ing his name upon it, neither morality nor the laws of this country will compel him to refund the money for which he sold it, if he did not know at the time he sold it that it was not a good bill. If he knew the bill to be bad, it would be like sending out a counter into circulation to impose upon the world, instead of the current coin." And, in another case, where the party discounted bills with a banker and received in part of the discount other bills, without the banker's indorsement, and they turned out to be bad, the same high authority said: "Having taken them without indorsement, he has taken the risk on himself. The bankers were the holders of the bills, and by not indorsing them, have refused to pledge their credit to their validity, and the transferee must be taken to have received them on their own credit only."

739a. Oral warranty of solvency, and guaranty of payment. But where the transfer by delivery is for a valuable consideration the transferrer may orally warrant the solvency of the parties and guarantee the payment of the paper. If he promises orally that the paper is good and will be paid at maturity, the promise is not within the statute of frauds, and the promisor is liable thereon in case of non-payment. The promise is regarded as that of the transferrer to pay for the consideration had, if parties to the paper do not pay, and not as a promise to answer for the default of another."

§ 740. Assignment of bill or note for antecedent debt. -When the bill or note of a third party is transferred without indorsement, in payment of an antecedent debt, it has been held that, if dishonored, the prior debt revives, because the instrument was given as money, and did not

'Fydell v. Clark, 1 Esp., 447; see also Emly v. Lye, 15 East., 7; Bank of England v. Newman, 1 Ld. Raym., 442.

2

Milks v. Rich, 80 N. Y., 268; Johnson v. Gilbert, 4 Hill, 178; Danber v. Blackney, 38 Barbour, 432; Cardell v. McNiel, 21 N. Y., 336; Bruce v. Burr, 67 N. Y., 237; see post, § 1763; King v. Summitt, 73 Ind., 312.

produce it. But this distinction does not seem to us ten able. The transferrer, by not indorsing, has declined to warrant that it will produce money, and the transferee has consented to take the security instead of money, and without such warranty. Still, this is to be observed: The law presumes, in the absence of proof, that the instrument was passed as conditional payment only, in which case the preexisting debt is only suspended during its currency, and revives on its dishonor; but if there was an express contract, or circumstances implying a contract, on the part of the creditor, to accept the stranger's paper in absolute payment, then he would be held to his bargain, although it threw upon him an entire loss-the burden of proof to this effect being upon the transferrer. The transferrer by delivery is not entitled in such cases to notice of dishonor; but if there is unreasonable delay in informing him of it, he may show in defence any injury he has sustained by the actual laches of the creditor.5

§ 740a. Liability of a broker or other agent transferring negotiable paper by delivery. Whether he warrants its genuineness. It is quite clear that if a broker or other agent transfer paper by delivery without disclosing who his principal is, he is himself to be regarded as a principal in the transaction, although the party dealing with him may have known that he was the broker and agent for some person. And this doctrine has been applied to compel a broker to refund money paid for a note sold by him to the

1 Camidge v. Allenby, 6 B. & C., 373; see chapter L, on Bank Notes, sec. iii, vol. 2; see 2 Pars. N. & B., 104, note; 156, note m; also chapter XXXIX, vol. 2.

* In Timmins v. Gibbins, 18 Q. B., 722 (14 Eng. L. & Eq., 64), Lord Campbell said: "I feel great difficulty in seeing any distinction between payment for goods sold at the time, and payment for them at a future day. In both cases it is a transaction of buying and selling; and even where the money is paid over the counter, there must be some interval during which the buyer was debtor." Dennis v. Williams, 40 Ala., 633; see chapter XXXIX, vol. 2.

3

Marsh v. Pedder, 4 Camp., 257; Taylor v. Briggs, Moody & M., 28; Robinson v. Read, 9 B. & C., 449; see chapter XXXIX, vol 2.

plaintiff, although he had paid over the money to his prin cipal, and although he sold the note for a sum less than its face. There is no doubt also that an express warranty that a note is genuine will bind the agent of the seller personally, if it appears that such was his intention; and that if there be an express exclusion or exemption from liability for genuineness he will not be bound.3

When a broker or other agent sells negotiable paper, and is known to be the agent of a certain principal, and it turns out that such paper is forged as to one or more of the ostensible parties, a more difficult question arises as to the agent's liability. But its solution is to be found in the inquiry: did the buyer understand that he was buying from the agent or from the principal-was the transaction intended to be between the principal and the buyer, or between the agent and the buyer? If the agent sells in his

1 Merriam v. Walcott, 3 Allen, 258.

2 Wilder v. Cowles, 100 Mass., 487; Story on Agency, § 269. Bell v. Dagg, 60 N. Y., 530; ante, §731b.

4 Worthington v. Cowles, 112 Mass., 30 (1873). Action of contract upon the implied warranty of the genuineness of the signature to a note sold by defendant, to plaintiff, Morton, J.: "The plaintiff claimed that in the purchase of the note he dealt solely with the defendants, and upon their credit. The defendants claimed that they were acting as agents of Hanson in the transaction, and that their principal was disclosed to the plaintiff. Upon those points the evidence was conflicting. The defendants asked the court to rule that if the defendants were in fact agents for Hanson, and disclosed their agency to the plaintiff, or the plaintiff knew it, or had reasonable cause to know it, the defendants would not be liable.' Considered as an abstract proposition of law, this is too broad. It omits the necessary element that, in the dealing or transaction in question, they were acting as such agents. It may be true that the defendants were agents of Hanson, and known to be such by the plaintiff, and yet, if in the purchase of this note, it was understood by the parties that the plaintiff was dealing with and upon the credit of the defendants, they would be liable. An agent may deal so as to bind himself personally; it is always a question of the intention and understanding of the parties. The presiding judge properly refused to give the instructions in the form requested by the defendants. Instead thereof, he ruled in substance that the question was: From whom did the plaintiff understand that he was buying the note-from the brokers, or from Hanson? and that if such a state of facts occurred, that the plaintiff understood, or ought to have understood, as a man of reasonable intelligence, that he was dealing with Hanson, the defendants would not be liable. These instructions were correct as applied to the facts of the case. . . . Unless from their (defendants') disclosures or other sources the plaintiff understood, or ought, as a reasonable man, to have understood, that he was dealing with Hanson, he had a right to assume that he was dealing with the defendants as principals."

own name it is immaterial whether he discloses his principal or not, in so far as his own liability is affected; for it is a general principle that evidence is inadmissible to discharge a party contracting in his own name (unless it be by adoption the name used by another), although it is admissible to charge an undisclosed principal.1 principal.1 And if the contract of sale be in writing, and in the name of the agent, he will be liable as a principal in the transaction, and parol evidence will be inadmissible to discharge him, although it would be admissible to charge his principal if he were in fact an agent.

SECTION II.

LIABILITY OF THE ASSIGNOR OF THE EQUITABLE TITLE BY DELIVERY.

741. We have already seen that where a bill or note payable "to order" is transferred without indorsement, the transferee does not acquire the legal, but only the equitable title. The holder under such a transfer must aver and prove the assignment, for the mere possession of the instrument unindorsed is not evidence of ownership, and its exhibition in a suit not sufficient ground of recovery. And he can only stand in the shoes of his assignor, and recover subject to such defences as were available against him, although

'Ewell's Evans' Agency, 410 [305]; Smith's Lead Cas., vol. 2, 369 [*224] ; Lyons v. Miller, 6 Grat., 439, Baldwin, J. (semble); see as to Exceptions Ewell's Evans' Agency, 416 [*309].

2 Story on Agency, §§ 269, 270, 155, 160; Smith's Lead Cas., vol. 2, 369 [224]; Benjamin on Sales, 164. See Magee v. Atkinson, 2 M. & W., 440; Jones v. Littledale, 6 A. & E., 486; Trueman v. Loder, 11 Ad. & E., 587; Higgins v. Senior, 8 M. & W., 834. "The distinction to be kept in mind is, that while parol evidence can not be received to discharge a party, it may be received when its effect is to show that another party, namely, the principal, is also bound." Wharton on Evidence, vol. 2, § 951.

'Ante, chapter XXI, § 664.

* Hull v. Conover, 35 Ind., 372; Prescott v. Hull, 17 Johns, 284; Van Eman v. Stanchfield, to Minn., 255; see chapter XX, on Presentment for Payment, sec. i, § 573 et seq.

he took it in good faith for value.1 Therefore, if the party who transfers a note payable to the order of another, but unindorsed by him to whose order it is payable, and it turn out that the transferrer had no title, the transferee could not recover, there being no equitable right to which he can claim succession. In such a case in Indiana it was said by Blackford, J.: "Whether the property in this note could pass without indorsement under any circumstances need not be considered. Supposing it could, the transfer in such case must be governed, not by commercial law, but by the rules which govern the sale of ordinary goods out of market overt." 8 It is quite well settled that delivery of such an instrument may operate as an assignment, but the assignee would have to sue in the name of the assignor, unless permitted by statute to sue in his own. The bona fide holder by assignment, while not protected against existing defences, is protected against all defences subsequently arising."

§ 742. Transfer by assignment of non-negotiable instruments. Notice of assignment to debtor.—These principles apply to bills and notes which are not drawn payable to bearer, or to order, and are not negotiable. The party party who becomes transferee of such instruments takes only the right and title of his transferrer-can sue only in the name of such transferrer-and is subject to all off-sets, equities, and other defences, which might have been pleaded against him up to the time when the debtor first receives notice of the assignment. As soon as a transferee receives such an in

'Allum v. Perry, 68 Me., 232; Lancaster N. B. v. Taylor, 100 Mass., 18: Foreman v. Beckwith, 73 Ind., 515; Hedges v. Sealy, 9 Barb., 218; Haskell v. Mitchell, 53 Me., 468; Boeka v. Nuella, 28 Mo., 181; Terry v. Allis, 16 Wis., 478; Simpson v. Hall, 47 Conn., 418; Matteson v. Morris, 40 Mich., 55. 'Myers v. Friend, 1 Rand., 13; see ante, § 441.

5

Elliott v. Armstrong, 2 Blackf., 212.

'Jones v. Witter, 13 Mass., 304

" Wheeler v. Wheeler, 9 Cow., 34; Grand Gulf Bank v. Wood, 12 Sm. & M, 482; Amherst Academy v. Cowls, 6 Pick., 427; Smalley v. Wight, 44 Me., 442 Pease v. Hirst, 10 B. & C., 125; 5 Man. & R., 88.