Jones v. Central Hanover Bank & Trust Co.

• Decision Date: 04 May 1933
• Citation: 110 Fla. 69,147 So. 895
• Parties: JONES v. CENTRAL HANOVER BANK & TRUST CO.
• Court: Florida Supreme Court

147 So. 895

110 Fla. 69

JONES v. CENTRAL HANOVER BANK & TRUST CO.

Florida Supreme Court

May 4, 1933

Rehearing Denied May 27, 1933.

En Banc.

Error to Circuit Court, Polk County; Harry G. Taylor, Judge.

Action by the Central Hanover Bank & Trust Company against W. G Jones. Judgment for plaintiff, and defendant brings error.

Affirmed.

COUNSEL Walker & Willson, of Bartow, for plaintiff in error.

McKillop & Hamilton, of Winter Haven, for defendant in error.

OPINION

DAVIS Chief Justice.

This action was brought in the circuit court of Polk county by the Central Hanover Bank & Trust Company, defendant in error against W. G. Jones, plaintiff in error, upon an ordinary promissory note given by Jones to the State Bank of Bartow and by it indorsed and delivered to the Central Hanover Bank & Trust Company. There was judgment for the plaintiff on a demurrer to defendant's amended pleas and defendant took this writ of error.

In substance the pleas held bad on demurrer tended to show that the promissory note sued upon had been indorsed and delivered by the State Bank of Bartow to Central Hanover Bank & Trust Company, the plaintiff in this suit, as collateral security for money borrowed by the State Bank of Bartow from said Central Hanover Bank & Trust Company; that the State Bank of Bartow thereafter became insolvent and was placed by the state banking authorities in the hands of a liquidator; that subsequent to the insolvency of the State Bank of Bartow and the appointment of a liquidator for it that the said Central Hanover Bank & Trust Company had filed its claim against the liquidator on the indebtedness due to it by said State Bank of Bartow, and had received a dividend thereon; that the dividend so paid was a general dividend and was claimed and allowed by the liquidator of said State Bank of Bartow to said Central Hanover Bank & Thrst Company on the basis of the full amount of the latter bank's secured debt, without surrender of its collateral or the giving of any credit therefor with respect to any proceeds collected by it on its collateral held as security for its said claim that defendant Jones, at the time the State Bank of Bartow closed, had on deposit in said State Bank of Bartow a sum of money to his credit which was far in excess of any liability on note to the defunct bank; [JONES V CENTRAL HANOVER BANK & TRUST CO 147 So. 895(1933)] that because Central Hanover Bank & Trust Company had not surrended its collateral to the liquidator when making claim against the liquidator for a dividend on the debt due to it by State Bank of Bartow, that said Central Hanover Bank & Trust Company was to be deemed a holder of the note sued on, mala fides, and thereby barred from having any judgment against defendant thereon.

The right of set-off against the liquidator of a bank is to be governed by the state of things existing at the time of insolvency of the bank and not by conditions thereafter created. Chipley State Bank v McNeill, 77 Fla. 827, 82 So. 292.

Conceding arguendo in this case that because the State Bank of Bartow was nevertheless still the owner of its pledged note at the time such bank became insolvent, and the thereby a right of set-off of his deposit could be asserted by Jones against the State that thereby a right of set-off of his deposit pledgee were the plaintiff in this case, the question presented by the defendant's pleas is whether or not the alleged unauthorized act of the liquidator in paying a general dividend on Central Hanover Bank & Trust Company's claim as a common debt, without requiring a surrender of the collateral security it held for that debt, can be pleaded as a defense to a suit at law on the note when brought by Central Hanover Bank & Trust Company as indorsee, merely because a right of set-off would exist against the amount of the note, if the collateral note had been surrendered to the liquidator and were sued upon by him.

Our conclusion is that such defense was properly held to be inadmissible, because of the rules governing defenses to suits on negotiable instruments when brought by a legal holder of the paper, though such legal holder be one as against whom the payee may have some good equity.

In a suit at law brought by an indorsee of a negotiable instrument against the maker thereof, it is enough that the plaintiff's title appears to be good as against the defendant maker. One who holds the full legal title to a promissory note by assignment, may maintain an action thereon against the maker, notwithstanding he has no beneficial interest in the proceeds. The title or interest of the holder of commercial paper cannot be disputed or inquired into unless necessary for the purpose of a legitimate defense, nor unless a meritorious defense is presented. The maker of commercial paper cannot, as against the indorsee holder thereof, defend against it upon the ground that the holder is not a bona fide holder for value, unless he at the same time asserts some defense against the original payee or holder which would be good against the latter if he were the plaintiff, in which case he may challenge the bona fides of the indorsee's holding in order to let in a defense that would be good against the original payee or his indorsee, where to deny him that privilege would deprive him of the benefit of such defense. 3 R. C. L. 990.

Jones in effect by his pleas has recognized the force of the foregoing statement of the law, and has attempted to bring himself within its rule by setting up against the original payee an alleged right of set-off, the benefit of pleading which he says is being denied him, because of the situation that exists in this suit wherein the original payee is not the plaintiff.

It is not a good plea to allege that a note sued on is the property of another, and not of the plaintiff, without showing some substantial matter of defense against the one asserted to be the owner, and which could not be set up against the plaintiff....