Hill v. Shields

• Decision Date: 30 June 1879
• Citation: 31 Am.Rep. 499,81 N.C. 250
• Parties: T. B. HILL v. W. H. SHIELDS.
• Court: North Carolina Supreme Court

31 Am.Rep. 499

81 N.C. 250

T. B. HILL

v.W. H. SHIELDS.

Supreme Court of North Carolina.

June Term, 1879.

OPINION TEXT STARTS HERE

CIVIL ACTION tried at Spring Term, 1879, of HALIFAX Superior Court, before Eure, J.

The facts appear in the opinion. There was a verdict for plaintiff, judgment, appeal by defendant.

Mr. R. B. Peebles, for plaintiff :

Upon the effect of the endorsement, cited 1 Danl. Neg. Insts., § 669; Ingalls v. Lee, 9 Barb., 947. Parol testimony varying legal effect of blank endorsement not admissible. 1 Danl., § 717, et seq;18 Gratt., 205; 6 Gratt., 642; Brown v. Wiley, 20 How. (U. S.), 442; 72 N. C., 150; Phil., 590; 5 Sergt. & Rawle, 363, and other cases to same effect.

Messrs. W. H. Day and Batchelor & Son, for defendant :

Remarked upon the cases referred to by the plaintiff's counsel, and cited among others Wright v. Latham 3 Murp., 298, in which it was held that if at the time of endorsement a special agreement was made that endorsee should sue maker and if he fail to make the money out of him, then endorser to be liable, parol evidence may be received to prove special agreement. Also Davis v. Morgan, 64 N. C., 570; Runyon v. Clark, 4 Jones, 52. The case of Parker v. Stallings, Phil., 590, in its leading feature is overruled by Baucom v. Smith, 66 N. C., 537, and is not sustained by the authorities cited. And also 13 East, 498; 12 E. C. L. Rep., 420, and the comments of PEARSON, C. J., in Harris v. Burwell, 65 N. C., 584, and C. C. P., § 55.

DILLARD, J.

From the case of appeal sent up to this court the case is that defendant was payee in a promissory note executed to him by Edward Anderson, payable at twelve months for a large sum of money, and secured by a mortgage on property, and on the 23rd day of January, 1875, after its dishonor, he transferred the same by a blank endorsement thereon to the Mercantile bank of Norfolk, which carried with it the mortgage as an incident, and the bank afterwards transferred the same to the present plaintiff by delivery for full value. After receiving several payments on the note and realizing all the proceeds of the property conveyed in the mortgage, there still remained a balance unpaid on the note and for that this action was brought.

On the trial in the court below the plaintiff tendered the issue, “was the plaintiff a bona fide purchaser of said note for full value and without notice?” Defendant admitted the affirmative of that issue and tendered on his own behalf the following issues:

1. Did defendant and the bank, when the former endorsed the note in blank agree that defendant was not to be held responsible on his endorsement?

2. Did any consideration pass from the bank to defendant for his endorsement?

The plaintiff objected to said issues upon the ground that an affirmative response thereto could in no way affect the liability of the defendant to the plaintiff, who was admitted to be a remote endorsee for full value and without notice, and His Honor, being of opinion with the plaintiff on the objection, refused to submit the said issues, and thereupon pronounced judgment, upon said admission of defendant and other facts not denied in the pleadings, for the plaintiff for the unpaid balance of his debt from which judgment the appeal is taken.

The question presented by the appeal for our determination is, does the plaintiff, a remote endorsee of defendant's note put into circulation past due, hold the same subject to the special agreement of defendant with the Mercantile bank, his immediate endorsee, not to hold him responsible on his endorsement, the plaintiff being a purchaser for full value, and without notice of the alleged special agreement.

We concur in the opinion of His Honor that the plaintiff held the legal title to the note, unaffected by the special agreement between the defendant and the bank, supposing such agreement to have been made.

A promissory note by statute of 3 and 4 Anne in England and by statute in this state is made negotiable as inland bills of exchange, and the legal title may be passed by endorsement thereon in full or in blank, absolute or restricted, in honor or dishonor, with incidents however to the holder and to the parties to the note raised by the fact of its being made before or after its maturity. If acquired before due, by the law merchant, the holder takes the title clear of all objections; but if after, he is put on inquiry and is held to take subject to all equities and legal defences of the maker at the date of the transfer or before notice thereof against the payee under the English law, but against the payee and all intermediate holders under our code as decided in the case of Harris v. Burwell, 65 N. C., 584.

This liability of the holder of overdue paper to equities and legal exceptions extends only to those that the maker has, as explained above; but does not apply as between the holder and others taking before him by endorsement, except between the holder and his immediate...