Moore v. Moore

• Decision Date: 18 October 1887
• Parties: Moore v. Moore and others.
• Court: Indiana Supreme Court

112 Ind. 149

13 N.E. 673

Moore

v.Moore and others.

Supreme Court of Indiana.

October 18, 1887.

Appeal from circuit court, Clark county.

Jason B. Brown, for appellant.

The contention of the appellee Robert W. Moore, who was the plaintiff below, is that because he paid value for the notes and mortgage in controversy, and had no notice that they had been obtained from appellant, Mary A. Moore, by fraud, and without consideration, that he holds them as an innocent purchaser, and is entitled to all the protection that the ordinary rules afford a bona fide purchaser of personal property, from a person having an apparent title to the same. The contention of the appellant, Mary A. Moore, who was the cross-complainant below, is that, the notes being overdue when Robert W. Moore purchased them, the rule caveat emptor applied, and that he could acquire no better title to them than his indorser or assignor, James E. Moore, had to them; that the rule which protects an innocent purchaser of a chose in possession does not apply to a purchaser of a chose in action which is not protected by the lex mercatoria. The question in this case is, who ought to have the judgment upon the notes, and the decree of foreclosure of the mortgage,-the appellee Robert W. Moore, or the appellant, Mary A. Moore?

The rule which protects an innocent purchaser of choses in possession has no reference to the sale or transfer of choses in action. Hil. Sales, (2d Ed.) 427; 1 Pars. Notes & B. (1st Ed.) 274. Negotiable paper is also protected, but the notes in suit are not negotiable so as to be governed by the lex mercatoria, and no indorsee or assignee of them can be protected as an innocent purchaser under the lex mercatoria. Glidden v. Henry, 104 Ind. 278; 1 N. E. Rep. 369; McComas v. Haas, 107 Ind. 512, 8 N. E. Rep. 579; Green v. Louthain, 49 Ind. 141; Pars. Notes & B. 255, 270; Murphy v. Lucas, 58 Ind. 360;Bremmerman v. Jennings, 61 Ind. 334;Morrison v. Fishel, 64 Ind. 180;Maxwell v. Morehart, 66 Ind. 304;Zook v. Simonson, 72 Ind. 86 ;Ruddell v. Fhalor, Id. 537 ;Coffing v. Hardy, 86 Ind. 370;Scotten v. Randolph, 96 Ind. 585;Melton v. Gibson, 97 Ind. 158.

The following authorities clearly sustain the rule that the transferee acquires no better title than his transferrer had. And this is so in all cases except choses in possession, and choses in action which are protected by the lex mercatoria. Sims v. Wilson, 47 Ind. 226;Scott v. Bank, 71 Ind. 446;Carithers v. Stuart, 87 Ind. 430;Kastner v. Pibilinski, 96 Ind. 229.

The transferee of negotiable paper to whom it is transferred after maturity, acquires nothing but the actual right and title of the transferrer. Scott v. Bank, 71 Ind. 446; 1 Daniel, Neg. Inst. § 579; Byles, Bills, (6th Ed.) 262, 267; Story, Prom. Notes, § 178.

“A person who purchases a non-negotiable chose in action for value, and in good faith, takes it subject not only to defenses of the original debtor who issued it, but also to what have sometimes been called latent equities in favor of the assignor of the person from whom such purchaser acquires it; indeed, this is implied in the statement that the purchaser takes only such title as his transferrer has.” 87 Ind. 430;Carithers v. Stuart, 87 Ind. 425;Scott v. Bank, 71 Ind. 445; Daniel, Neg. Inst. § 782; Bush v. Lathrop, 22 N. Y. 535; Pom. Eq. Jur. § 709.

Marshall & Montgomery, for appellee Robert W. Moore.

The cases cited by appellant's counsel in support of the proposition that a person cannot be an innocent purchaser of paper governed by the lex mercatoria unless he purchased it without notice, for a valuable consideration, and before maturity, are cases in which the question arose between the holder and the maker, or party liable on the note. This is a case between adverse claimants to the note, each asserting his claim to the ownership of the note, and the maker is making no defense, and willing the judgment shall go in favor of whichever party prevails on the question of ownership.

There is, however, another class of cases cited by Mr. Brown. In these cases there were adverse claimants to the ownership of the notes sued on, and the maker had no defense. But in every one of these cases the person claiming adverse ownership to the plaintiff had a valid and just interest or title of some kind to the note, which he never had parted with, and never intended to part with, and was still at the time of the action the owner of said right or interest. These cases are different from the case at the bar, in this: that Mrs. Mary A. Moore intended to part with, and did part by indorsement and delivery with, all her right, title, and interest in the notes and mortgage, and by her own voluntary act clothed her assignor with all the indicia of title and ownership.

In Pomeroy's Remedies & Remedial Rights (section 161) we have the following language: “In short, whenever the owner of a non-negotiable thing in action delivers the same to another person, and accompanies the delivery by an assignment thereof, absolute on its face, and this person transfers the same to a purchaser for value, who relies upon the apparent ownership created by the written assignment, and has no notice of anything limiting that apparent title, the original owner is estopped from asserting, as against such purchaser, any equities existing as between himself and his immediate assignee, any interest or property in the security, notwithstanding the written transfer.” And the case of Stoner v. Brown, 18 Ind. 464, fully supports appellee's position.

Mitchell, J.

This was a suit by Robert W. Moore against William and Kate Lee, to foreclose a mortgage executed by the latter as a security for the payment of five promissory notes payable by the mortgagors to Louis Schneck, guardian of Charles H. Moore, a person of unsound mind. As appears from the complaint, the notes were indorsed by Schneck to Mary A. Moore, and by her to James E. Moore, and by the latter to the plaintiff, Robert W. Moore. The appellant, Mary A. Moore, upon her intervening petition, was admitted a party defendant. She thereupon filed a cross-complaint, in which she alleged that the indorsement and delivery of the notes by her had been procured by fraud and false representations, and by the inducement and persuasion of James E. Moore, to whom she indorsed them without any consideration, and that she was therefore in fact the owner of the notes in suit. She prayed that the mortgage might be foreclosed, and that the court give its decree perpetually enjoining the plaintiff from claiming any interest in the notes, or in the decree of foreclosure.

Issue was taken upon the cross-complaint, the makers of the note making no contest, and upon due request the court made a special finding of the facts. So far as they are material to be stated, the facts found are that the notes and mortgage in suit had been assigned and delivered to Mary A. Moore by the guardian of her deceased husband as part of her share in her husband's estate. It was also found that the appellant, Mary A. Moore, indorsed and delivered the notes and mortgage to James E. Moore without any considerationwhatever, and that the indorsement and delivery had been obtained by the false and fraudulent representations of James E. Moore and one Amy Jones. On the twenty-fourth day of April, 1884, long after the notes had matured, they were indorsed and delivered with the mortgage by James E. Moore to the plaintiff, Robert W. Moore, who paid their full face value without any notice that they had been obtained from Mary A. Moore by fraud and false representations, or that she had or claimed any title or interest whatever in the notes and mortgage.

The court having found that Robert W. Moore was a purchaser for full value, without notice, the question is whether his title to the notes will prevail over the appellant's equity, notwithstanding the indorsement and delivery were obtained by the appellee's assignor from the appellant by fraud, and without consideration. The argument for a reversal rests mainly on the proposition that the assignee of a non-negotiable instrument can take no greater interest or better title to the instrument assigned than was possessed by the assignor at the time of the transfer. Hence, the argument proceeds, the notes in suit having been transferred to the appellee after they had matured and were dishonored, the latter took them subject not only to all defenses and equities between the original parties, but subject also to all equities in favor of the appellant, a prior indorser. In short, the appellee's position is that “a purchaser of a chose in action must always abide by the case of the person from whom he buys.” This doctrine ruled the case of Bush v. Lathrop, 22 N. Y. 535, and some earlier cases in the state of New York. As applied to instruments or things in action, the legal title to which is transferable by assignment in writing, the...