existence of these defenses, affecting some contract embodied in the instrument before the innocent party takes it. Therefore an immediate party to a contract who has been guilty of fraud, misrepresentation, and duress must suffer as against him upon whom he has committed such a

wrong.

In general, where the parties are remote, then the theories of negotiability apply. The fact of importance in the doctrine of negotiable instruments is the presumption in favor of the purchaser for value without notice necessary to preserve the instrument as a circulating medium. The remote party is one who knows nothing of the facts of defense which have arisen between immediate parties. He has not contracted with them, and is ignorant of their transactions. He is to be protected in paying money or giving value for the instrument from the wrong other parties have committed. The wrong which has tainted their contract does not vitiate his. He stands in the position of one fortified by the doctrines of equity, who will be pro

It was held in an anonymous case that where a bank bill payable to A or bearer was lost, and was afterwards found by X, and was by him passed over to Y for value, who got a new bill from the bank in his own name, an action in trover for the first bill would not lie against Y. 1 Ld. Raym. 738. An action was brought against the acceptor by an indorsee, and the defendant offered to prove the drawer's name forged, but it was held that such proof would not be a defense against an acceptance which gave credit to the bill. Jenys v. Fawler, 2 Strange, 946. A note was made payable to J. C. in consideration of money given to be used in gambling, and indorsed by J. C. to the plaintiff for value. It was held that the plaintiff could not recover, even though he had no notice of the use to which the money had been put. Bowyer v. Bampton, Id. 1155. But see p. 314, note 87, infra. In Grey v. Cooper, an action by indorsee against the drawer of a bill, payable to W., who in turn indorsed it to another, and which finally came into possession of plaintiffs by indorsement, it was pleaded in defense that the payee was an infant. Held that the drawer was charged, on the ground that, according to the bill, he engaged to pay to the order of the payee, whoever that might be. 3 Doug. 65. In Smith v. Chester, it was held that an indorsee, in an action against an acceptor, must prove the handwriting of the first indorser, as a bill would be no payment to the one in whose favor it was drawn, unless indorsed by him. 1 Term R. 654.

tected by courts, because the loss was not occasioned by his act, but rather that of some prior party of whom he knows nothing.1o

METHODS OF TRANSFER

86. There are three methods of transfer:

(a) By assignment.

(b) By operation of law.

(c) By negotiation.

SAME BY ASSIGNMENT

87. A bill or note may be transferred by assignment, or sale, as distinguished from negotiation, subject to

the same conditions that would be requisite in the case of an ordinary chose in action.11

We have already seen that transfers in the form of words commonly used for an assignment when written on the bill or note are construed as indorsements and not as assignments, unless the intention between the parties plainly is to treat them as an assignment in distinction from an indorsement. 12 But where a bill or note, which can only be transferred by indorsement, is delivered without indorsement, yet with intention to give the transferee the right to sue, as we shall see in the later sections of this chapter, the right to sue vests by assignment.13 The legal effect of assignment differs from the legal effect of the

10 N. I. L. § 57. See Chapter VIII.

11 Chalmers' Dig. Bills (7th Ed.) 143. See N. I. L. §§ 49, 58.. 12 See p. 152, supra.

18 Examples are: An order by the payee of a note on the maker to pay over the proceeds to some one. Noyes v. Gilman, 65 Me. 589, semble. A transfer of a note or bill by deed. McClain v. Weidemey. er, 25 Mo. 364. An assignment by a separate writing. Morris v Poillon, 50 Ala. 403. An order by a holder to his collecting agent to pay over the proceeds. Gayoso Sav. Inst. v. Fellows, 6 Cold. (Tenn.)

passing of the legal title by negotiation. And this raises the question of the rights conveyed by assignment.11

The effect of the assignment of an ordinary contract right is that the party holding the right drops out of the contract and another takes his place. The assignee is substituted in place of the assignor. And that the student may better understand the matter, we will say that the assignee, and every subsequent person to whom the contract comes by assignment, may be considered as the person who made the contract in the first instance, and as having said and done everything in making the contract which the original assignor said or did. Hence if the original assignor said or did something which under the ordinary law of contracts would prevent him from enforcing the contract, or asserting his right against the other party to the original contract, the assignee, although he knows nothing of the original transaction, may be deemed to have said and done the same things. And further, if any subsequent assignee from whom, as an assignor, the holder in turn derives the contract, has done anything to prevent its enforcement against the original party, the last holder cannot enforce it against the original party. Each assignee takes his chances as to the exact position in which any party making an assignment of it stands.15 He takes the contract subject to

14 It was once held that a bill payable to A. or bearer was not negotiable. Hodges v. Steward, 1 Salk. 125; Nicholson v. Sedgwick, 1 Ld. Raym. 180. But these cases have been overruled. Graut v. Vaughan, 3 Burrows, 1516. See Daniel, Neg. Inst. § 104. Before the passing of the statute 3 & 4 Anne, c. 9, a promissory note was held not assignable or indorsable over within the custom of merchants. Buller v. Crips, 6 Mod. 29. See ante, p. 7. As to whether inland bills only were contemplated by this statute, see Milne v. Graham, 1 Barn. & C. 192. In the case of Lodge v Phelps, the question arose as to whether the assignee of a promissory note given in Connecticut, where such assignee could not maintain an action in his own name, might so maintain such action in New York. It was held that the action might be brought in the assignee's own name, but allowing the defendant every defense to which he would have been entitled in New York. 2 Caines, Cas. (N. Y.) 321.

15 Crouch v. Credit Foncier, L. R. 8 Q. B. 386; Mangles v. Dixon, 3 H. L. Cas. 735; Littlefield v. Albany County Bank, 97 N. Y. 581; Callanan v. Edwards, 32 N. Y. 483; Kleeman v. Frisbie, 63 Ill. 482;

equities; that is, to defenses to the contract which would avail in favor of the original party up to the time of the notice of the assignment given to the person against whom the contract is sought to be enforced. The effect of an assignment in this respect thus differs from the effect of negotiation, for the chief difference between an assignment and a negotiation is that the negotiable contract can be enforced by the transferee, without previous notice to the contractor, and without the risk of being met by defenses which would have been good against the assignor.

SAME BY OPERATION OF LAW

88. The full title to a bill or note passes, without assignment or negotiation, by operation of law, in the following cases:

(a) Upon the death of the holder, when the title vests in his personal representative, or

(b) Upon the bankruptcy of the holder, when the title vests in his assignee, or

(c) At common law, if the holder is an unmarried woman, upon her subsequent marriage, when the title vests in her husband, or

(d) At common law, if a bill or note be made payable or be transferred to a married woman, when the title vests in her husband, or

(e) Upon the death of a joint payee or indorsee, when the title vests at once in the survivor or survivors.

By "operation of law" is meant that in the cases above specified the law implies a transfer where there is none by act of the parties. The rules of law themselves effect the transfer. The position, rights and liabilities of executors and administrators and trustees have been already suffi

Willis v. Twambly, 13 Mass. 204; Spinning v. Sullivan, 48 Mich. 5, 11 N. W. 758; Lane v. Smith, 103 Pa. 415; Shade v. Creviston, 93 Ind. 591; Warner v. Whittaker, 6 Mich. 133, 72 Am. Dec. 65. But by statute in many states the assignee may sue in his own name. See, for example, Gamble v. Malsby (Fla.) 64 South. 437.

ciently explained.1 The position, rights, and liabilities of an assignee in bankruptcy are similar to theirs, because in most respects he is but an ordinary trustee.17 As regards the position of married women at common law, there is not much to be said, because in England and in almost all our states the common law has been abrogated by statutes abolishing most of the old rules. These rules were that at common law a married woman, though she might have contracted as feme sole, was nevertheless by marriage disabled from acquiring the benefits under the contract. These belonged conditionally to her husband. If he reduced them to possession, they were his absolutely. If he did not reduce them to possession, on his death they survived to her if alive, but, if dead, to her representatives. These rules were operative in case of bills and notes whether made payable to or indorsed to a married woman. And during the marriage, the husband was for all purposes deemed to be the holder of the instrument payable to the order of the wife, whether it was made payable to her before or after marriage. As regards the joint payee or indorsee, the rule stated in the text is the statement of the contract rule of survivorship, perhaps the principal characteristic of the doctrine of joint right. By this is meant that the order in the bill or indorsement and the promise in the note are made to all the promisees, not as separate individuals, but as one legal entity. We may liken them, in their being but one party in ownership, to a corporation, which may be composed of many individuals, yet acts as one, and which in case of the death of some of its members still exists and acts through the survivors. So with joint payees or indorsees, the right does not descend to representatives, but passes on or is transferred to the survivors, who have the title to it and are entitled to enforce it.

16 Ante, p. 90. Upon death of the holder, the title vests in his executor or administrator. Stone v. Rawlinson, Willes, 559; Rand v. Hubbard, 4 Metc. (Mass.) 256. Even if the bill or note be specifically bequeathed. Bishop v. Curtis, 21 Law J. Q. B. 391; Crist v. Crist, 1 Ind. 570, 50 Am. Dec. 481.

17 Title vests in assignee. Smith v. De Witts, 6 Dowl. & R. 120; Daniel, Neg. Inst. § 260.