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representative; if he becomes bankrupt, and he holds the bill or note in his own right, on his assignees.
And if the right to a bill or note be in several partners, and some of them become bankrupt, and afterwards indorse it, such indorsement, though made to a creditor of the partnership, will confer (35) no title on the indorsee.
And if the creditor receive the money due upon the bill or note, the solvent partners, together with the assignees of the bankrupts, (35) may recover back the money so received.
(35) Thomason and others v. Frere and others, 10 East's Rep. 418. Thomason, Underhill, and Guest, were partners in trade at Birmingham; and being debtors to the defendants to the amount of 1800l., and creditors upon Gamble and Co. for 1450l., Underhill and Guest, on the 11th October 1807 without the consent or knowledge of Thomason, (who was abroad,) indorsed to the defendants a bill drawn by the firm of Thomason, Underhill, and Guest, upon, and accepted by, the agents of Gamble and Co. for this 1450l. Underhill and Guest had, on the 7th October 1807 committed acts of bankruptcy; upon which separate commissions issued on the 19th. The bill for 14501. became due on the 6th December, and was then paid. And to recover this money the present action was brought by Thomason, and the assignees of Underhill and Guest. The house of Thomason, Underhill, and Guest was still indebted to the defendants beyond the amount of the sum now sought to be recovered. The plaintiffs were nonsuited. But on a rule nisi for a new trial, the court (Lord Ellenborough C. J. absente) held that the indorsement, having been made after an act of bankruptcy, though before the issuing of the commission and for the purpose of paying a partnership debt, was invalid; and they inclined to think that, this action being
But if a man holds a bill or note, not in his own right, but as a trustee, his bankruptcy will not pass the right to transfer to his assignees. (36)
And if partners hold a bill or note, as trustees, the bankruptcy of one of them will not preclude him and the others from transferring it. (36)
If the person who has a right to indorse a bill or note, deliver it over to another for a valuable consideration, and forget to indorse it, he (37) may
brought to recover the money received on the bill, which had been thus wrongfully indorsed, the defendants had no right to set off their demand upon the firm, against this claim by Thomason and the assignees. Rule absolute.
(36) Ramsbottom and others v. Cator, 1 Stark. 228. J. and M. Hervy were partners as bankers; defendant delivered them a bill that they might get it discounted; they passed it to plaintiffs, their bankers; but before they did so, J. H. committed an act of bankruptcy, upon which a commission afterwards issued it was urged for defendant that the bankruptcy of J. H. destroyed his and his partner's right to pass away the bill; but Lord Ellenborough held, that as the Herveys held it upon a special trust, to get it discounted, and not in their own right, no interest in it passed to the assignees of J. H., and though he doubted whether plaintiffs had an interest beyond what the Herveys had, he allowed them to take a verdict, and gave the defendant leave to take the opinion of the court upon the point. But the defendant did not move it.
(37) Smith and another v. Pickering, Peake, N. P. C. 50. Richardson and Hill drew a bill on the defendant, payable to their own order, which the defendant accepted. The drawers delivered this bill to the plaintiffs for a valuable consideration, but forgot to indorse it. They afterwards became bankrupts, and then indorsed it. The plaintiffs, as indorsees, now sued the defendant as acceptor. Lord Kenyon was clearly of opinion that the indorsement was good, and the plaintiffs had a verdict.
indorse it after he has become a bankrupt, and the right in it will pass to the person to whom he so delivered it.
So the right to indorse will not devolve upon a bankrupt's assignees, if (38) neither he or they would have any right to demand payment.
Therefore if a bankrupt draw a bill payable to his own order, having at the time (38) no effects in the hands of the drawee; or if, having effects, he draw it for a sum (39) exceeding their amount,
(38) Arden v. Watkins, 3 East's Rep. 317. On the 5th of October, 1801, Lewis Jones committed an act of bankruptcy, on which a commission issued on the 31st December, 1801. On the 4th of December, 1801, he drew a bill on Watkins for 1007. payable to his own order, and indorsed it to the plaintiff, who paid him the full value. Watkins owed Jones nothing, but accepted the bill to enable him to raise money upon it, and Jones deposited a lease with him as an indemnity: the assignees insisted upon a restoration of the lease, and Watkins refused to pay the bill.. Action on the bill and reference. The arbitrator awarded against Watkins, but stated the facts specially, to enable him to take the opinion of the court. After a rule nisi to set aside the award, cause shewn, and time taken to consider, the court was clear that the defendant was liable: that as Jones had no effects in Watkins's hand, no right to indorse devolved on his assignees, and that therefore his indorsement was effectual, and transferred the property to the plaintiff. Rule discharged.
(39) Willis v. Freeman and another, 12 East's Rep. 656. İn an action by the indorsee of a bill against the acceptors, a verdict was found for the plaintiff, subject to the opinion of the court upon a case. The case stated, that Anderson, the drawer, being indebted to the plaintiff in more than 2000l. and being insolvent, proposed to pay the plaintiff a composition of 13s. 6d. in the pound, together with the costs of an action
and the bill be accepted for his accommodation ; his indorsement will, in the former case, confer a good title as to the whole sum mentioned in the bill; and in the latter, as to such sum as is not covered by the effects.
So if a trader get a bill by fraud, and become bankrupt, the bill will belong, not to his assignees, (40) but to the person from whom he obtained it;
which had been brought by the plaintiff against him, by a bill upon the defendants. This proposal being acceded to, Anderson applied to the defendants to accept a bill for 1400l. for his accommodation. The defendants accepted the bill, drawn on the 5th of July, and payable on the 10th of November 1809, having in their hands effects of Anderson's to the amount of 8881. 16s. 8d. Anderson had committed a secret act of bankruptcy on the 7th of March 1809, upon which a commission issued on the 25th of July. The Court of King's Bench held, that to the extent of 8887. 16s. 8d. the defendants had a right to resist payment on the ground of their being answerable for that amount to the assignees, to whom these funds devolved upon the act of bankruptcy; and that therefore the indorsement by Anderson to that extent was inoperative: but as to the surplus (5117. 3s. 8d.) for which the acceptance was accommodation, the case of Arden v. Watkins was in point to shew that the indorsement was valid. And they held that the law in this respect had not been altered by the 49th Geo. 3. c.121. §8. They therefore ordered the verdict to be entered for this reduced sum of 511l. 3s. 4d.
(40) Gladstone v. Hadwen, 1 Maule, 517. Sill and Co. got bills from Hadwen under colour of giving him a security upon some coffee to which however they had no title: on being pressed by Hadwen, they promised to return him the bills, which were on their way from London to Liverpool; but before they arrived, Sill and Co. committed acts of bankruptcy upon which a commission afterwards issued: when the bills arrived,
at least if he promised, before he became bankrupt, to return it.
So if a banker who has a lien on a bill or note for his general balance, delivers it to his customer when it is due, that he may obtain payment, and the customer become bankrupt, the bill or note will nevertheless belong not to the assignees but to the banker. (41)
If a bill or note is made payable to a person who is merely an agent in the transaction, if he indorse generally, without using words to prevent his liability, he will be bound personally. (42)
If an executor or administrator indorse, he binds himself personally, not the assets in his hands. (43)
they were delivered to Hadwen, upon which Sill and Co's. assignees brought trover; but on case and time to consider, the court held that they could not sue for what a court of equity would not have allowed them to keep; and that as Hadwen would never have parted with the bills but for a false pretence and fraud, a court of equity would have compelled the assignees, who claimed under Sill and Co., had they got the bills, to have delivered them up to Hadwen.
(41) Bruce v. Hurley, 1 Stark. 23. Young and Co. bankers at Taunton, sent to plaintiffs, their town bankers, a note of defendant's at two months after date. The day before it became due plaintiffs sent it to Young and Co. at Taunton, that they might obtain payment from defendant; defendant did not pay it, and whilst the bill was in their hands, Young and Co. became bankrupts. Young and Co. had overdrawn plaintiffs, and plaintiffs sued defendant on this note; and as plaintiffs only sent the note to Young and Co. that they might obtain payment for plaintiffs and act as their agents in that respect, Lord Ellenborough held plaintiffs entitled to recover, and they had a verdict accordingly.
(42) See Goupy v. Harden, ante, p. 55. (43) See King v. Thom. ante, p. 56.