Press Co. v. City Bank of Hartford

• Decision Date: 03 November 1893
• Docket Number: 17.
• Citation: 58 F. 321
• Parties: PRESS CO., Limited, v. CITY BANK OF HARTFORD.
• Court: U.S. Court of Appeals — Third Circuit

58 F. 321

PRESS CO., Limited, v. CITY BANK OF HARTFORD.

No. 17.

United States Court of Appeals, Third Circuit.

November 3, 1893

James H. Shakespeare, for plaintiff in error.

George Tucker Bispham, (Paul Wilcox, on the brief,) for defendant in error.

Before ACHESON, Circuit Judge, and BUTLER, District Judge.

BUTLER District Judge.

The action is on promissory notes drawn by the plaintiff to the Thorne Type-Setting Company, or order, and indorsed to the defendant. The claim filed avers that the indorsements were made before maturity and for value. The affidavit of defense denies proper execution of the notes; and says the payee is a foreign corporation, without authority to transact business in this state, because of failure to comply with the statute of 1874; that the notes grew out of business transacted here and are therefore invalid. The affidavit was held to be insufficient; and judgment was entered accordingly. The defendant (below) appealed, and assigns the entry of judgment as error.

The objection to the execution of the notes is abandoned. The points urged are, first, that the notes are invalid; and second, that the pleadings do not warrant the judgment.

Neither objection can be sustained. Granting that the notes could not be enforced by the payee, they can be by an innocent indorsee. This seems to be settled. Daniel, Neg. Inst. § 197; Shars. & B. Bills, etc., 110; Wyatt v. Bulmer, 2 Esp. 538; Williams v. Cheney, 3 Gray, 220; Carpenter v. Longan, 16 Wall. 271. Why should not the ordinary rules which govern the transfer of negotiable paper, apply? Why should the plaintiff, who has expressly promised to pay the indorsee, escape on the defense set up? If the notes were wrongfully given, in violation of the statute, the wrong was his. Why therefore should he be allowed to cast the consequences upon another? If the payee's right to transact business in this state was questionable he should have investigated it. He could as readily have discovered the lack of authority before drawing the notes as after. The indorsee knew nothing of such question. He did not know even that the notes grew out of a transaction here. It is urged that public policy forbids a recovery; that to hold otherwise will nullify the statute. We do not think so. If the legislature intended the consequences claimed, we would expect it to say so. It has not; and we think justly, for otherwise the drawer of such paper might cast the consequences of his misconduct or carelessness on others, who rely on his promises without means of protecting themselves. The public interests require that persons dealing with foreign corporations shall inform themselves of the authority to transact business here, in advance, instead of aiding violations of the statute, and then repudiating their promises to the injury of innocent persons. Public policy requires that the circulation of negotiable paper shall be free from unnecessary trammels.

We think the objection based on the pleadings is equally untenable. The holder of negotiable paper is presumed to have received it for value, before maturity. Where...