Bresee v. Crumpton

• Decision Date: 23 November 1897
• Citation: 28 S.E. 351,121 N.C. 122
• Parties: BRESEE v. CRUMPTON.
• Court: North Carolina Supreme Court

28 S.E. 351

121 N.C. 122

BRESEE v. CRUMPTON.

Supreme Court of North Carolina

November 23, 1897

Appeal from superior court, Person county; Allen, Judge.

Suit by O. F. Bresee against R. W. Crumpton to recover on a note. From a judgment for defendant, plaintiff appeals. Affirmed.

The bare fact that the clerk of a general agent of an insurance company had indorsed the name of a local agent to various papers with the local agent's approval was no evidence of authority to indorse in his name a premium note made payable to the local agent, and sent by him to the general agent.

W. W Kitchin and A. L. Brooks, for appellant.

Boone & Bryant, for appellee.

CLARK J.

The note was indorsed to the plaintiff by the plaintiff's clerk signing the payee's name, and there was no evidence that such clerk had authority from the payee to make this indorsement. The bare fact that he had indorsed Parker's name to other papers with his approval, taken alone, was not evidence to submit to the jury of authority to indorse this paper, for there was no general authority shown, nor course of dealing from which it could be inferred. The plaintiff is therefore, simply the holder of an unindorsed negotiable paper. As such, he has, prima facie, the equitable title, and can maintain an action thereon under Code, § 177. Carpenter v. Tucker, 98 N.C. 316, 3 S.E. 831; Kiff v. Weaver, 94 N.C. 274; Jackson v Love, 82 N.C. 405. But such transfer without indorsement (except in cases where the note is made payable to bearer) does not pass the legal title (Jenkins v Wilkinson, 113 N.C. 532, 18 S.E. 696), and the transferee, by not requiring the payee to indorse, is on notice, and "is not a bona fide holder for value, who takes the paper free from equities" (4 Am. & Eng. Enc. Law [2d Ed.] 250; Allum v. Perry, 68 Me. 232). "He therefore takes the paper subject to all equities that might be set up against the transferror." Tied. Com. Paper, § 247, and numerous cases cited in note 4. This distinction is fully discussed and pointed out in Miller v. Tharel, 75 N.C. 148, in which it is said: "The note sued on was not indorsed to the plaintiff, but was assigned to him by an oral contract. It is true that under this assignment, by virtue of our recent legislation (now Code, § 177), the assignee may sue in our courts in his own name, as an equitable assignee or cestui que trust could formerly have done in equity; but he does not acquire by such an assignment the peculiar rights which by the law merchant, founded on the policy of promoting the circulation of promissory notes, attaches to an indorsee of such paper. All the authorities cited to sustain the proposition that a holder of a promissory note taken under the circumstances stated (i. e. before maturity, for value, and without notice) can recover against the maker notwithstanding any equitable or other defense he may have, apply only to a holder by an assignment recognized by the law merchant; i. e. an indorsee. The distinction between a title by assignment and by indorsement is stated in 2 Pars. Bills & N. 52." See, also, Daniel, Neg. Inst. § 729. The opinion further cites in its support Thigpen v. Horne, 36 N.C. 20; Lindsay v. Wilson, 22 N.C. 85; Whistler v. Foster, 108 E. C. L. 248; Haskell v. Mitchell, 53 Me. 468. Miller v. Tharel is quoted with approval of this proposition. Bank v. Michael, 96 N.C. 53, 1 S.E. 855. The plaintiff, therefore, being a mere assignee, and not an indorsee, and not entitled to the protection of the law merchant as a bona fide holder of negotiable paper before maturity, stands in the shoes of Parker, the payee, and subject to whatever equities existed between him and the maker. The conditions upon which the note was given could be shown as between them. Davidson v. Powell, 114 N.C. 575, 19 S.E. 601; Bank v. Pegram, 118 N.C. 671, 24 S.E. 487. Parker was the local agent of the insurance company. As such he solicited the defendant, and procured him to insure in said company. By his insistence the defendant was persuaded to accept provisionally a policy of $2,000, and gave his note for the premium thereon upon an agreement that if the defendant, after seeing his wife, should prefer only a $1,000 policy, the first policy and premium note were to be canceled, and the new policy (and premium...