., 12 Ind. 398. So, the assignee of a duebill must sue in Missouri in his own name, and not in that of the assignor. Brady v. Chandler, 31 Mo. 28. 701 Fenwick v. Phillips, 3 Metc. (Ky.) 87.

702 Banking House of Bartholow, Lewis & Co. v. St. Joseph Lead Co., 12 Mo. App. 587.

703 Weeks v. Medler, 20 Kan. 57. But where the plaintiff holds by a written assignment after suit brought, he must show that he was the equitable owner at the commencement of the suit. Weinwick v. Bender, 33 Mo. 80. 704 Van Riper v. Baldwin, 19 Hun (N. Y.) 344.

705 Hyde v. Lawrence, 49 Vt. 361.

706 Stone v. Hubbard, 7 Cush. 595. So, of a witnessed note payable to two payees, and purchased by one who sued in the name of both. Drury v. Vannevar, 5 Cush. 442.

without the payee's indorsement can recover against the drawer, although payment had been countermanded by him, but only on proof of the consideration paid.707

Discount Refused by Nominal Payee.

1655. Where a note is made payable to A. for the purpose of being discounted by him, and on his refusal it is discounted by B., the latter may sue the makers (both principal and surety) in the name of the nominal payee." 708 And he may recover in an action of trover brought in the payee's name against the receiver of the bank at which it was made payable, and to which it had been forwarded for payment.70" In Indiana he may bring suit in his own name against the maker, and the payee is not a necessary party to the suit."1 But the payee's consent, either express or implied, is necessary to support such action. An action lies, in like manner, against an accommodation indorser who signs as surety for the maker.712

711

710

And it is said that the

107 Farris v. Wells, 68 Ga. 604.

Bank of Rutland v. Buck, Hunt v. Aldrich, 27 N. H.

708 Utica Bank v. Ganson, 10 Wend. (N. Y.) 313; 5 Wend. (N. Y.) 66; Cross v. Rowe, 22 N. H. 77; 31. So, by the payee's consent. Bank of Middlebury v. Bingham, 33 Vt. 621. So, where the plaintiff holds the note as collateral, Bank of Newbury v. Rand, 38 N. H. 166; or where the payee holds it by agreement as trustee for the real plaintiff, who advanced the money upon it, President, etc., of Bank of Chenango v. Hyde, 4 Cow. (N. Y.) 567. So, where it was made at B.'s request and for his benefit, to be credited to him by the payee, A., and it is refused by A., B. may sue the maker in A.'s name. Overman v. Grier, 70 N. C. 693. So, where the note was made by one partner in the name of his firm, and the indorsement of the payee was forged by him, and the note was then discounted by the plaintiff, York Bank v. Asbury, 1 Biss. 230, Fed. Cas. No. 18,142; or where the plaintiff held a nonnegotiable note under an unauthorized indorsement by the cashier of the nominal payee, Barrick v. Austin, 21 Barb. (N. Y.) 241.

709 Corn Exch. Bank v. Blye, 2 N. Y. St. Rep. 112.

710 Rhyan v. Dunnigan, 76 Ind. 178; especially where the plaintiff, as part of the consideration, canceled a judgment held by him against the maker, Spurrier v. Briggs, 17 Ind. 529.

711 Skowhegan Bank v. Baker, 36 Me. 154; Allen v. Ayers, 3 Pick. (Mass.) 298; Adams Bank v. Jones, 16 Pick. (Mass.) 574. But see, contra, Farmers' & Mechanics' Bank v. Humphrey, 36 Vt. 554.

712 Commercial Bank v. Claiborne, 5 How. (Miss.) 301.

plaintiff may bring suit in the name of the payee, or declare on the note as payable to bearer, or to himself by the name of the payee.713 Many cases hold, however, that the surety is discharged if the note is discounted by any other than the intended payee, and that no recovery can be had against him, even in the payee's name.?11

Title without Possession.

§ 1656. The plaintiff must be the holder as well as the owner of the paper on which he brings suit. If it is actually held by a third party, it will, in general, defeat his action,715 since the defendant is entitled to have it produced and surrendered on payment. And this is true,

But it has been

á fortiori, where it is held adversely by another.716 held that the tender to B. of a note made by A., under the payee's agreement with B. for goods purchased, makes it B.'s property, and will support an action by B. against A., although it was refused by B., and, after being held some time for him, was sold by the payee to C. conditionally, and afterwards destroyed by fire while still in the payee's possession.717 So, the pledgee of a note may sue upon it while still in the pledgor's possession.718 And the possession of a third party for the plaintiff by agreement of the parties will not prevent the plaintiff's recovery.719 In like manner, an agent's possessión

713 Elliot . Abbot, 12 N. H. 549. In this case the note was indorsed afterwards by the payee, and discounted by the plaintiff, with the consent of the surety.

714 Manufacturers' Bank v. Cole, 39 Me. 188; Granite Bank v. Ellis, 43 Me. 367; Dewey v. Cochran, 49 N. C. 184; Clinton Bank v. Ayres, 16 Ohio. 282; Farmers' & Mechanics' Bank v. Hathaway, 36 Vt. 539.

715 Hook v. Murdoch, 38 Mo. 224. But the payee may recover on a check procured by another in his name for money due him, and paid to such other person on his forging an indorsement of the payee's name. Dodge v. Bank, 20 Ohio St. 234, 30 Ohio St. 1.

716 Crandall v. Schroeppel, 1 Hun (N. Y.) 557; although held under a mere verbal assignment, Burton v. Dees, 4 Yerg. (Tenn.) 4. So, of a check, although indemnity is offered. Van Alstyne v. Bank, 4 Abb. Dec. (N. Y.) 449.

717 Des Arts v. Leggett, 16 N. Y. 582.

718 The recovery being as trustee for the pledgor for all excess above the amount due to the pledgee. Stones v. Butt, 2 Cromp. & M. 416.

719 Selden v. Pringle, 17 Barb. (N. Y.) 458.

is that of his principal, and the principal may bring trespass against one who has taken the note from the possession of his agent.720

Action by Agent-Collecting Agent.

722

§ 1657. Where a bill or note is made payable expressly to one person as agent for another, the agent who is named as payee may sue upon it in his own name.721 And it has been held that the principal may bring the action in his own name on proving his property in the bill," even though his name is not disclosed in the instrument.723 So, where a note is payable to "A. B., cashier," action may be brought on it by A. B.,72 even after the bank has ceased to exist,725 or it may be brought by the bank as owner, 720 especially where the principal is named in the note; e. g. by making it payable to "A. B., cashier of the First National Bank of L." 727 So, where a note is payable to "A. B., treasurer of the C. Co.," the title is often treated as mere description, and the suit may be brought in the name of A. B.728 And A. B., or his successor in office, may sue on a note payable to A. B. as treasurer, 720 Gillett v. Ball, 9 Pa. St. 13.

721 2 Daniel, Neg. Inst. 236; 2 Pars. Notes & B. 451; Buffum v. Chadwick, 8 Mass. 103; Pearce v. Austin, 4 Whart. (Pa.) 489; Zapata v. Cifreo, 26 La. Ann. 87; Rutherford v. Mitchell, Mart. & Y. (Tenn.) 261. And see § 156, supra. So, on a note to "A., lawful attorney of B.," A. may sue. Austell T. Rice, 5 Ga. 472.

722 Southern Life Insurance & Trust Co. v. Gray, 3 Fla. 262; Harrow v. Dugan, 6 Dana (Ky.) 341; Stinson v. Sachs, 8 Wash. 391, 36 Pac. 287.

723 Pacific Guano Co. v. Holleman, 4 Woods, 462, 12 Fed. 61. So, upon a nonnegotiable note payable to "A. B., agent." National Life Ins. Co. v. Allen, 116 Mass. 398.

724 Rose v. Laffan, 2 Speers (S. C.) 424. And see § 157, supra. contra, Olcott v. Rathbone, 5 Wend. (N. Y.) 490.

725 Horah v. Long, 20 N. C. 274.

And see § 156, supra.

But see,

726 Watervliet Bank v. White, 1 Denio (N. Y.) 608; Wright v. Boyd, 3 Barb. (N. Y.) 523; Dupont v. Ferry Co., 9 Rich. Law (S. C.) 255; Darby v. Bank, 97 Ala. 643, 11 South. 881; Hobbs v. Bank, 97 Ga. 524, 25 S. E. 348. And see

157, supra.

727 Nave v. Bank, 87 Ind. 204.

728 Alston v. Heartman, 2 Ala. 699; Martin v. Lamb, 77 Ga. 252, 3 S. E. 10. But the corporation cannot sue in its own name without indorsement. Fine v. High Bridge M. E. Church, 44 N. J. Law, 148. And his successor in office cannot sue. Nash v. Russell, 5 Barb. (N. Y.) 556.