Furbee v. Furbee, C. C. No. 562.

• Decision Date: 29 September 1936
• Docket Number: C. C. No. 562.
• Citation: 188 S.E. 123
• Parties: FURBEE. v. FURBEE.
• Court: West Virginia Supreme Court

188 S.E. 123

FURBEE.

v.FURBEE.

C. C. No. 562.

Supreme Court of Appeals of West Virginia.

Sept. 29, 1936.

Syllabus by the Court.

1. A note payable to order may be negotiated by indorsement and delivery under N.I.L., § 30 (Code 1931, 46-3-1), or by transfer for value without indorsement under N. I.L., § 49 (Code 1931, 46-3-19). If negotiated under section 49, the transferee does not become a holder in due course, but a holder subject to existing equities against the transferor. Point 1 of syllabus in Com munity Co. v. Eifort, 111 W.Va. 308, 161 S.E. 564, clarified.

2. The transferee for value of an unindorsed note payable to order may maintain legal action thereon in his own name, if the transferor had the legal title.

Case Certified from Circuit Court, Marshall County.

Action by Florence O. Furbee against David Furbee. To review a ruling on demurrer, a certificate was granted.

Reversed.

Walter A. McGlumphy, of Moundsville, for plaintiff.

Lloyd Arnold, of Moundsville, for defendant.

HATCHER, President.

This certificate presents the question, whether legal action is maintainable against the maker of a note by one to whom allegedly the payee had transferred the note for value without indorsing it. On demurrer, the circuit court held against the transferee.

The demurrant contends that, since the note herein was not indorsed, the transfer did not pass the right of legal action, citing decisions under the law merchant and also citing the Negotiable Instruments Law, § 30 (W.Va.Code, 46-3-1) which follows: "An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer it is negotiated by delivery; if payable to order it is negotiated by the indorsement of the holder, completed by delivery." It is uniformly held that the first sentence of this section defines negotiation; and that the second sentence is specific rather than exclusive. "The last sentence of section 30 was manifestly * * * not intended to define the exclusive methods by which negotiation can be accomplished." Merchants' Nat. Bank v. Smith, 59 Mont. 280, 296, 297, 196 P. 523, 527, 15 A.L. R. 430. Accord: Liberty Trust Co. v. Tilton, 217 Mass. 462, 465, 105 N.E. 605, L.R.A.1915B, 144; Howard Nat. Bank v. Wilson, 96 Vt. 438, 120 A. 889, 892; Johnson v. Knipe, 260 Pa. 504, 507, 105 A. 705, L.R.A.1918E, 1042; Carter v. Butler, 246 Mo. 306, 174 S.W. 399, 402, 403, Ann. Cas.1917A, 483. This holding is requisitein order to give effect to other sections of Negotiable Instruments Law, especially section 49 (Code, 46-3-19), which in part follows: "Where the holder of an instrument payable to his order transfers it for value without indorsing it, the transfer vests in the transferee such title as the transferrer had therein." This section changes the law merchant by vesting in the transferee the entire title of the transferor whether legal or equitable, or both. The transferee thus becomes a holder of the note (under the first sentence of section 30), though not a holder in due course; since his title is precisely that of, and consequently subject to all the equities against, the transferor. "This section (49)" says Professor Brannan, "vests the title in the transferee without indorsement, and is not affected by sections 30 * * * and if the transferor had the legal title, this must pass though subject to equities." Brannan's N.I.L.(5th Ed.) § 49, p. 463. Accord: Lile's Bigelow on Bills, etc. (3d Ed.) § 463. Here the allegations show that the transferor had the legal title to the note in question. Hence the transferee acquired the legal title, and, as holder thereof, has the right to maintain legal...