Stagg v. Linnenfelser

• Decision Date: 31 March 1875
• Citation: 59 Mo. 336
• Parties: HENRY STAGG, Respondent, v. MARY A. LINNENFELSER, Appellant.
• Court: Missouri Supreme Court

59 Mo. 336

HENRY STAGG, Respondent,

v.MARY A. LINNENFELSER, Appellant.

Supreme Court of Missouri.

March Term, 1875.

Appeal from St. Louis Circuit Court.

James C. Moody, for Appellant.

I. Defendant never was the owner of these notes, and had no right to transfer them. The addition to her name is mere surplusage. Even if she had qualified as executrix she still would have had no right or power to transfer the notes without proper action of the Probate Court. In such case the rights of creditors of deceased persons must be regarded. She therefore created no liability by the indorsement, passed no title to Ketterer, and he passed none to respondent, and respondent has no title to the notes and no right of action upon them.

Defendant is shown to be very old and ignorant of the English language, and did not know what she was doing. But respondent, was smart enough to have known what he was about. There is, therefore, no innocent holder without notice here. (Exchange Bank vs. Cooper, 40 Mo., 169.)

James Carr, with H. A. McGindley, for Appellant.

I. There is no cause of action stated in respondent's petition, in this; that there is no allegation in the petition that letters testamentary were granted to the appellant by said Probate Court; or that she ever accepted the trust reposed in her by said will. This is a traversible allegation, and should have been made. (Hulbert vs. Young, 13 How. Pr., 413; Lyle vs. Smith, Id., 104; Hoftaling vs. Teal, 11 How. Pr., 188; Burnham vs. Bevorse, 8 How. Pr., 159; Stanley vs. Chapel, 8 Cow., 236; Higgins vs. H. & St. Jo. R. R. Co., 36 Mo., 418.)

II. The appellant had no legal right to take said notes into her possession, or to interfere with them prior to the granting of letters testamentary to her. (Wagn. Stat., 84, §§ 5, 6; Stagg vs. Greene, 47 Mo., 500.)

III. The notes ceased to be negotiable after the death of Frederick Linnenfelser, the payee, and at best they were only assignable instruments and not negotiable notes, within the meaning of the statute in regard to bills of exchange and promissory notes. (Weaver vs. Beard, 21 Mo., 155; Ivory vs. Catlin, 30 Mo., 142.) And appellant not having assigned to respondent directly, he cannot maintain this action directly against her. (Bromage vs. Lloyd, 1 Exch., 32; Gough vs. Findon, 7 Exch., 48; Sto. Prom. Notes, §§ 120, 123.)

Not having accepted the trust in the manner prescribed by our statute, in such cases made and provided, she could not impart that which she did not have, i. e., the legal title to said notes to respondent. (Stagg vs. Greene, supra; Sto. Prom. Notes, §§ 120, 123; Dwight vs. Newell, 15 Ill., 333.)

Appellant is neither payee, maker nor indorser of said notes, within the import of any of those terms as understood by the law merchant or our statute in regard to bills and promissory notes. (Malbon vs. Southard, 36 Me., 147.) The petition does not seek to hold her liable as being a joint maker. She is not named as payee in the face of the note. She cannot sustain the relation of first indorser, because she is not named as payee. She is not claimed to be a second or other indorser. And as the only ground upon which respondent seeks to hold her liable, i. e., as deriving title through herself as executrix, has failed, it follows then that the respondent shows no legal title to the notes sued on, and as a consequence the judgment of the court below must be reversed for want of sufficient allegations in the petition.

P. E. Bland, for Respondent.

The only point presented in this case for the consideration of the court, is, whether Mrs. Linnenfelser's act of putting these notes into circulation by her indorsement and delivery of them, renders her liable to the bona fide holder.

I. The said act operates an estoppel on her to deny that the title was in her, or that she had right to transfer the paper. (Taylor & Mason vs. Zepp, 14 Mo., 482; Dezell vs. Odell, 3 Hill, 219; Henman vs. Hook, 37 Mo., 207; Chouteau vs. Goddin, 39 Mo., 439; Camp vs. Byrne, 41 Mo., 525; Grant vs. White, 42 Mo., 285.)

II. But aside from the doctrine of estoppel, Mrs. Linnenfelser's indorsement rendered her liable to the holder. (Burrell vs. Smith, 7 Pick., 291; Bailey Bills, 111, 115; Sto. Prom. Notes, §§ 118, 479; Chitty's Bills, [11 Am. ed.] 201.)

Where a third party puts his name on the back of a negotiable promissory note, there is much diversity among authorities as to his precise character and liabilities. But all concede that the act must have some legal effect. He must either be a joint maker, and so not entitled to notice of presentment and dishonor, or as a surety, or as guarantor with the liabilities belonging to such, or as a second indorser. (Lewis vs. Harvey, 18 Mo., 74.)

In the case here, the indorsement itself is conclusive as to the capacity in which it was made. The indorsement could not have been made in the capacity of surety or guarantor for the maker to the payee, for it was after the making and delivery of the note to the payee, and after his death, for it is expressly made in the capacity of “sole legatee” of the payee. Her indorsement is, therefore, that of a holder or owner deriving or claiming to derive title from the payee. It is impossible that such an indorsement was intended to create a liability on the part of the indorser to the payee as a first indorser, or that it should be other than to assume the liability of a second indorser.

SHERWOOD, Judge, delivered the opinion of the court.

By the terms of her husband's will, the defendant became the sole legatee of all his property, both real and personal, including the promissory notes in suit, executed to the testator by Theo. P. Greene. Although the will was duly probated, the defendant never qualified as executrix, in accordance with her appointment as such, nor does the petition so allege. It does, however, charge, that, as executrix, she took possession of the assets of the estate, transferred the notes by delivery to herself as sole legatee, thereby becoming absolute owner, and for value indorsed and delivered the same before maturity to Ketterer, who in like manner transferred them to plaintiff. The non-payment of the notes at maturity, and notice thereof given to defendant, are also alleged. The answer put in issue the chief averments of the petition.

The negotiability of bills of exchange does not rest on positive law, but on the custom of merchants, which in process of time and with the increase of trade, ripened into what is known as the common law merchant. By that ancient usage, if the party in whose favor the bill was drawn, died, it was customary for his executor or administrator to negotiate it with like effect as if done by the testator or intestate. And this usage prevails in most if not all of the states of this country. Promissory notes were also embraced within the custom referred to, and were negotiable by the payees or their personal representatives, in the same manner as were bills of exchange. But it having been held in England, that promissory notes were incapable of being thus transferred, and were not within the custom of merchants, the statute of 3 and 4 Anne, C. 9, was passed, which, after reciting the above mentioned ruling, provides that promissory notes should thereafter, ( i. e., from May 1st. 1705) “be assignable or indorsable over, in the same manner as inland bills of exchange are or may be, according to the custom of merchants.” The first case which arose under this act was that of Rawlinson vs. Stone, (3 Wils., 1) where it appeared that an administratrix had transferred the note in suit, which had been made payable to her husband; the court holding that the whole property in the note was vested in the administratrix, and that since the statute of 3 and 4 Anne, which recognized the custom of merchants in respect to bills of exchange, and placed promissory notes upon the same footing with those instruments, it was competent for the administratrix to transfer the note, and the transferree to maintain his action thereon.

Our statute respecting bills of exchange, providing that promissory notes expressed to be for value received, etc., etc., (Wagn. Stat., 216, § 15) should “be negotiable in like manner as inland bills of exchange,” is no doubt derived from the statute of Anne, and if a familiar rule is to prevail, should be received with the construction placed upon it where first enacted, unless something in our own laws should forbid. Besides, we have in this State adopted the common law of England (of which the custom of merchant formed a part) as it existed “prior to the fourth year of the reign of James the First,” and save where it is local to that kingdom, or repugnant to or inconsistent with the constitution of the United States, of this State or of the statutes in force for the time being, is to be the rule of action and decision here. (Wagn. Stat., 886, § 1.)

This adoption of the common law occurred in 1816. The right of an executor or administrator to negotiate a bill or note drawn in favor of, or made payable to his decedent is asserted in all its broadness by the text writers as unquestioned law. (1 Pars. N. and B., 157; Sto. Confl. L., § 359; Sto. Bill Exch., §§ 72, 74; Sto. Prom. Notes, § 120; Wm's Ex'rs, 806.) And also by the courts of last resort in many of our sister States. (Malbon vs. Southard, 36 Me., 147; Owen vs. Moody, 7 Cush., 79; Prosser vs. Leatherman, 4 How., [[[[[Miss.] 241; Dwight vs. Newell, 15 Ill., 333; Sanders vs. Blaine's Adm'r, 6 J. J. Marsh, 446; Sutherland vs. Brush, 7 Johns. Ch., 17; Wheeler vs. Wheeler, 9 Cow., 34; Rand vs. Hubbard, 4 Met., 252.) But it will be observed upon examination, both of the text writers and of the reports of many of the States, that 3 Wils., supra, is, when authority is deemed worthy of citation, relied on.

Now it must be evident that 3 Wils. cannot be authority for the transfer by an executor or administrator of promissory notes,...