Chaudron v. Hunt & Norris

3 Stew. 31

Opinion

By JUDGE SAFFOLD.

The declaration having been demurred to, all the material facts alleged therein are of course to be taken as true. But the plaintiff in error is not understood to rely on any defect in the manner or form of pleading. The objection is, that an action at law will not lie on an assignable lost note, especially if lost previous to its maturity; nor upon a note tranfera-ble by delivery; or made payable to order, and indorsed in blank; because as is contended, in either case, the instrument may fall into the hands of a bona fide holder, who would thereby acquire an indefeasible interest, so as to be enabled to recover on it, notwithstanding the former holder may have received payment; and in this case, though it appears the note was made payable to Hunt and Norris, or order, it does not appear but that it may have been indorsed in blank.

In support of this position, reference has been made to Chitty on bills,

Footnotes

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a “where it is said, that “in general no action at law can be supported against a party to a bill of exchange, note or cheek, indorsed in blank, so as to be transferable to a bona fide holder, and lost before or on the day it is due, although a bond of indemnity has been tendered to the defendant; and if the bill be transferable by delivery, it would seem, that if it were lost, even after it became due, and after action brought, the same rule prevails.”

Again, it is held, where a bill or note has been lost before it is due, it is proper that the party should be confined to a Court of Equity for relief; “for as a transfer before a is due, though made by a person not entitled thereto? may give a bona fide holder a right of action thereon; it is but right that the party called upon to pay, should be previously sufficiently indemnified; and the sufficiency of the indemnity can be more correctly ascertained in a Court of Equity than of law. But where a bill has been lost after it became due, and that fact be clearly proved, there seems to be no reason why the party who lost it should not be permitted to proceed at law; and indeed without offering an indemnity, inasmuch as the law itself, would in such case indemnify all the parties. ” <* In the, case of Bevan Widow v. Hill, b a recovery at law on a lost check was denied, on the ground of the supposed necessity for an indemnity against the check, which Chancery alone was competent to afford. The same doctrine was held in relation to a bill of exchange which had been lost, after being indorsed by the payee, in the case of Pierson v. Hutchinson. c Yet all the cases referred to admit that where it appears the instrument had been destroyed, or was not negotiable, or has not been negotiated, or that it was only specially indorsed, the party who lost itmaypro-ceed by action at law, and secondary evidence of the contents may be admitted.

The only objection urged against a recovery in this ease, either on principle or authority, is, that the instrument was assignable, and may have been assigned; that it may be in the hands oí abona fide holder,and evensthata recovery may already have been had on it, by proceedings in attachment in another State against the defendant’s property. Under the force of a statute of this State, this latter ground only is mainly relied on. The act alluded to, is that of 1818, d which provides that all bonds, bills, notes,. &c., may be assigned by indorsement; and that in all actions to be commenced, and sued upon any such assigned instrument, the defendant shall be allowed the benefit of all payments, discounts and sets off, made, had or possessed against the same, previous to notice of the assignment &c., in the same manner as if the same had been sued and prosecuted by the obligee or payee therein.

This statue has the effect to remove much of the objection to the remedy at law, which was allowed to exist in the English Courts, where such instruments are purely negotiable, and the defendant was not allowed the benefit of payments, sets off or discounts, against a bona fide hold er, though made, had or possessed, previous to the notice of the transfer. 1'his difference is admitted by the counsel <br the plaintiff in error, but ho contends that part of the objection still exists, unless it was clearly shewn that the note had not been indorsed in blank or otherwise transferred; as it is possible the amount may have been recovered by attachment in another State, of which the defendant has not yet been informed. This is an apprehension of danger too remote to be regarded by the law. It is extremely improbable that a recovery can be had elsewhere, and here also, on the same demand, before the defendant would obtain notice of both suits; and either recovery, by virtue of the statute referred to, would constitute a bar to the other. But even in England, the more correct doctrine appears to be, that it was only in cases upon negotiable paper which had been merely lost, and not destroyed, and which was either shewn or presumed to have been indorsed, or otherwise transferred, previous to the loss, that a recovery at law was not permitted. a

The statute of 1828 “regulating judicial proceedings,” and which prescribes a mode of suing at law on lost bonds, bills, notes, &c., can have no influence on this decision, for the reason that it was passed subsequent to the commencement of the suit; moreover, it is conceived to be merely declaratory of the true principles of the common law, as far as it could apply to a case like the present, except in the requisition that the plaintiff shall make o.nh in writing of the loss of the instrument previous to instituting suit; and this is alleged to have been done on the present occasion.

In this case the idea of the note having been transferred, or indorsed in blank before the loss, is negatived as far as practicable. It is alleged and admitted to have been drawn payable to Hunt and Norris, or order, and they are the original plaintiffs. Then on the supposition that the note was lost by them, and that it remains lost or destroyed, as charged, it would be impossible to prove, negatively, that it had not been transferred or indorsed in blank; and, as contended by their counsel, it would have been unnecessary and improper to allege these facts unless susceptible of proof.

The most rational doctrine, and which is believed to prevail in the United States, is that which was recognised in the case of Pintard v Tackington,b that in an action or. a promissory note, alleged'to baye been lost or destroyed, where its existence and contents were proved, and it did not appear that it was negotiable, or if negotiable that it had in fact been negotiated, the plaintiff was entitled to recover on the note at law.

By the unanimous opinion of the Court, let the judgment be affirmed.

Judgment affirmed.

Lipscomb, Chief Justice, and Judge Collier, not sitting.

Page 152;

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Chitty on bills 157.

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2 Camp. R. 381.

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2 Camp. R. 211.

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Laws of Ala. 69.

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6 Vesey 812.

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10 Johns. R 104.