The Chancellor.
Holmes purchased a tract of land from the defendant Carman, who acted as the agent of the defendants, Floyd and others. The land was to be paid for in three annual instalments, for which Holmes gaye his three several promissory notes, and received from Carman a deed signed by himself as agent for Floyd. The notes so taken were transferred by Carman to the defendant Johnson, to indemnify him against certain liabilities he had incurred as Car-man’s indorser. These facts are set forth in the bill of Holmes, upon which he obtained an injunction, restraining Johnson from the collection of the notes. The bill makes Floyd and others parties, and prays for a perfect title to the land; or, if that cannot be had, for a rescission of the contract. Floyd and others filed their cross bill, making Holmes the complainant, and Johnson and Carman defendants, to the original bill, also defendants to the cross bill. They propose to do whatever is necessary to perfect the title of Holmes to the land, so bought from their agent, and pray that the notes or their proceeds, which were fraudulently transferred by their agent, Carman, to Johnson, may be decreed to them as the real owners. The several answers contain an admission of the foregoing statement of facts.
The deposition of Holmes, to the admissibility of which I perceive no objection, proves clearly that the notes in question were the property of Floyd and others, the complainants in the cross bill.
I can have no doubt of the right of the complainant in the original bill to call for a further conveyance from the complainants in the cross bill, to perfect his title to the land which he bought of them through their agent. The deed is executed in the name of Carman as attorney in fact for his principal. This is not sufficient. To make a conveyance binding which is executed by an attorney or agent, the contract must be made and signed in the name of the principal. A conveyance made, in the name of an agent or attorney, and signed by him as for his principal, is not the contract of the principal, and is binding merely upon the attorney. Spen[416]*416cer v. Field, 10 Wend. Rep. 87; Copeland v. Mercantile Ins. Co. 6 Pick. R. 302.
The principal question to be decided is, who has the best right to the notes which were given by Holmes for the payment of the land? The complainants in the cross bill urge their claim upon the 'ground that they are the true owners; that the notes were given for their property, and that they were fraudulently transferred by their agent to Johnson, who they allege paid no valuable consideration therefor, either in money or property. On the other hand, Johnson insists that he obtained the notes in good faith, they having been transferred to him by Carman by way of indemnity against his liability' as Carman’s indorser; that he took them without any notice of the claim of Floyd and others; and insists that he is entitled to hold them, according to the rules of commercial law.
It is true the policy of the laws of commerce have thrown around commercial paper, in the hands of a bona fide holder, who has taken it in the usual course of trade, a sort of immunity against assault from whatever quarter it may come. The fitness and propriety of this rule in a strictly commercial community, have been very generally admitted. The legislature of this state have, however, thought fit to abolish this feature of the commercial law, and to place the purchaser of negotiable paper upon the same footing with the original payee, clothing him with the same rights, and subjecting him to the same equities, which attached in favor of, or existed against the payee himself. How. & Hutch. Dig. 373, sec. 12. But even where the rigor of the commercial law is strictly enforced, to entitle the holder of commercial paper to the immunity which Johnson here claims, it must appear that he came to the possession of it in the usual course of trade, by having paid for it what the law deems a valuable consideration, without notice of the equity or claim of any third person. The commercial rule in this particular follows the general analogies of the law, and gives protection only to the bona fide ¡purchaser, without notice, who has parted with money or property upon the faith of his purchase. Hence, if the holder of a negotiable note receives it in payment of a precedent debt, or takes it by way of indemnity against some responsibility incurred for his immediate [417]*417indorser, without paying any present consideration therefor, he takes it subject to all the existing equities between the original parties. Rosa v. Brotherson, 10 Wend. Rep. 85; and Bay v. Coddington, 5 John. Ch. R. 54.
In the case of Collins v. Martin, 1 Bos. & Pull. 651, chief justice Eyre says “ if it can be proved that the holder gave no value for the bill, then indeed he is in privity with the first holder, and will be affected by every thing which would affect the first holder.” In the case before me, Johnson received the notes without paying any new consideration for them; he parted with neither money nor property; nor did he incur any new responsibility on account of the transfer to him; he was not yet even a creditor of Carman, not having then paid any portion of the money for which he was liable as Carman’s indorser. Although that liability was sufficient to support the transfer of the notes as between Carman and Johnson, it is not sufficient to overreach the superior equity of the complainants in the cross bill, who are the true owners of the notes. Coddington v. Bay, 20 John. Rep. 637.
It would seem, then, that Johnson is not a holder of the notes in question, for a valuable consideration in the sense which would entitle him to hold them discharged from the claim of those to whom they equitably belong. To protect the holder of a note against the true owner, it is not alone sufficient that he paid a valuable consideration therefor. If at the time of the transfer to him he had notice that it was a fraudulent appropriation of the note by the then holder, and that the right to it was in a third person, he will be decreed to deliver it up or to account for its value or proceeds. Had Johnson such notice at the time he received the notes from Carman? It is admitted that at least two of the notes were upon their face payable to Carman as agent for Floyd and others. This, while it gave notice that Carman was the mere'nominal holder of the notes, at the same time gave information who were the substantial and equitable owners. That feature of the transaction was, of itself, sufficient to have awakened distrust as to Carman’s right to the notes, and to have excited such inquiry as would have led to a knowledge of the true owners. Whatever is sufficient to put a party upon enquiry, amounts in equity to notice. Smith v. Law, 1 Atkins, 489; Daniels v. Davidson, 16 Ves. 250. [418]*418The holder of á note who takes it with a knowledge that it belonged to another, can stand in no better situation than the purchaser of a chattel who knew that the title was.not in his vendor, but in a third person. Looking to the equity of the respective parties claiming the notes, I can have no doubt how I should decide between them. It is apparent from the facts disclosed in the case, that Johnson did not become the indorser of Carman upon the faith of his being the owner of the notes. I infer that they were not even in existence at the time of such indorsement.
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The Chancellor.
Holmes purchased a tract of land from the defendant Carman, who acted as the agent of the defendants, Floyd and others. The land was to be paid for in three annual instalments, for which Holmes gaye his three several promissory notes, and received from Carman a deed signed by himself as agent for Floyd. The notes so taken were transferred by Carman to the defendant Johnson, to indemnify him against certain liabilities he had incurred as Car-man’s indorser. These facts are set forth in the bill of Holmes, upon which he obtained an injunction, restraining Johnson from the collection of the notes. The bill makes Floyd and others parties, and prays for a perfect title to the land; or, if that cannot be had, for a rescission of the contract. Floyd and others filed their cross bill, making Holmes the complainant, and Johnson and Carman defendants, to the original bill, also defendants to the cross bill. They propose to do whatever is necessary to perfect the title of Holmes to the land, so bought from their agent, and pray that the notes or their proceeds, which were fraudulently transferred by their agent, Carman, to Johnson, may be decreed to them as the real owners. The several answers contain an admission of the foregoing statement of facts.
The deposition of Holmes, to the admissibility of which I perceive no objection, proves clearly that the notes in question were the property of Floyd and others, the complainants in the cross bill.
I can have no doubt of the right of the complainant in the original bill to call for a further conveyance from the complainants in the cross bill, to perfect his title to the land which he bought of them through their agent. The deed is executed in the name of Carman as attorney in fact for his principal. This is not sufficient. To make a conveyance binding which is executed by an attorney or agent, the contract must be made and signed in the name of the principal. A conveyance made, in the name of an agent or attorney, and signed by him as for his principal, is not the contract of the principal, and is binding merely upon the attorney. Spen[416]*416cer v. Field, 10 Wend. Rep. 87; Copeland v. Mercantile Ins. Co. 6 Pick. R. 302.
The principal question to be decided is, who has the best right to the notes which were given by Holmes for the payment of the land? The complainants in the cross bill urge their claim upon the 'ground that they are the true owners; that the notes were given for their property, and that they were fraudulently transferred by their agent to Johnson, who they allege paid no valuable consideration therefor, either in money or property. On the other hand, Johnson insists that he obtained the notes in good faith, they having been transferred to him by Carman by way of indemnity against his liability' as Carman’s indorser; that he took them without any notice of the claim of Floyd and others; and insists that he is entitled to hold them, according to the rules of commercial law.
It is true the policy of the laws of commerce have thrown around commercial paper, in the hands of a bona fide holder, who has taken it in the usual course of trade, a sort of immunity against assault from whatever quarter it may come. The fitness and propriety of this rule in a strictly commercial community, have been very generally admitted. The legislature of this state have, however, thought fit to abolish this feature of the commercial law, and to place the purchaser of negotiable paper upon the same footing with the original payee, clothing him with the same rights, and subjecting him to the same equities, which attached in favor of, or existed against the payee himself. How. & Hutch. Dig. 373, sec. 12. But even where the rigor of the commercial law is strictly enforced, to entitle the holder of commercial paper to the immunity which Johnson here claims, it must appear that he came to the possession of it in the usual course of trade, by having paid for it what the law deems a valuable consideration, without notice of the equity or claim of any third person. The commercial rule in this particular follows the general analogies of the law, and gives protection only to the bona fide ¡purchaser, without notice, who has parted with money or property upon the faith of his purchase. Hence, if the holder of a negotiable note receives it in payment of a precedent debt, or takes it by way of indemnity against some responsibility incurred for his immediate [417]*417indorser, without paying any present consideration therefor, he takes it subject to all the existing equities between the original parties. Rosa v. Brotherson, 10 Wend. Rep. 85; and Bay v. Coddington, 5 John. Ch. R. 54.
In the case of Collins v. Martin, 1 Bos. & Pull. 651, chief justice Eyre says “ if it can be proved that the holder gave no value for the bill, then indeed he is in privity with the first holder, and will be affected by every thing which would affect the first holder.” In the case before me, Johnson received the notes without paying any new consideration for them; he parted with neither money nor property; nor did he incur any new responsibility on account of the transfer to him; he was not yet even a creditor of Carman, not having then paid any portion of the money for which he was liable as Carman’s indorser. Although that liability was sufficient to support the transfer of the notes as between Carman and Johnson, it is not sufficient to overreach the superior equity of the complainants in the cross bill, who are the true owners of the notes. Coddington v. Bay, 20 John. Rep. 637.
It would seem, then, that Johnson is not a holder of the notes in question, for a valuable consideration in the sense which would entitle him to hold them discharged from the claim of those to whom they equitably belong. To protect the holder of a note against the true owner, it is not alone sufficient that he paid a valuable consideration therefor. If at the time of the transfer to him he had notice that it was a fraudulent appropriation of the note by the then holder, and that the right to it was in a third person, he will be decreed to deliver it up or to account for its value or proceeds. Had Johnson such notice at the time he received the notes from Carman? It is admitted that at least two of the notes were upon their face payable to Carman as agent for Floyd and others. This, while it gave notice that Carman was the mere'nominal holder of the notes, at the same time gave information who were the substantial and equitable owners. That feature of the transaction was, of itself, sufficient to have awakened distrust as to Carman’s right to the notes, and to have excited such inquiry as would have led to a knowledge of the true owners. Whatever is sufficient to put a party upon enquiry, amounts in equity to notice. Smith v. Law, 1 Atkins, 489; Daniels v. Davidson, 16 Ves. 250. [418]*418The holder of á note who takes it with a knowledge that it belonged to another, can stand in no better situation than the purchaser of a chattel who knew that the title was.not in his vendor, but in a third person. Looking to the equity of the respective parties claiming the notes, I can have no doubt how I should decide between them. It is apparent from the facts disclosed in the case, that Johnson did not become the indorser of Carman upon the faith of his being the owner of the notes. I infer that they were not even in existence at the time of such indorsement. It is clear, then, that no reliance was placed upon the notes as a means of enabling Carman to afford protection to Johnson against his indorsement. To take them from him, therefore, withdraws no means to which he had a right to look as a source of indemnity against his contingent liability. The case is widely different as to the other parties. If they lose the notes, they are deprived of what they expressly contracted for, and upon the faith of which they agreed to part with the title to their land. The transfer of the notes by Carman was a most fraudulent breach of his trust; and there is strong reason to believe that Johnson must have known from the face of the notes that Carman held them in trust. If this were evident, there could be no doubt about Johnson’s liability to account for the notes or their proceeds. It is a well settled principle in equity, that a purchaser of property from one holding it in trust, knowing that fact, becomes ipso facto a trustee, liable to the cestui que trust, to the same extent as the original trustee. From every view which I have been able to take of the case, I am of opinion that Johnson did not acquire any title to the notes in question as against the complainants in the cross bill. I shall accordingly declare that Johnson shall deliver over the notes, if he has any, and if collected that he account for the proceeds; that Floyd and others be permitted to prosecute for their use the judgment recovered against Holmes, in the name of Carman, and' that a commissioner be appointed to make title to Holmes of the lahd bought from Carman as agent. Let the case be referred to a commissioner to report, &c.