Maryland Trust Co. v. Gregory

• Decision Date: 21 May 1946
• Docket Number: 9798.
• Citation: 38 S.E.2d 359,129 W.Va. 35
• Parties: MARYLAND TRUST CO. v. GREGORY.
• Court: West Virginia Supreme Court

38 S.E.2d 359

129 W.Va. 35

MARYLAND TRUST CO. v. GREGORY.

No. 9798.

Supreme Court of Appeals of West Virginia.

May 21, 1946

Syllabus by the Court.

1. Under Code, 46-1-1, and 46-3-17, a promissory note, signed by the maker, containing an unconditional promise to pay a sum certain in money and payable on demand or a fixed or determinable future time, to order or bearer, is negotiable in its origin, and continues to be negotiable until it has been restrictively indorsed or discharged by payment or otherwise.

2. An indorsement of a negotiable instrument 'for collection' is a restrictive indorsement within the meaning of Code, 46-3-7, and prevents the further negotiation of the instrument.

3. Under Code, 46-3-18, the holder of an instrument negotiable in its origin may strike or waive any indorsement not necessary to his title.

4. Where a negotiable instrument is hypothecated to secure a loan under a collateral agreement, empowering the lender to sell the collateral, a restrictive indorsement on the note made by the creditor-holder of the note, is waived by the holder's written assignment of the note for value to a third party, though unaccompanied by delivery of the note, and such assignment, under Code, 46-3-19, vests in the assignee such title to the instrument as the assignor had.

5. Where a negotiable promissory note, upon which a pending action is based, is transferred to a person, not a party to the action, by assignment, it is improper for the trial court to dismiss the action without giving the assignee the opportunity to revive. Upon reversal of the judgment of dismissal, this court will remand the case with directions to the trial court to give the assignee the right to resort to revivor, provided application therefor is made not later than the second term of the trial court after the entry of the mandate of this court.

Wolverton & Callaghan, of Richwood, for plaintiff in error.

Charles C. Scott, of Clarksburg, and Wendell W. Hoover, of Webster Springs, for defendant in error.

RILEY Judge.

Maryland Trust Company, a corporation, instituted a civil action on a promissory note against I. N. Gregory before a justice of the peace of Webster County. Upon a judgment for plaintiff defendant appealed to the Circuit Court of Webster County where a trial, had at the May, 1943, term of court, resulted in a jury disagreement. When the case was called for a second trial at the September, 1945, term of court, defendant, for the first time, suggested that the note had been assigned pendente lite by plaintiff, Maryland Trust Company, to one C. E. Lawhead. Thereupon, the circuit court dismissed the case without granting the plaintiff an opportunity for revival. To the order of dismissal, plaintiff prosecutes this writ of error.

The note in litigation is dated May 14, 1931, payable four months after date for the sum of $700. It was made and signed by defendant, I. N. Gregory, and others, and was payable to the order of 'The Citizens Bank'. The note recites that it is 'Negotiable and Payable Without Offset at the Citizens Bank'. The Citizens Bank delivered the note to Maryland Trust Company to secure certain notes, to which were attached concomitant collateral agreements, which provided among other things, that 'Any and all of said collateral may be held at any time by the holder hereof and treated as security for any and all of said obligations. The holder hereof is authorized to use, transfer, hypothecate or rehypothecate any or all of the said collateral; * * *.' The note is indorsed by the payee with the stamp 'Pay Any Bank or Banker, or order The Citizen Bank 69-356 Richwood, W.Va. L. French Herold, Cashier'. The Maryland Trust Company indorsed the note with the stamp, 'For Collection Only Sep 9, 1931 Pay to the Order of Any Bank or Banker Prior Endorsement Guaranteed Maryland Trust Company, Baltimore, Md. Jervis Spencer, jr., Treasurer'. From the date of the indorsement on September 9, 1931, until the alleged assignment to Lawhead on December 16, 1942, the trust company owned and held the note, and payments were indorsed thereon on November 17, 1933, and at various dates to and including December 9, 1941. During the pendency of the action in the circuit court, and while the note was filed in the clerk's office, Maryland Trust Company, on December 16, 1942, assigned to Lawhead, for a valuable consideration, a number of obligations, including the obligation represented by the note in litigation, but the note was never indorsed or delivered to said Lawhead.

When defendant's appeal was ready for the second trial, the circuit court, on September 17, 1945, dismissed the case upon defendant's motion, on the ground that the obligation had been assigned by Maryland Trust Company to Lawhead. This was the first term at which the purported assignment had been suggested on the record.

Plaintiff assigns as error the refusal of the trial court to permit the assignee pendente lite to prosecute the action in the name of the original plaintiff, and the dismissal of the action with no right of the assignee to revive in his own name. This assignment of error raises two questions: (1) May the assignee, C. E. Lawhead, prosecute the action upon the...