such other and further orders, judgments and decrees as it may be entitled to under the law and the facts, both generally and specially, both in law and equity, and in duty bound will ever pray.'

"We respectfully propound for your decision the question: Did the trial court err in sustaining the general demurrer ?"

The action appears to be founded on the idea that by the transactions alleged the bank became a party to the contract of sale between plaintiff and White & Company, bound to perform the undertakings of the latter, and therefore liable for the violation of their agreement. It is not averred that the bank was a party to or had notice of the fraud charged against White & Company, or was guilty of any negligence or misrepresentation, or in any way deceived plaintiff, and hence the action cannot be maintained as for deceit, fraud or negligence on part of the bank.

We un

The theory of the plaintiff is supported by the decision of the court of civil appeals for the third district in the case of Landa v. Lattin, 19 Tex. Civ. App. 246, 46 S. W. 48, which was followed by the supreme court of North Carolina in the case of Finch v. Gregg, 126 N. C. 176, 35 S. E. 251. derstand the courts to hold in those cases that a purchaser of such drafts and bills of lading is substituted, by the mere purchase, in the place of the vendor in the contract of sale, becomes bound to perform that contract as a condition precedent to his right to the price of the goods represented by the bill of lading; and that, therefore, although the drafts be actually accepted and paid by the drawee, if the consideration which he was to receive from the drawee fails, the price may be recovered from the holder to whom the payment has been made. It is 632 undoubtedly true that the purchaser acquires by his purchase no greater rights than the drawer has against the drawee. The attitude of the latter is, so far, unchanged, and he is no further bound to the purchaser than he would be bound to the drawer to accept or pay; but we do not agree that the purchaser becomes bound to perform the contract of the vendor, nor that, when the bill of exchange is subsequently accepted or paid, he acquires no additional right against the acceptor or payor. Transactions of this kind have often come before the courts and we understand the rule of the commercial law to be thoroughly established, that one who has accepted or paid a bill of exchange drawn upon him, cannot defeat his acceptance or recover the money paid because there was no consideration, or the consideration has failed, as between him and the drawer, when

the payee bought from the latter, for value, without notice of the defense. The leading cases on the subject have arisen where bills of lading for goods were forged and attached to drafts drawn for the prices of the goods, negotiated with banks, and forwarded to and accepted or paid by the drawees, without knowledge on the part of either holder or drawee of the forgery. Efforts of the acceptors to avoid liability on acceptances and of payors to recover the money so paid have been defeated, both in courts of law and of equity: Hoffman & Co. v. Bank of Milwaukee, 12 Wall. 181; Goetz v. Bank of Kansas City, 119 U. S. 551, 7 Sup. Ct. Rep. 318; Robinson v. Reynolds, 2 Ad. & E. 196; Thiedemann v. Goldschmidt, 1 De Gex, F. & J. 4; 1 Daniel on Negotiable Instruments, secs. 174, 175, and notes; Marsh v. Low, 55 Ind. 271. Other authorities are cited in those referred to.

In Thiedemann v. Goldschmidt, 1 De Gex, F. & J. 4, Lord Campbell said: "I think that dangerous consequences would follow, and the credit of bills of exchange be very much shaken, if the title of the indorsees of bills of exchange, as against the acceptor, under such circumstances, could be called in question. It is allowed that the case of Robinson v. Reynolds, 2 Ad. & E. 196, was well decided, that its authority has never been questioned, and that it is a part of the commercial law of England." After further discussing the cases, he says: "It must be considered that the bills were accepted by Thiedemann (the drawee) on the credit of Homeyer (the drawer and forger), and for that reason it would be alarming if the title of the indorsees (they holding the bills bona fide for value) could be thus impeached."

In the case of Hoffman & Co. v. Bank of Milwaukee, 12 Wall. 181, the supreme court of the United States thus states the doctrine: "Money paid under a mistake of facts, it is said, may be recovered back as having been paid without consideration, but the decisive answer to that suggestion as applied to the case before the court, is that money paid, as in this case, by the acceptor of a bill of exchange to the payee of the same, or to a subsequent indorsee, in discharge of his legal obligation as such, is not a payment by mistake nor without consideration, unless it be shown that the instrument was fraudulent in its inception, or that the consideration was illegal, or that the facts and circumstances which impeach the transaction, 633 as between the acceptor and the drawer, were known to the payee or subsequent indorsee at the time he became the holder of the instrument.. Different rules apply between the immediate

parties to a bill of exchange-as between the drawer and the acceptor, or between the payee and the drawer-as the only consideration as between those parties is that which moves from the plaintiff to the defendant; and the rule is, if that consideration fails, proof of that fact is a good defense to the action. But the rule is otherwise between the remote parties to the bill, as, for example, between the payee and the acceptor, or between the indorsee and the acceptor, as two distinct considerations come in question in every such case where the payee or indorsee became the holder of the bill before it was overdue and without any knowledge of the facts and circumstances which impeach the title as between the immediate parties to the instrument. Those two considerations are as follows, first, that which the defendant received for his liability, and secondly, that which the plaintiff gave for his title, and the rule is well settled that the action between the remote parties to the bill will not be defeated unless there be an absence or failure of both these considerations. Unless both considerations fail in a suit by the payee against the acceptor, it is clear that the action may be maintained, and many decided cases affirm the rule, where the suit is in the name of a remote indorsee against the acceptor, that if any intermediate holder between the defendant and the plaintiff gave value for the bill, such an intervening consideration will sustain the title of the plaintiff."

It is claimed that the allegation in this case, that not only the drafts but the bills of lading were purchased by the bank, distinguishes it from those cited where the bills merely accompanied the drafts as security. The facts alleged in the pctition do not show this to have been other than the common transaction in which money is paid for drafts accompanied by bills of lading, representing the goods consigned as security. The allegation is that the drafts and bills of lading were indorsed in blank and were transferred to and purchased by the bank. The conclusion from these facts is then stated: "Whereby said bank became and was the owner of said drafts and bills of lading and of the cotton represented." This is only a conclusion from the facts previously stated and can not be held to enlarge the legal effect of those facts. The drafts were for the price of cotton which the drawer was under obligation to deliver to the drawee on payment. The bank's right was therefore only to receive the amount called for by the drafts, and, on payment thereof, it was bound to deliver to the payor the bilis of lading representing the cotton. The bank became the owner,

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only as the facts alleged made it the owner, of the cotton; and this was only in the limited sense that it could hold and control the cotton until the drafts were paid, and as a means of insuring payment or recovering loss. No contract or agreement of the bank, either with the drawer or drawee, is alleged to make its relation to the contract of sale other than that which resulted from the simple fact that the drafts for the price of the cotton and the bills of lading were purchased by it from the vendors of the cotton. The concluding language in the fourth and fifth paragraphs of the petition, referring to the undertaking of the bank to carry out the contract, does not charge nor, as we construe the pleading, intend to charge, that the bank affirmatively agreed to carry out the contract, but states, as the pleader's construction of the facts alleged, that such undertaking arose from the purchase, as held in Landa v. Lattin, 19 Tex. Civ. App. 246, 46 S. W. 48. Necessarily, the legal effect of the transaction stated between the bank and White & Company was only to entitle the former to collect, either from the drawee or, in case of its refusal to pay, from the drawers, the money called for by the drafts, and, to secure this right, a limited ownership and control of the cotton was conferred by the indorsement and delivery of the bills of lading. Such is the legal effect of the facts alleged, and such was the legal effect of the transactions passed upon in the authorities cited; and those decisions clearly control this case. It was as true in those cases, as it is in this, that the purchasers of the bills of exchange secured by the bills of lading originally acquired only such rights against the drawees as the drawers had against them, and that, in order to put the holders in a position to require acceptance or payment of the bills of exchange, performance of the contract of sale by the drawers was essential; and it is equally true in this case, as it was in those, that, in paying the drafts, the drawees, acting on the credit of the drawers and not of the holder, became bound to the latter, and that a failure of the consideration moving from the drawers to the drawee cannot affect the rights of the payee thus acquired in good faith upon a consideration moving from itself to the drawers.

The latest decision called to our attention is that of the supreme court of Iowa in the case of Tolerton v. Anglo-California Bank, 112 Iowa, 706, 84 N. W. 930, in which the court, after discussing Landa v. Lattin, 19 Tex. Civ. Ap.. 246, 46 S. W. 48, and Finch v. Gregg, 126 N. C. 176, 35 S. E. 251, enunciates what we regard as the correct rule.

The decisions referred to are wholly inconsistent with the theory that in such a transaction the purchaser of the draft and bill of lading becomes substituted for the vendor to such extent that he assumes the obligations of his contract with the vendee. This is not true of assignees generally. While an assignee may not by his assignment acquire any right against the party against whom the claim is asserted, he does not, by taking the assignment merely, assume the obligations of the assignor. The true question in such cases is whether or not money so paid upon bills of exchange can be recovered as having been paid by mistake, which is negatived by the rules of the law-merchant; and not whether or not there has been a breach of contract by the holder, who never has a contract with the drawee of the bill of exchange until the latter honors it.

We answer that the court did not err in sustaining the general demurrer.

Bona Fide Ownership of Negotiable Paper is discussed in the monographic note to Bedell v. Herring, 11 Am. St. Rep. 309-326. As to the defense of want of consideration as against a bona fide holder, see Oppenheimer v. Bank, 97 Tenn. 19, 56 Am. St. Rep. 778, 36 S. W. 705.