By the Court,
Savage, Ch. J.
Several questions were raised in the progress of the trial, which will be noticed in their order.
1. It was objected that the plaintiffs could not declare as endorsees, but should have declared specially as receivers. The judge decided that the action was well brought by the plaintiffs as endorsees. To this decision, I can see no objection. 'In point of form, the paintiffs shew a good title to the nóte, and in point of fact, they had title as receivers, if not as assignees; and, as the defendant was not thereby deprived of any defence which he would have had if they had declared as receivers, there is no good reason for supporting this objection.
2. The judge decided that the transfer of the note and the assignment of the 28th July, were void by virtue of the sixth •section of the act to prevent fraudulent bankruptcies by incorporated companies, (Statutes, vol. 7, p. 450 a.) That section prohibits áh assignment of any property to any officer [17]*17or stockholder for the payment of any debt, and any assignment to any person in contemplation of insolvency; and renders such ^assignments void. The assignment in this case was not made to any officer or stockholder for the payment ot any debt ot theirs ; nor was it an assignment to any one in contemplation of insolvency, within the purview of the act. If it is void, it must be because it is against the policy of the act. Instead of being so, it seems to me to have been in accordance with it. The statute intended to prevent an assignment which should give a preference to the officers or stockholders, and that a fair dividend should be made among the bona fide creditors ; but I can see nothing in this section of the act, or any other, which, before an injunction, prohibits receiving monies due to the bank, or paying any of its creditors, except officers and stockholders of the bank, by transferring the property of the bank in payment. The assignment of July 28th was therefore, in my opinion, a valid instrument. If every assignment was forbidden, by the sixth section, there was ho necessity for providing, in the seventeenth section, for an injunction to prevent the transfer of the effects of the bank. Besides, if every assignment was intended to be prohibited, it is strange that the legislature should have selected two instances only: one before insolvency, and in anticipation or contemplation of that event; the other, after insolvency, to officers or stockholders for the payment of any debt. The assignees here do not appear to be either officers or stockholders ; and the object is not to pay any debt due to such officers or stockholders, but for the benefit of all the creditors of the bank.
But perhaps it is not important in this case whether the assignment of the 28th July was valid or not, as the plaintiffs Were appointed receivers on the 14th August, before the note declared on was due. This appointment of receivers constituted the plaintiffs trustees, -not for the bank, but for the creditors of the bank. The note was a negotiable note, transferred before due, and the set off can no more be allowed than , if the parties here had been individuals. Where the payee transfers a note before due, while the maker holds a note against him, or has any other demand against him, nothing [18]*18is better settled than that the holder of the note by endórsement jias noting to do with the state of the accounts between the original parties. Even had the note declared on been due, but no payment made or tendered before the transfer, according to the decision of this court in Wheeler v. Raymond, (5 Cowen, 231,) confirmed in the court of errors, there could have been no set off. A set off must be between the parties to the record. The ground upon which it was admitted in this case was, that the plaintiffs were trustees for the bank. That was certainly an error. Receivers are appointed for the security of the creditors, and the property becomes the property of the creditors. They must take it, indeed, subject to all legal incumbrances ; but before the note was due, the defendant could not have any legal claim to set off, as against any one to whom the bank might transfer it. Suppose the bank had transferred this note before they stopped payment, and while the defendant held the bills of the bank to an equal or greater amount, it would not be pretended that the fact of having the bills constituted a demand which could be set off ; and yet there is no real difference between this case and the case supposed, when we consider the appointment of the receivers and the possession of the note by them, a transfer or assignment of the note for the benefit of all the creditors. All the creditors collectively should be in no worse situation than an individual creditor would have been. The fact of .stopping payment does not vary the rights of the parties to a note or bill, provided the transfer in both cases be made before the note is due and payable.. ,
The cases cited of The Bank of Niagara v. McCracken, (18 Johns. R. 493,) and Jefferson Co. Bank v. Chapman, (19 Johns. R. 322,) are not applicable_ here. In the first, the demand was assigned after the note was due; in the second, there was no assignment in the case. The set off was excluded because the right did not exist at the commencement of the suit. Nor do the cases under the English bankrupt act apply.' They are decided upon those acts, and do not seem to me to be analogous.
[19]*19The justice of this case clearly corresponds with my conceptions of the law. When the bank stopped payment, the defendant was, as is admitted, a debtor to the amount of his note. This ought to be paid for the benefit of all the creditors, and not of Mr. Rodgers or Mr. Sandford, or any other bill holders in particular. But if a debtor can connive with his particular friends, who happen to hold the bills of the bank, and a considerable portion of the debtors might do the same thing, it will be perceived that the object of the legislature might be frustrated; and instead of all the creditors receiving a proportion of their demands, some will be paid in full, while others perhaps will receive nothing. There is no sympathy to be felt for the defendant. He had the money in his pocket to pay his note; and instead of doing so, he chooses to purchase at par the bills of an insolvent bank. If he loses, therefore, it is his own fault.
The grounds upon which I have placed the decision are applicable to all the other cases relating to the Greene County Bank, decided at the last October term, and render it unnecessary to decide a point raised here, and also in one of those cases; I mean' the case against Edward T. Stevens.
Whether a bank notes, payable on demand without specifying any place of payment, may be prosecuted without a demand at the banking house from which it issued, seems not to have received a judicial decision in this court. In the case of The Bank of Utica v. Magher, (18 Johns. R.
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By the Court,
Savage, Ch. J.
Several questions were raised in the progress of the trial, which will be noticed in their order.
1. It was objected that the plaintiffs could not declare as endorsees, but should have declared specially as receivers. The judge decided that the action was well brought by the plaintiffs as endorsees. To this decision, I can see no objection. 'In point of form, the paintiffs shew a good title to the nóte, and in point of fact, they had title as receivers, if not as assignees; and, as the defendant was not thereby deprived of any defence which he would have had if they had declared as receivers, there is no good reason for supporting this objection.
2. The judge decided that the transfer of the note and the assignment of the 28th July, were void by virtue of the sixth •section of the act to prevent fraudulent bankruptcies by incorporated companies, (Statutes, vol. 7, p. 450 a.) That section prohibits áh assignment of any property to any officer [17]*17or stockholder for the payment of any debt, and any assignment to any person in contemplation of insolvency; and renders such ^assignments void. The assignment in this case was not made to any officer or stockholder for the payment ot any debt ot theirs ; nor was it an assignment to any one in contemplation of insolvency, within the purview of the act. If it is void, it must be because it is against the policy of the act. Instead of being so, it seems to me to have been in accordance with it. The statute intended to prevent an assignment which should give a preference to the officers or stockholders, and that a fair dividend should be made among the bona fide creditors ; but I can see nothing in this section of the act, or any other, which, before an injunction, prohibits receiving monies due to the bank, or paying any of its creditors, except officers and stockholders of the bank, by transferring the property of the bank in payment. The assignment of July 28th was therefore, in my opinion, a valid instrument. If every assignment was forbidden, by the sixth section, there was ho necessity for providing, in the seventeenth section, for an injunction to prevent the transfer of the effects of the bank. Besides, if every assignment was intended to be prohibited, it is strange that the legislature should have selected two instances only: one before insolvency, and in anticipation or contemplation of that event; the other, after insolvency, to officers or stockholders for the payment of any debt. The assignees here do not appear to be either officers or stockholders ; and the object is not to pay any debt due to such officers or stockholders, but for the benefit of all the creditors of the bank.
But perhaps it is not important in this case whether the assignment of the 28th July was valid or not, as the plaintiffs Were appointed receivers on the 14th August, before the note declared on was due. This appointment of receivers constituted the plaintiffs trustees, -not for the bank, but for the creditors of the bank. The note was a negotiable note, transferred before due, and the set off can no more be allowed than , if the parties here had been individuals. Where the payee transfers a note before due, while the maker holds a note against him, or has any other demand against him, nothing [18]*18is better settled than that the holder of the note by endórsement jias noting to do with the state of the accounts between the original parties. Even had the note declared on been due, but no payment made or tendered before the transfer, according to the decision of this court in Wheeler v. Raymond, (5 Cowen, 231,) confirmed in the court of errors, there could have been no set off. A set off must be between the parties to the record. The ground upon which it was admitted in this case was, that the plaintiffs were trustees for the bank. That was certainly an error. Receivers are appointed for the security of the creditors, and the property becomes the property of the creditors. They must take it, indeed, subject to all legal incumbrances ; but before the note was due, the defendant could not have any legal claim to set off, as against any one to whom the bank might transfer it. Suppose the bank had transferred this note before they stopped payment, and while the defendant held the bills of the bank to an equal or greater amount, it would not be pretended that the fact of having the bills constituted a demand which could be set off ; and yet there is no real difference between this case and the case supposed, when we consider the appointment of the receivers and the possession of the note by them, a transfer or assignment of the note for the benefit of all the creditors. All the creditors collectively should be in no worse situation than an individual creditor would have been. The fact of .stopping payment does not vary the rights of the parties to a note or bill, provided the transfer in both cases be made before the note is due and payable.. ,
The cases cited of The Bank of Niagara v. McCracken, (18 Johns. R. 493,) and Jefferson Co. Bank v. Chapman, (19 Johns. R. 322,) are not applicable_ here. In the first, the demand was assigned after the note was due; in the second, there was no assignment in the case. The set off was excluded because the right did not exist at the commencement of the suit. Nor do the cases under the English bankrupt act apply.' They are decided upon those acts, and do not seem to me to be analogous.
[19]*19The justice of this case clearly corresponds with my conceptions of the law. When the bank stopped payment, the defendant was, as is admitted, a debtor to the amount of his note. This ought to be paid for the benefit of all the creditors, and not of Mr. Rodgers or Mr. Sandford, or any other bill holders in particular. But if a debtor can connive with his particular friends, who happen to hold the bills of the bank, and a considerable portion of the debtors might do the same thing, it will be perceived that the object of the legislature might be frustrated; and instead of all the creditors receiving a proportion of their demands, some will be paid in full, while others perhaps will receive nothing. There is no sympathy to be felt for the defendant. He had the money in his pocket to pay his note; and instead of doing so, he chooses to purchase at par the bills of an insolvent bank. If he loses, therefore, it is his own fault.
The grounds upon which I have placed the decision are applicable to all the other cases relating to the Greene County Bank, decided at the last October term, and render it unnecessary to decide a point raised here, and also in one of those cases; I mean' the case against Edward T. Stevens.
Whether a bank notes, payable on demand without specifying any place of payment, may be prosecuted without a demand at the banking house from which it issued, seems not to have received a judicial decision in this court. In the case of The Bank of Utica v. Magher, (18 Johns. R. 441,) it was held that no action lay upon the bills issued by the branch at Canandaigua, unless first demanded there. The act authorizing the establishment of an office of discount and deposit at Canandaigua, directed that no notes should be issued at such office unless countersigned by the cashier; and when so countersigned, they should be considered as paya[20]*20ble on demand at the office of the said branch. Spencer, Ch. j ust¡ce) jn giving the opinion of the court, says, “ Considering the object and provisions of the act, we have no hesitar tion in saying that payment of such bills must first be demanded at the branch.” This was in accordance with the object of the legislature, which was, that a part of the funds of the bank of Utica should be transferred to Canandaigua, for the purpose of banking operation there. It was highly proper, therefore, that there should be a demand upon the branch which had possession of those funds, before the parent bank should be subjected to a suit. In the bank of Niagara v. McCracken, (18 Johns. R. 493,) Woodworth, justice, expresses an opinion that bank bills, payable on demand and not at any particular place, -would sustain an action without a demand at the bank. In the case of The Jefferson County Bank v. Chapman, (19 Johns. R. 322,) this opinion of Mr. Justice Woodworth was said not to be the opinion of the court, and that the question whether a demand was necessary in such a case, was open; but it did not become necessary to decide it in that case. In the former of these cases a set off was allowed, on the ground .that the defendant held $419 of the bills of the Niagara bank after his note became due to the bank, and before .any suit was commenced, though they were not demanded .at the bank until after the defendant’s note had been assigned. The court, however, did not think the assignment varied the rights of the defendant, because the assignment was after the defendants note had become due, and the assignee took It subject to all the equity existing at the time between the original parties. Perhaps, since the case of Wheeler v. Raymond, even that -set off would not.now be allowed, although a .payment upon the note, or an appropriation of a.counter demand after due and before assignment, undoubtedly would. These -cases, -therefore, do not decide the question. In the case of Caldwell v. Cassidy, (8 Cowen, 272, 3,) I remarked, that in case of a note payable on demand at a certain place, (a bank note for instance,) I -thought a demand would be .necessary, and -referred to 5 T. R. 30, and 16 East, 112.; and such I still think is the law in England at the present day, as ap[21]*21pears from the cases cited in regard to all promissory notes, when the place of payment forms a part of the note itself. In this court, however, we hold that on such a note a demand at the place of payment is not necessary; but if the maker was at the place of payment with funds to pay the note, that fact is a good defence against interest and costs, provided the defendant avails himself of the defence by pleading it and bringing the money into court. Bank notes are promissory notes, and actions founded upon them are governed by the same rules. The corporation being a person in law, has the same rights, and is subject to the same liabilities as an individual, unless the act of incorporation varies those rights and liabilities. In relation to promissory notes, it is well settled that in an action on a note payable on demand, generally no demand need be proved; the commencement of the suit is a demand. So also is an action on a note payable at a particular place, on a particular day, it is not necessary to aver or prove a demand at the time and place ; but the readiness of the defendant is matter of defence. It seems to follow, that in an action on a note payable on demand at a particular place, no demand need be averred or shewn; but if the defendant pleads that when the demand was made, that is, when the suit was commenced, he was ready at the place mentioned in the note to make payment, and brings the money into court, he discharges himself from interest and costs. Mr. Chitty, in his Treatise on Bills, p. 426, remarks, that a mode of enforcing bank notes was provided by 8 and 9 Wm. 3. ch. 20, sect. 30. . This was within a few years after the incorporation of the bank of England. “But now, when the right to receive payment is disputed, the course is to proceed by action against the bank.” Both in England and here bank notes for some purposes are considered money; but in both countries, the remedy upon them is the same as upon promissory notes by individuals. If this be a correct view of the question, a holder of a bank note previous to suit need not make a demand of a note payable on demand at the hank; but if the bank is solvent, a defence will be made out, which will subject the plaintiff to costs. So, too, upon a bank note payable generally on demand, the commencement [22]*22of a suit is a demand; and it seems to me no other demand is necessary to sustain an action upon it.
If I am right, then, the defendant, Bishop, might have prosecuted the bank upon the notes which he held, previous to the appointment of the receivers in this case; and had the note upon which this suit is brought been then due, according to the case of The Niagara Bank v. McCracken, the notes which he held on the 31st July would be a good set off; and if the defendant was correct in his position that the plaintiffs are trustees for the bank, the set off should be allowed. But in the case of The Niagara Bank v. McCracken, either the doctrine of set off was not understood as it now is, or the court did not consider the interest of the assignees, the suit not being in their names. Upon the whole case, I consider these propositions as established: 1. That the plaintiffs, either as assignees or as receivers of the court of chancery, are trustees for the creditors of the bank, but not for the bank itself) or its stockholders; 2. That the plaintiffs having a lawful title to the note on which this suit is brought, may set out any correct legal title, either as endorsees or as' receivers ; 3. That the set off cannot be admitted—because, 1. The note on which this suit is brought, was assigned by the bank for the benefit of their creditors, before the defendant bought the notes which he seeks to set off; and 2. Even if that assignment was void, the note passed before it was due into the hands of the plaintiffs as receivers of the court of chancery, and trustees for all the creditors ; and the note being negotiable, and having been negotiated before it was due, the maker cannot set up a defence of set off; 3. The maker of a promissory note can never, under any circumstancds, set off" against the endorsee a demand against the payee, provided the note was endorsed bona fide, and for a valuable consideration, before maturity. Although, therefore I consider the notes which the defendant purchased of Sanford, a legal demand against the bank, and one which he had a right to prosecute without any demand, still that demand cannot avail him in this suit, the note haying been transferred before it was due. Had the note become due before the transfer, and had the defendant made any payment [23]*23upon it after due, or tendered such payment, that would have been a defence which would have been available to the defendant against the note, in the hands of any holder to whom it might have passed subsequently. But the mere having a demand against the payee of a note is of no consequence in a defence to the note, provided it was endorsed before maturity.
In my opinion, the plaintiffs made out a case entitling them to recover; and as the verdict was for the defendant, a new trial must be awarded, with,costs to abide the event.
New trial granted.*
See note at end of case.