when the assignor is dead.1 But the doctrine of equitable assignments has been constantly extending to meet the conveniences of trade and business; and it has long been settled that the assignee of a chose in action may sue in a court of law in the name of his assignors, and recover, subject, however, to such defences as were available against the assignor at the time the debtor received notice of the assignment.2

744. Assignment by delivery, and failure to execute an agreed indorsement.-If the transferee delivers a bill without indorsing it, where it was upon good consideration, agreed or understood that it should be indorsed by him, and afterward he refuse to indorse, he may be sued for damages for breach of contract. And he, or his personal representative, may be compelled by bill in equity to indorse. But the transferee, by delivery under such circumstances, has no right to sign his transferrer's name as indorser.5

$ 745. Whether indorsement when made relates back to time when it was agreed to be made.-It has been thought that where an assignment of a note or bill payable to order has been made for a valuable consideration, an indorsement thereof, whenever made, will relate back to the time of assignment, and operate as if then made. This doctrine may be, and doubtless is, true when the indorsement at the time of the assignment was agreed upon and intended to be made, but omitted by mistake, accident, negligence, or

'Skinner v. Somes, 14 Mass., 107; Amherst Academy v. Cowls, 6 Pick., 427. 'Gibson v. Cooke, 20 Pick., 15.

'Rose v. Sims, 1 B. & Ad., 521 (20 E. C. L. R.)

'Watkins v. Maule, 2 Jac. & Walk., 242; Rolleston v. Hibbert, 3 T. R., 411; ex parte Greening, 13 Ves., 206; Byles [*150], 270; 1 Parsons N. & B., 279; Hughes v. Nelson, 29 N. G. (Eq.), 549; Story on Notes, § 120; 1 Story Eq. Juris., $$ 99, 729.

Rose v. Sims, supra; Harrop v. Fisher, 30 L. J. C. P., 283; Byles [*150], 270; Story on Bills, § 201.

'Baker v. Arnold, 3 Caines, 283 (1805), Livingston, J.; 1 Parsons N. & B., 279.

VOL. I.--44

If the instrument

fraud.' But beyond this it can not go. be payable to order, an assignment is not in the usual course of business. It transfers the equitable, but not the legal title; and an indorsement after maturity, or after notice of a defence, can not effectuate an anterior imperfect transaction, and exclude equitable defences which had become available. In Wisconsin it is held that a post indorsement relates back to delivery in respect to any equity outside the note itself."

2

In Maine it has been held that where an assignment is made before maturity, a contemporaneous promise of the payee to indorse, if not complied with until after maturity, will not avoid the defence of want of consideration, made by the maker against the indorsee.1

746. In respect to set-off a different principle applies. An indorsement at any time before suit brought, whether before or after maturity, cuts out the right of the maker or acceptor to plead it, for a set-off is not an equity.5

'Southard v. Porter, 43 N. H., 380 (1861). The party had notice of the defence at the time of the indorsement, but not at time of assignment. But see Haskell v. Mitchell, 53 Me., 468. In Watkins v. Maule, 2 Jacob & Walker, 237, it is said by Lord Eldon: "When a note is handed over for a valuable consideration the indorsement is a mere form; the transfer for consideration is the substance; it creates an equitable right and entitles the party to call for the form.” Hughes v. Nelson, 29 N. J. (Eq.), 549.

Lancaster National Bank v. Taylor, 100 Mass., 24 (1868); Clark v. Whitaker, 50 N. H., 474; Southard v. Porter, 43 N. H., 380; Whistler v. Forster, 14 J. Scott, N. S. (108 E. C. L. R.), 254 (1863). Erle, C. J.: "Griffiths, at the time he so handed the bill over to the plaintiff, omitted to indorse it. Under these circumstances the condition of things was this, that the plaintiff had at that time the same rights as if an ordinary chattel had passed to him by an equitable assignment; he would have all the rights which Griffiths could convey to him. Now, Griffiths having defrauded the defendant of the bill, he could pass no right by merely handing over the bill to another. According to the law merchant the title to a negotiable instrument passes by indorsement and delivery. A title so acquired is good against all the world, provided the instrument is taken for value and without notice of any fraud. The plaintiff's title, under the equitable assignment here, therefore, was to be rendered valid by indorsement; but, at the time he obtained the indorsement, he had notice that the bill had been fraudulently obtained by Griffiths from the defendant, and that Griffiths had no right to make the indorsement. Assuming, therefore, that there may be conflicting equities between the plaintiff and the defendant, I think the right should prevail according to the rules of law, and that the plaintiff had no title as transferee of the bill at all."

B

Beard v. Dedolph, 29 Wis., 136. 'Haskell v. Mitchell, 53 Me., 468 (1866). Ranger v. Carey, 1 Metc., 369 (1840); contra, Odiorne v. Woodman, 39 N. H., 544 (1859). The case of Ranger v. Carey is often quoted in support of

747. A second assignee who gives immediate notice of his assignment will be protected against a prior one who failed to give notice, or who is guilty of any neglect or fraud which enables the assignor to make a second assignment to a bona fide assignee."

The assignee may sue the debtor in his own name, when the assignor has discharged him, and the debtor, in consideration thereof and of the assignment, has promised the assignee to pay the debt to him. And the debtor, after making such promise to pay the assignee, could not make defences available against the assignor which he did not reserve in his promise to the assignee.*

§ 748. Equitable assignment.-There is a peculiar kind of assignment which remains yet to be noticed. It is an assignment which arises not from the direct act of the person from whom the beneficial interest in the thing assigned passes; but is effected by operation of law, and is called equitable assignment.

The assignment of any particular claim is considered an equitable assignment of all securities held by the assignor to assure it. Thus the assignment of a debt by whatever form of transfer, carries with it any bill or note by which it is secured; and the converse of the proposition is equally true, that the transfer by indorsement or assignment of a bill or note carries with it all securities for its payment," whether they exist by way of mortgage, deed of trust, or

the doctrine that indorsement relates back to the assignment; but the contrary is expressly decided in Lancaster National Bank v. Taylor, 100 Mass., 24, and that case is there explained.

'Judson v. Corcoran, 17 How., 612.

'Maykin v. Kirby, 4 Rich. Eq., 105.

Tatlock v. Harris, 3 T. R., 174; Weston v. Barker, 12 Johns, 276; Doty v. Wilson, 14 Johns, 378; Murry v. Todd, 12 Mass., 281; Currier v. Hodgdon, 3 N. H., 82; Myers v. York, etc., R.R. Co., 43 Me., 232.

4

Wiggin v. Damrell, 4 N. H., 69; Thompson v. Emery, 7 Foster, 269.

'Marston v. Allen, 8 M. & W., 494; Adams v. Jones, 12 Ad. & E., 455: Hayes v. Caulfield, 5 Q. B., 81.

Freeman's Bank v. Ruckman, 16 Grat., 129; see post, § 834, Mechanics Building Ass'n, 29 La., 549.

otherwise.1 A renewal note has the benefit of any security for the payment of the original, whether by way of mortgage, deed of trust, or otherwise, and the holder may enforce it.2

748a. Assignment by separate paper.-Negotiable instruments may also be assigned by a separate and distinct paper, although not delivered, as by deed or mortgage, conveying them specifically, or all "choses in action";3 but it has been held that such an assignment carried only the equitable and not the legal title. For such mode of transfer separates the evidence of ownership from the paper itself. The deed, or other instrument by which the assignment is made, operates as a constructive delivery of the paper, and the transferrer holds it as agent of the transferee. Where a person who has made a voluntary assignment for the benefit of creditors, retains certain promissory notes which passed by the assignment, he may be sued by the assignee in trover for their conversion. If a party, to induce another to discount a note of a third party, gives a written obligation, "to be holden precisely the same as if I had indorsed said note," he is entitled to it upon making payment, and has the same rights as an indorser would have on taking it up.8

'See post, §§ 834, 1282; De Bruhl v. Maas, 54 Texas, 464; Martin v. O'Bannon, 35 Ark., 68; Garrett v. Williams, 31 Ark., 240; Citizen's Bank v. Ferry 32 La. An., 120; Kerhane v. Smith, 97 Ill., 159; Dunn v. Snell, 15 Mass., 485 Titcomb v. Thomas, 5 Greenl., 282; Jones v. Witter, 13 Mass., 282; Waller v. Tate, 4 B. Mon., 529; Miller v. Ord, 2 Binn., 382; Fox v. Foster, 4 Penn. St. 119; Croft v. Bunster, 9 Wis., 503; Potter v. Stransky, 48 Wisc., 244; Johnson v. Carpenter, 7 Minn., 183; Holmes v. McGintry, 44 Miss., 94; Kelley v. Whitney, 45 Wisc., 110; Walker v. Kee, 14 S. C., 144; Hall v. Mobile & M. R.R., 58 Ala., 10; Murray v. Jones, 50 Ga., 118; Fisher v. Otis, 3 Chandler, 83; Dodge v. Bank, 1 McArthur, 420.

Gleason v. Wright, 55 Miss., 247.

'McGee v. Riddlesgarber, 39 Mo., 365; Grand Gulf Bank v. Wood, 12 Smed. & M., 482; Ducarse v. Keyser, 28 La., 419.

Franklin v. Twogood, 18 Iowa, 517; French v. Turner, 15 Ind., 62; Grand Gulf Bank v. Wood, 12 Smed. & M., 482.

Hopkirk v. Page, 2 Brock., 41, Marshall, C. J.; Milenoy v. Keen, 89 Ill., 395 see ante, § 689.

Byles on Bills (Sharswood's ed.) [*143], 260, note 1. 'Burrows v. Keays, 37 Mich., 431.

Bishop v. Rowe, 71 Me., 263.

CHAPTER XXIII.

THE SALE AND DISCOUNT OF BILLS AND NOTES, AND THE

AMOUNT OF RECOVERY.

SECTION I.

THE VALIDITY OF THE ORIGINAL NEGOTIATION.

$749. When suit is brought upon a negotiable instrument by the payee, or indorsee, or by an assignee without indorsement where it is payable to bearer, he is presumed to have paid therefor its full face value, and is therefore prima facie entitled to recover the whole amount of all the parties bound to him for its payment.1 But suppose the indorsee, where such an instrument is payable to order, or the assignee by delivery, where it is payable to bearer, has paid his immediate transferrer less than its face value, there are then several important questions presented. The first is, is the transaction of such a character as to constitute the instrument usurious in its inception? Second, if there be no usury, what is the amount of recovery as against the maker or acceptor? Third, is the contract of transfer usurious as between the parties thereto? And fourth, what is the amount of recovery against the indorser ?

$750. Is transaction usurious?-In the first place, is the transaction of such a character as to render the instrument usurious in its inception? There is no doubt that if

'Lee v. Pile, 37 Ind., 107; Youse v. McCreary, 2 Blackf., 246; Duncan & Sherman v. Gilbert, 20 N. J. L. R. (5 Dutch.), 521; Allaire v. Hartshorne, I Zab, 673.