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oletti, it is because this negotiable note, payable to order, was transferred to it in good faith, and upon good consideration, before due.

The legislature did not intend to protect non-negotiable notes. against the equities existing in favor of the makers before notice of assignment, although assigned for value before maturity. Did it intend to protect notes negotiable, payable to order, but not indorsed by the payee? If it did, it intended to overturn a well-established rule of the law-merchant, recognized and enforced the world over. Such was not the intention. At the time the Code was passed there was a well-established mode of transferring a negotiable promissory note payable to order, and no other was recognized which was by indorsement. If it was assigned for value before maturity, but not indorsed, it was subject to the equities in the hands of the assignee that it would have been in the hands of the payee. This principle has not been changed by the statute. A note like the one under consideration, not indorsed, is not "transferred in good faith." Richards v. Warring, 39 Barb. 51-54; Bush v. Lathrop, 22 N. Y. 547; Patterson v. Crawford, 12 Ind. 245; Whistler v. Forster, supra, 257; Trust Co. v. Nat. Bank, supra; Terry v. Allis, 16 Wis. 479; Calder v. Billington, 15 Me. 398; Savage v. King, 17 Me. 302; Hedges v. Sealy, 9 Barb: 217; Pease v. Rush, 2 Minn. 111, (Gil. 89.) "A promissory note made payable to order may be transferred without indorsement, so as to vest the property in it in the purchaser. Transferred in that manner, it was formerly necessary to bring the action upon it in the name of the payee; under the Code it may be brought in the name of the real owner. But such a transfer does not clothe the assignee with all the rights of an indorsee of negotiable paper, transferred to him in the usual course of business; it gives him the title to the note, but subject to the rules applicable in case of an assignment of any other chose in action. In short, a note negotiable by indorsement, but not indorsed, transferred by delivery, and a note not negotiable, transferred by delivery, are equally open to every equitable defense which the maker had against it at the time of transfer; and if the payee could not have recovered at that time, the assignee cannot." Edw. Bills, (2d Ed.) 270. "The rule is settled, by an unbroken series of authorities, that the assignee of a thing in action not negotiable takes the interest assigned, subject to all the defenses, legal and equitable, of the debtor who issued the obligation. That is, when the original debtor or trustee, in whatever form his promise or obligation is made, if it is not negotiable, is sued by the assignee, the defenses, legal and equitable, which he had at the time of the assignment, or at the time when notice of it was given, against the original creditor, avail to him against the substituted creditor." 2 Pom. Eq. Jur. $ 704.

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Hedges v. Sealy was decided in 1850, (9 Barb. 217.) The New York Code was adopted in 1848. The case was on all fours with the

one in hand, with this exception: the note was payable to one person, who pledged it as collateral security for money loaned, without indorsement, while in this case the note was payable to two, and indorsed by one. The court said:

"Although the plaintiff took the note upon sufficient consideration, and the transfer was consummated by the actual delivery, yet the plaintiff is not a bona fide holder, or indorsee, and entitled as such to recover against the maker, if the proof shows that he had a good defense against it in the hands of Roberts. To entitle the plaintiff to protection from such a defense, in addition to the valuable consideration paid by him for the note, it must also appear that he is the indorsee. The pleadings disclose that it was payable to order, and was not indorsed by the payee. In respect to the note the plaintiff is a mere assignee, and his rights are to be settled by the same rules that govern the case of an assignee of any other chose in action. The rule that the indorsee may recover where the payee may not, is founded on the commercial policy of sustaining the credit of negotiable paper. The paper in question was negotiable, but it was not negotiated. It is payable to Robert Roberts or order, and he has not indorsed it. * * * A note negotiable, but not indorsed, transferred by delivery, and a note not negotiable transferred by delivery, are open to every equitable defense which the maker had against them at the time of transfer; and if the payee could not have recovered, at that time, the holder cannot."

"A promissory note, like any other personal property, can be transferred by mere delivery so as to pass the title, and the right to sue in the name of the holder when a note is payable to order, and is found in the hands of a person not the payee, without the indorsement of the payee. The difference between such a holder and one who holds by indorsement, is that the former is not entitled to the privileges of a bona fide holder, while the latter is a note payable to order, passed without indorsement, is not taken in the regular course of business, and is subject to the same disabilities as if it had been taken after due, but the title passes sufficiently to maintain a suit in the name of the owner." Pease v. Rush, 2 Minn. 111, (Gil. 89.)

At the time of that decision the Minnesota Code was like ours. St. Minn. 1849-58, p. 534. To the same effect is Terry v. Allis, 16 Wis. 479, under a statute like ours. Rev. St. Wis. 1858, p. 714.

Beard v. Dedolph, 29 Wis. 141, supports the same doctrine, although holding, also, that an indorsement made after maturity of a note assigned, but not indorsed before maturity, relates back to the time of delivery and protects the assignee against everything subsequent to the delivery. This doctrine is repudiated, however, by many well-considered cases. Clark v. Whitaker, 50 N. H. 475, and cases there cited; Lancaster Bank v. Taylor, 100 Mass. 22. See, also, Grimm v. Warner, 45 Iowa, 108; Seymour v. Leyman, 10 Ohio St. 285; McCrum v. Corby, 11 Kan. 470; Franklin v. Twrogood, 18 Iowa, 515; Patterson v. Cave, 61 Mo. 439; Boeka v. Nulla, 28 Mo. 180; Hadden v. Rodkey, 17 Kan. 429.

We have considered the questions before discussed, upon the theory that a note like the one in suit, indorsed by one only of two joint payees, is subject to any equities existing in favor of the maker, the same as though it had not been indorsed by either; and such, we

think, is the law. Such a note is payable to both, or to their joint order. By the law-merchant it cannot be transferred except by the joint indorsement of all the payees. Ryhiner v. Feickert, 92 Ill. 311, and authorities there cited. If a note unindorsed is not transferred in good faith, then one indorsed by a part only is in the same situation. Such a note is surely only transferred in part. 2 Pars. Bills. & Notes, 4, 5; Smith v. Whiting, 9 Mass. 333; Dwight v. Pease, 3 McLean, 94; Bennett v. McGaughy, 3 How. (Miss.) 193; Wood v. Wood, 1 Har. (N. J.) 428; 1 Daniell, Neg. Inst. § 684; Lowell v. Reading, 23 Amer. Dec. 546. We are satisfied that plaintiff is in no better situation than the payees of this note would have been had they brought this suit; and, in that case, Nicoletti would have been entitled to credit for all payments made, according to the agreement entered into at the time of the execution of the notes and mortgage, and before notice of the assignment. Davis v. Neligh, 7 Neb. 82; Peeker v. Sawyer, 24 Vt. 464; Britton v. Bishop, 11 Vt. 70.

The judgment and order appealed from are reversed, and the cause remanded.

(7 Colo. 299)

SUPREME COURT OF COLORADO.

RIO GRANDE EXTENSION Co. v. COBY.

Filed April 1, 1884.

In an action upon the time-checks of a corporation, signed by its agent, the plaintiff must produce some evidence of the agent's authority, unless that is admitted by the pleadings.

A time-check, signed by defendant's agent, acknowledging a sum of money due the plaintiff, is valid against the defendant without formal acceptance.

Appeal from county court of El Paso county.

Wm. Harrison, L. M. Cuthbert, and L. K. Bass, for appellant.

J. B. Cochran, for appellee.

HELM, J. This action was brought against the extension company by appellee, as assignee and owner of five several instruments of writing known as time-checks. The checks, and also certain separate orders relating thereto, were received in evidence over the objections of appellant. There is no claim or proof that these orders were ever presented to or accepted by the company; the judgment, therefore, cannot rest upon them, as no liability on its part thereunder was shown. It must be sustained, if at all, exclusively by the timechecks. They are alike in form, and the following sample is all that need be given here:

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COLORADO SPRINGS, COLO., July 17, 1880.
Paymaster Rio Grande Extension Company:
Due Thos. Flinn, for labor in month of July, 188-, as
laborer, twelve days, at $1.25 per day,
Deduct for board,

Balance due,
Approved:

$15 00 3 05 $11 95

T. S. BLACKBURN,
Foreman.

F. T. GRISWOLD.

his

Endorsements:

THOS. X FLYNN.

mark.

Witness: E. W. ROSENBERG.

These checks purport to be written acknowledgments of indebtedness executed upon a settlement with the laborers to whom they were given. They are apparently made for the information and guidance of the paymaster of the company; and, therefore, we might, perhaps,

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infer that they were intended to represent obligations of the company. Each acknowledges a definite sum of money to be due from some one to a payee named therein, and is payable at a time certain; were there no restricting words, they would therefore be clearly negotiable under our laws-(chapter 9, Gen. St. ;) the indorsement of the payee's name upon the same is the proper mode of transferring the ownership of such instruments. But the words "not negotiable" appear written or printed across the end of these checks. It is unnecessary for us to consider whether the maker has power to take away by such declaration the attributes of negotiability bestowed upon the instruments by statute; for in the first place they still remain assign. able thereunder; and, secondly, they are choses in action, and, as such, the ownership might be transferred by assignment independent of statute. Under our practice-(see section 3 of the Code of Civil Procedure) the equitable rule relating thereto prevails, and the action should be in the name of the purchaser and assignee, because he is the owner and real party in interest.. The principal effect of destroying the negotiability of these instruments is simply to render them subject in suit by the assignee to all defenses existing prior to notice of the assignment that might have been interposed to an action by the original payee. Pom. Rem. & Rem. Rights, § 157; Combes v. Chandler, 33 Ohio St. 178; Moore v. Metropolitan Bank, 55 N. Y. 41; 1 Pars. Cont. 227.

Objection is made that no acceptance of the time-checks by the company was proven, but if a recovery can be sustained upon them at all, it is because they are acknowledgments of indebtedness made by the company itself; they are more in the nature of due-bills than orders or bills of exchange, and no acceptance is necessary. This would be equally true could they be regarded as the drafts of an agent of the company upon another agent. Such drafts are analogous to the case where an individual draws upon himself, and may be treated either as accepted bills or as promissory notes. 1 Daniell, Neg. Inst. § 424. The word "approved," over the signature of one Griswold, appears written thereon. It may be that Griswold was an agent of the company, and that his approval was evidence to its paymaster of the justice of the debt and genuineness of the time-check. Upon this subject we are not enlightened by the record; but this supposition, ii true, only recognizes a private arrangement or regulation of the company for its own convenience and protection, and in no way changes the character of the instruments, so far as third parties are concerned.

There is, however, a fatal objection to the recovery had in the court below. The action was originally brought before a justice of the peace, and was tried in the county court on appeal. There are, therefore, no written pleadings. No evidence was offered by the defendant, and hence we are not advised of its defenses, except as they may be learned from the objections interposed at the trial, and argued upon

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