Haeussler v. Greene

• Citation: 8 Mo.App. 451
• Parties: HERMAN A. HAEUSSLER, Appellant, v. THEODORE P. GREENE, Respondent.
• Decision Date: 09 March 1880
• Court: Court of Appeal of Missouri (US)

8 Mo.App. 451

HERMAN A. HAEUSSLER, Appellant,

v.THEODORE P. GREENE, Respondent.

St. Louis Court of Appeals, Missouri.

Mar. 9, 1880.

1. The indorsee of an overdue negotiable bill or note takes it, as against the maker, subject only to the equities arising out of the bill or note transaction itself; not subject to a set-off arising out of independent transactions between the indorsee and maker, though it be indorsed to defeat the right of set-off, and the indorsee gave no value.

2. Where it is claimed that there was an agreement to consider a claim of the maker against the indorsee as an equity against the paper in the hands of the indorsee, the burden is upon the maker to show this.

3. Where the principal, holding negotiable notes of one of his sureties, defaults and transfers the notes to another of his sureties in trust for all the sureties, the surety who is thus made trustee for the others may sue the maker of the notes upon them, and the maker cannot set off, as against the notes, an indebtedness of his principal to him on account of payments made by him, as surety, to his principal's creditors.

APPEAL from the St. Louis Circuit Court.

Reversed and remanded.

BROADHEAD, SLAYBACK & HAEUSSLER, for the appellant: The indorsee of an overdue note does not take it subject to an offset arising from independent transactions between the parties.-- Arnot v. Woodburn, 35 Mo. 99; Unseld v. Stephenson, 33 Mo. 161; Smith v. Busby, 15 Mo. 399. That the payee is indebted to the maker, and insolvent, makes no difference in a suit on the notes by the transferee.-- Hopkins v. Fechter, 47 Mo. 331.

S. S. MERRILL, for the respondent: If the appellant sues as Gambs' representative, certainly he cannot ask a judgment against respondent, to whom Gambs is a heavy debtor. If he sues as trustee for the four sureties, how can he, as the agent of the respondent, sue the respondent? How can respondent be both plaintiff and defendant in a lawsuit? The notes were passed to appellant after maturity and without consideration. He takes them subject to all the equities against them in Gambs' hands. Gambs could assign no greater interest than he himself possessed. Hence appellant is subrogated to those rights only which Gambs could assert. If Gambs assigned these notes to appellant in trust, for the benefit of his (Gambs') sureties, nevertheless he cannot thereby enlarge his rights against respondent. Appellant, being subrogated only to such rights as Gambs could assert, took these notes subject to the following defences: 1. To payments made in extinguishment thereof, prior to their transfer. 2. As Gambs was insolvent, to the equity of respondent to assert against appellant the $10,000 paid by him as surety for Gambs prior to the transfer. Wright v. Saulsbury, 46 Mo. 30 [point not in syllabus]; Field v. Oliver, 43 Mo. 200; Morrow's Assignee v. Bright, 20 Mo. 298; Reppy v. Reppy, 46 Mo. 571; Baker v. Brown, 10 Mo. 396; Martindale v. Hudson, 25 Mo. 422; Parsons v. Nelson, 19 Mo. 190.

HAYDEN, J., delivered the opinion of the court.

This is an action on nine notes, some of which were due-bills and others in form negotiable promissory notes, made by the defendant, and by the payee, one Henry Gambs, assigned or indorsed to the plaintiff. For the purposes of this case it may be admitted that the plaintiff received them all after maturity. It appeared that Gambs had been public administrator of St. Louis County, and was a defaulter and largely indebted upon his bond, on which the defendant and three other persons were sureties. The defendant, before the time when Gambs transferred these notes and due-bills to the plaintiff, had paid about $10,000 on account of this indebtedness of Gambs. Gambs made the transfer to the plaintiff in trust for the benefit of all the sureties, including the defendant, the plaintiff giving no consideration for the indorsement, but receiving the paper to pay the debts of Gambs for which these sureties were liable. The sureties, by an arrangement among themselves, contributed an equal amount to pay judgments against them as sureties. After the indorsement of these notes and due-bills to the plaintiff by Gambs, the defendant paid a further sum of $13,000 as surety. These sums were in addition to $7,500 which the defendant had, before Gambs absconded, paid upon the notes and due-bills themselves, with which $7,500 the defendant was of course to be credited. The aggregate of the notes and due-bills was about $15,750. There was judgment for the defendant.

The doctrine of the commercial law of England, that the indorsee of an overdue negotiable bill or note takes it as against the maker, subject to the equities arising out of the bill or note transaction itself, but not subject to set-offs arising out of independent transactions between the indorser and the maker, has been adopted here, and such is now the law in Missouri. Gullett v. Hoy, 15 Mo. 399; Unseld v. Stephenson, 33 Mo. 163; Arnot v. Woodburn, 35 Mo. 99. The leading case is Burrough v. Moss, 10 Barn. & Cress. 558, and this has...