Summary
noting that the defendant was entitled to assert legal and equitable defenses in response to an action on the note at trial
Summary of this case from U.S. Bank Nat'l Ass'n v. PinkneyOpinion
(Filed 27 April, 1910.)
Notes, Non-negotiable — Indorser for Value — Defenses, Legal and Equitable — Party in Interest.
The indorsee for value of a non-negotiable note may maintain his action thereon, as the real party in interest, subject to any defenses existing between the original parties, whether legal or equitable (Revisal, sec. 354), and when such defense is set up in the answer, which, if true, is a valid one, upon conflicting evidence, an issue of fact is raised for the determination of the jury, notwithstanding the fact that the instrument sued on is not negotiable.
(409) APPEAL from Jones, J., at July Term, 1909, of ASHE.
Action heard on appeal from a justice of the peace.
The facts are stated in the opinion of the Court.
T. C. Bowie and R. A. Doughton for plaintiff.
No counsel for defendant.
This action was brought to recover the amount of a bond or a note under seal, executed by the defendant to B. Morris and by the latter assigned for value to the plaintiff, E. E. Thompson. The bond is in the following words and figures:
$120.00. November 15, 1904.
Four months after date I promise to pay B. Morris one hundred and twenty dollars ($120) for value received in land this day bought from him, adjoining lands of H. Wingler, John Royal heirs and others. This note is to be discharged by D. A. Osborne delivering to B. Morris, on cars in town of Durham, N.C. ten thousand (10,000) feet of black pine lumber, 12 feet long, log run (mill culls out), to be sawn widths and thickness as per order to be furnished. D. A. Osborne to pay freight on lumber.
D. A. OSBORNE. (SEAL.)
The defendant alleged, in his answer, that the bond was given for the purchase money of a tract of land, and that B. Morris, who sold the land to him and to whom he gave the note, had promised to make him a good and perfect title to the land which he had purchased, and that at the time the note was given the said B. Morris did not have a good and perfect title to the land, although he had represented to the plaintiff that he had a good and perfect title thereto; and he further averred, in his answer, that the plaintiff purchased the note and the same was indorsed after its maturity, and, therefore, he took the same with full notice and knowledge of the agreement between B. Morris and the defendant, and that as Morris did not have the title to the land, the plaintiff was not entitled to recover the amount of the note. After the pleadings were read, and before any testimony was introduced by either party, the court intimated that, as the note was not negotiable, the plaintiff was not entitled to recover in the action, whereupon he submitted to a nonsuit and appealed to this Court.
The right of the plaintiff to recover upon the note did not depend upon its negotiability, for if it was not negotiable, the plaintiff would be entitled to recover the amount of the note, unless the defendant had a valid defense, if the action had been between B. Morris and (410) himself. By the indorsement of the note to the plaintiff, for value, he acquired title to it and, consequently, the right to recover the amount which the defendant had promised to pay to Morris, unless the defendant could show that he had a good legal or equitable defense which would defeat the plaintiff's right of recovery. The plaintiff acquired, by the assignment of the note, the right to maintain this action, he being the real party in interest, even if, by virtue of the assignment, he had only an equitable title to it, which is subject to all equities and defenses which the defendant may have against the original payee. Revisal, sec. 354.
This Court, when construing Code, sec. 177, held, in Kiff v. Weaver, 94 N.C. 274, that the assignee of a bond or note not indorsed, is the proper person to maintain an action upon it in his own name, because he is the real party in interest, and that the possession of an unindorsed negotiable note, payable to bearer, raises the presumption that the person presenting it on the trial is the real and rightful owner, citing Andrews v. McDaniel, 68 N.C. 385; Jackson v. Love, 82 N.C. 404; Bank v. Bynum, 84 N.C. 24; Pate v. Brown, 85 N.C. 166. It was further held to be immaterial whether the action brought by the plaintiff is legal or equitable, for under the present system of procedure the distinction between actions at law and suits in equity and the forms of all such actions are abolished.
In this case the court, when it ruled against the plaintiff, assumed that the averments of the answer, as to the agreement between the defendant and Morris, were true, whereas that was the question to be decided by the jury, even if the note was not negotiable. The question involved in this case is fully discussed in Tyson v. Joyner, 139 N.C. 69.
There was error in the ruling of the court. The judgment of nonsuit will be set aside.
New trial.
Cited: Bank v. R. R., 153 N.C. 349.
(411)