Newman, Ex'r, vs. Henry.

greater authority to withhold the note for $4,380.85, or over the note for $4,000, than Fellows & Co. had. The proof upon this point is, that the note of $4,000 was sent by mail by Henry to Fellows, with instructions to be used and applied for a particular purpose.

Henry

Henry deposed that Fellows & Co. proposed, by letter, that he should renew his note for $4,380.85, by giving them a new note for $4,000, in payment of the first, the difference between the notes to be settled otherwise between them. accepted the proposition, and forwarded the note to Fellows & Co., supposing at the time that they were still the holders of the note for $4,380.85, with the express understanding that the first note should be delivered to him. It is shown, that at the time the note for $4,000 was received by Fellows & Co., they had parted with the first note, and in fact, held no debt against Henry, had no right to the note, and could neither receive satisfaction of it nor deliver it to Henry, and as a consequence their power and control over the $4,000 note ceased, or in fact never existed. It was to become their note upon a condition which they did not comply with, and in fact had not the power to comply with. According to the evidence of Logan, one of the firm, it was expressly agreed between the firm and Walworth, that Walworth, to whom they assigned the note for $4,000, would receive it in payment of that much of the $4,380.85, but was to hold the latter note until Fellows should pay to him a note for $2,687.49 they owed to him, which agreement was in direct violation of the terms upon which Henry placed the $4,000 note in the hands of Fellows & Co.; all of which was well known to Walworth.

And it was under this state of case found to exist, that the court gave the fifth ruling, to the effect that Walworth, the assignee of the $4,000, could only protect himself as a holder of the note received in the course of trade, as an innocent holder for a valuable consideration.

Payne, Huntington & Co. vs. Flournoy.

In this ruling of the court there was no error.

No one by the mere act of assignment can transfer a greater interest than he has, nor make that good which is vicious and unlawful. The assignment, whether by indorsement or delivery, but conveys the legal title and gives the right of action, and does not itself bar the equities. The rule which cuts them off is a rule of commercial policy, to facilitate trade and sustain commercial credit, and applies only where the note or bill has passed by indorsement or by delivery, into the hands of the assignee in the due course of trade, upon a consideration, and without notice of the existing grounds of defense as between maker and payee. Bertrand v. Barkman, 13 Ark., 150; Coddington v. Bay, 20 Johns., 638; Edwards on Bills and Notes, p. 56.

It appears from the evidence that the executor of Walworth has brought suit upon the first note for $4,380.85, which, so far as is disclosed by the evidence in this case, was received in the course of trade, and upon which he may have his

recovery.

Finding no error in the proceedings and judgment in this case, the same is affirmed.

PAYNE, HUNTINGTON & Co. vs. FLOURNOY.

1. PRACTICE: When too late to object to an answer for want of verification. After replication, trial and judgment in the court below, it is too late to raise the objection for the first time in this court, that the answer is not verified.

2. EXECUTOR: Cannot appropriate assets to particular debts.

An executrix, to whom notes are executed for personal property and rent of the land of her testator, holds them in her fiduciary capacity as a part of the general assets of the estate, and has no power

Payne, Huntington & Co. vs. Flournoy.

by assignment as collateral security or otherwise, to appropriate them to the payment of one creditor to the exclusion of others.

3. AGENCY: Principal's right of revocation not affected by the disposition to be made of the proceeds, etc.

Where the payee of a note indorsed and left it with a member of a firm to which she was indebted, for collection, and directed him to apply the proceeds to the payment of her indebtedness, it was a mere direction to an agent, and did not impair the right of the payee to collect the note or change the direction at pleasure.

4. NOTICE: Of facts apparent on negotiable paper.

The fact that a note is made payable to an executrix, and by her indorsed in her representative capacity, is notice that it is assets in her hands.

5. PLEADING AND PROOF: Must correspond.

A fact that is proven, but not averred in the pleadings, can avail nothing.

APPEAL from Arkansas Circuit Court.

Hon. HENRY B. MORSE, Circuit Judge.

Pindalls, for appellants.

Gallagher & Newton, contra.

WALKER, J. The defendant Thomas C. Flournoy executed to Elizabeth J. Flournoy, the executrix of the estate of Thompson B. Flournoy, on the 2d day January, 1867, his note for $7,000, due the 1st of December of that year, and two other notes, dated 8th of January, 1867, one for $3,100, the other for $1,300, both due the 8th of December of that year. The first of these notes was given for the rent or lease of a plantation belonging to the estate of Flournoy, and the other two for stock and farming utensils, which also belonged to the estate. The notes were made payable at the office of I. P. Harrison & Son, in New Orleans. With these notes there was also an agreement of defendant with the payee, Elizabeth J. Flournoy, that he would ship cotton to the house of I. P. Harrison & Son, to pay the notes as they became due.

Payne, Huntington & Co. vs. Flournoy.

The estate of Thompson B. Flournoy was indebted to the firm of Payne & Harrison to the amount of $40,000, and soon after the notes were executed, they were indorsed in blank by Johnson, as agent for the payee, and placed in the hands of L. P. Harrison, one of the firm of Payne & Harrison, for collection. The blank indorsements were filled up, making the notes payable to Payne, Huntington & Co.

On the 14th of July, 1869, Jacob Payne, George W. Huntington and William H. Dameron, partners doing business under the name and style of Payne, Huntington & Co., brought their suit in the circuit court of Arkansas county against T. C. Flournoy, the payor of the notes.

The defendant filed his answer, in which he admitted the execution of the notes, but denied that they were assigned to plaintiffs for a valuable consideration; that the notes were left with I. P. Harrison merely for collection, and were indorsed for that purpose only; and that afterwards and whilst the notes were the property of the payee, that he had fully paid them.

This answer was not sworn to, as required by our code of practice, and for this defect might have been stricken out, but as no exceptions were taken to it for this cause, it is too late after replication and trial before a jury, and final judgment, to raise the objection, for the first time, in this court.

The case was submitted to a jury and a verdict returned in favor of the defendant. The plaintiffs moved for a new trial which was overruled, exceptions were taken and an appeal to this court.

Exceptions were taken to several instructions given at the instance of the defendant, as well as well as to those refused by the court when asked by the plaintiffs, which, from the conclusions at which we have arrived as to the law governing the case, will be disposed of in the further consideration of the case.

Payne, Huntington & Co. vs. Flournoy.

It is contended on the part of the plaintiffs, that the notes in suit left with Payne & Harrison, as collateral security for the payment of a debt due by the estate of T. B. Flournoy to them, and, being indorsed in blank, Payne & Harrison had a right to deliver the notes to Payne, Huntington & Co., the plaintiffs in this suit.

On the part of the defendant, it is contended, that the notes were not placed in the hands of Payne & Harrison as collateral security, but were in fact left with I. P. Harrison, a member of that firm, for collection, with instructions to apply the money when collected to the payment of the debt which the estate of Flournoy owed to the firm of Payne & Harrison, and the indorsement on the notes was made to facilitate collection and for no other purpose.

In the investigation of the question of the ownership of these notes, and as to whether they did or did not pay to the plaintiffs by assignment, and vest in them a right of action against the payor, the defendant in this action, it will be im. portant to inquire, not only whether from the facts as disclosed in evidence, an assignment of the notes was made, upon such consideration and under such circumstances as to divest the payee, Mrs. Flournoy, of her title to them, but also as to whether she, holding them as she did, as a trustee, to be collected for the benefit of the creditors of the estate of T. B. Flournoy, and for his heirs and distributees, had the power to sell, or to assign the notes which were held by her as the executrix of the estate as assets to be distributed under the provisions of the statute.

These notes were executed to the payee, as the executrix of the estate of Flournoy, and given in consideration of rents and personal estate of the testator, T. B. Flournoy, sold and rented to the defendant, who executed the notes in suit. Jilson P. Johnson, the agent for the payee, deposed that, at