Opinion
No. 19038
Decided March 15, 1943.
Parties — Action on negotiable instrument or bond — Section 8156, General Code — Holder, proper party plaintiff, when.
One who is a holder of a bearer note or bond, or negotiable instrument, is by virtue of the provisions of Section 8156, General Code of Ohio, a proper party plaintiff in bringing an action thereon, and it is not a defense to such action that such plaintiff has no beneficial interest therein, or is not the real party in interest.
APPEAL: Court of Appeals for Cuyahoga county.
Messrs. Baker, Hostetler Patterson and Mr. Donald D. Wick, for appellee.
Messrs. Jones, Day, Cockley Reavis, for appellant.
This action is in this court on appeal on questions of law from a judgment of the Court of Common Pleas.
The plaintiff by his petition alleges that he is the holder of certain bearer bonds, either issued by or for which the defendant is liable, and which the defendant upon demand refused to pay. The petition alleges that there is now due the plaintiff as the holder of such bearer bonds the several amounts alleged in the ten causes of action set forth in the petition.
The defendant, by its amended answer, admits that the bonds are past due and alleges that the plaintiff was not the owner of the bonds upon which the action is brought, and that he received them after maturity for the purpose of bringing suit thereon and that the plaintiff is not the real party in interest. The plaintiff then filed a motion to strike the amended answer on the ground that it was frivolous and a sham and asked for summary judgment. The court granted the motion and upon trial to the court, a jury having been waived, the court returned a finding for the plaintiff in the full amount prayed for.
We have presented to us by this appeal the question as to whether or not where an action is brought by the holder of a bearer note or bond or negotiable instrument it is a defense thereto that such holder is not the real party in interest. It will be noted that the plaintiff's petition does not allege either of these facts. All that is alleged by the plaintiff is that he is the holder of the bonds.
Section 11241, General Code, provides:
"An action must be prosecuted in the name of the real party in interest, except as provided in the next three succeeding sections. When a party asks that he may recover by virtue of an assignment, the right of set-off, counterclaim, and defense, as allowed by law, shall not be impaired."
The three sections following have no application to the question here presented, and therefore unless the Negotiable Instruments Code modifies the rule here provided for, the contention of the defendant must be sustained.
Section 8156, General Code, provides:
"The holder of a negotiable instrument may sue thereon in his own name; and payment to him in due course discharges the instrument."
The rights of the holder to bring an action in his own name is here provided for in unmistakably clear language and so far as the law of negotiable instruments is concerned, modifies the provisions of Section 11241, supra.
In Brannon's Negotiable Instruments Law (6 Ed.), 533, Section 51, the following rule is set forth:
"The holder of the legal title to a note may sue thereon in his own name, although others may have the beneficial interest therein."
And on page 535 of the same authority, the rule that is applicable to the exact question before us is stated as follows:
"Although the Code requires an action to be brought in the name of the real party in interest, yet under Sec. 51, N.I.L. [Section 8156, General Code], a holder even though he be a holder only for collection, may sue in his own name."
The rule as thus stated has been adopted in all jurisdictions where the Uniform Negotiable Instruments Law has been enacted into law.
"A person who is a holder within the meaning of pertinent provisions of the Negotiable Instruments Act is entitled to sue notwithstanding he is without beneficial interest and a general code provision requires every action to be prosecuted in the name of the real party in interest * * *.
"The holder of negotiable paper is presumptively the owner * * * and as such is entitled to bring suit as the real party in interest." 10 Corpus Juris Secundum, 1166, Section 536.
Before the passage of the Negotiable Instruments Law, the courts of Ohio uniformly held that even though one was the holder of a bearer note or bond or a negotiable instrument, it was a good defense to an action brought thereon by such holder that the plaintiff was not the real party in interest. See Osborn v. McClelland, 43 Ohio St. 284; Independent Coal Co. v. First National Bank, 6 C.C. (N.S.), 225; Nichols v. Gross, 26 Ohio St. 425; Brown v. Ginn, Trustee, 66 Ohio St. 316. But by the passage of the Negotiable Instruments Law in Ohio in 1902, we hold that the rule was thereby changed because of the provisions of Section 8156, General Code, supra, so that the holder of a bearer note or bond, or a negotiable instrument, may now bring an action thereon in his own name and it is not a defense to such action that he is not in fact the real party in interest. This conclusion is well stated and supported in 30 Ohio Jurisprudence, 728, Section 18:
"Formerly, Ohio courts adopted the view that a transferee of a promissory note for collection only, whether by delivery or indorsement, could not maintain suit on the note, not being the real party in interest. There seems no doubt, however, but that the rule in this regard has been changed by the Negotiable Instruments Act, and that such holder may now bring suit in his own name."
We therefore affirm the judgment of the Court of Common Pleas.
Judgment affirmed.
MORGAN, P.J., and LIEGHLEY, J., concur.