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Rossman v. McFarland.

372] such assignments to be "unlawful" and *“ absolutely void as against the operation and provision of said acts." No title can be acquired by an assignment which is in violation of law. McClintock v. Cummins, 3 McLean, 161. The sole question is, whether the legislature intended to prohibit such assignments either expressly or by implication. Smith's Merc. Law, 647.

The district court, in rendering judgment in this case, necessarily passed upon the title by which the defendant in error held the note. If the note had not been assigned to the defendant in error, he clearly could not have recovered, though he had a complete equitable title to the note. For the same reason, if the title of the assignees of the bank was acquired in a manner and for a purpose forbidden by a public law, it was void.

The distinction is between a mere private fraud and an act done in violation of a public law enacted for the public welfare. It is conceded that any mere private fraud between the assignor and assignee of a negotiable instrument, can not be set up by the maker to defeat the title of the assignee; but it is otherwise if the assignee acquired his title in violation of some public law. In the latter case the assignment is void, as to everybody, on the ground of public policy.

2. The district court erred in not treating the note as paid.

In June, 1842, when the note matured, McCleary was still one of the assignees of the bank. If he had resigned his trust before the maturity of the note, perhaps a different question might have arisen, for then it might be said payment could not have been made to him. But when this note matured, McCleary was the one by whom, and to whom, it was to be paid. In default of actual pay. ment, he could not sue himself. The same hand was to receive and pay, and payment is therefore conclusively presumed. McCleary was entirely solvent when the note matured, and for four years afterward, during all which time he, as assignee, held the note. It 373] is true, there were two other *assignees besides McCleary, but the trust was strictly a joint trust, and payment to one was pay. ment to all. 2 Greenl. Ev., sec. 518. The two other assignees could not have sued without joining McCleary as co-plaintiff. The right of action being thus gone, the law says the note shall be treated as assets in the hands of the trustees. See Stephens' Adm'r v. Gaylord, 11 Mass. 257; Winship v. Bass, 12 Mass. 199; Salk. 306,

Rossman v. McFarland.

296;

v. Du Rhone, McNaughton Select Eq. Cas. 180; Cox (N. J.), 153.

The same principle was held in Bigelow v. Bigelow, 4 Ohio, 138. See also Com. Dig. 337.

3. Admitting that we are wrong in claiming that the note should be treated as paid, yet we think there can be no doubt, as the right of action against McCleary, the principal in the note, was suspended by the act of the assignees in holding the note until its maturity, that this discharged Rossman, who was merely the surety. Sco Bank of Steubenville v. Leavit, 5 Ohio, 207.

The surety had a right to pay the note and sue the principal. He had a right under the statutes then in force, to notify the holder of the note to put it in suit. Swan's Stat. (1841) 878.

He had a right to proceed in equity to compel the principal to pay the note. Burge on Surety, 378.

But all these rights were rendered unavailable ; for the holder was the maker of the note, and could not sue upon it.

N. C. McFarland, argued :

1. It is claimed that as the assignment made by the Bank of Hamilton, is declared "unlawful," and as it is in violation of a public statute that therefore no rights could pass to the assignees. But in order to determine this question, we must look at the true intent of the act. Against whom is it unlawful? And when is it to be so held? Evidently only as between the bank commissioners and the bank or its assignees; for such assignments “shall *be held [374 absolutely void as against the operations and provisions of said acts.” Did the legislature intend that if the bank commissioners never appeared to claim the assets, that thereby the debtors of the bank should all be released from liability? This is the position taken in the argument submitted on the other side. But suppose it to have been proved that the assignment was made in fraud to prevent the bank commissioners from closing up the bank. It is a well established rule, that none but the defrauded can take advantage of it. There is no fraud practiced on Rossman that he can complain of. And whether the bank has exceeded its powers, or violated law, is not a question that can be inquired into in this collateral way. See Banks v. Poitiaux, 3 Rand. 136; Grand Gulf Bank v. Archer, 8 S. & M. 151; Chester Glass Co. v. Dewey, 16 Mass.

Rossman v. McFarland.

94; Gilman's Dig. 84; Voorhes v. Receivers of Circleville Bank, 19 Ohio, 463.

The defendant, in an action upon a promissory note, is not allowed to contest the plaintiff's title to sue, except for the purpose of protecting himself from a subsequent suit in the name of some one having a better title to sue, and who has not acquiesced in the suit commenced. Hackett v. Kendall, 23 Vt. (8 Wash.) 275 ; Varner v. Lamar, 9 Ga. 589.

But especially does the defendant below not stand in a position to dispute title. By the very terms of the note sued on, he has accounted with the assignees in that capacity, and consequently is estopped from denying such capacity and ownership. 2 Greenlf. . Ev. 127, 129; 1 Saun. P. & E., 46, 49; 2 Phillips Ev. 125 ; 1 Chitty's Pl. 308.

2. But it is said that the court erred in not treating the note as paid.

No act of the parties having occurred after the giving of the note, which would discharge the surety, what is the nature of the contract entered into by him when this note was given ; and has it any binding validity? And here counsel for plaintiff in error seem to 375] be laboring under *a total misapprehension. They treat the note as though it were joint only, whereas it is joint and several, which, in many respects, makes the rights of the promisors very different. Ilere is a distinct and several obligation on the part of Rossman to pay this note to the assignees. They are not willing to take McCleary & Johnson. Rossman says, I will pay it. Not that he will pay, if the others do not, as a guarantor, or as an indorser if duly notified, but absolutely, as a several maker of the note. Hence all the authorities cited by counsel on this branch of the case, are inapplicable, as there is not one of them that contemplates such a contract as is here made. True, McCleary can not sue himself; but what legal objection is there to McCleary, Millikin, and Corwin suing Rossman? None whatever. His contract is with them, to pay the note to them.

It is well settled that a creditor, where the contract is several, may resort, first, to the surety for the payment of his debt, without applying to the principal. Geddis v. Hawk, 1 Watts, 280; 5 Obio, 104; 13 (oon. 412.

All the payers of a joint and several promissory note are princi. pals, and their relation to each other does not affect their liability

Rossman v. McFarland.

to the payee. Carson v. Hill, 1 McMullen, 76; Bull v. Allen, 19 Conn. 101; 13 Id. 412.

The sureties of a note are liable, although the note is void as to their principal, because she was a feme covert when it was signed. Smyley v. Head, 2 Rich. 590.

The assignees, then, could have supported this action against Rossman; and if there is anything to prevent, it is a technical legal objection only, which is disposed of by the indorsement of the note to the defendant in error. That he can sustain the action, though the payees might not, is clearly established by authority.

It is not a valid objection to a suit against a surety upon a promissory note, that it is brought for the benefit of the principal in the note and two others as executors of an estate. Hampton v. Shehan, 7 Ala. 295. A case quite analogous to the one at bar, because this suit is not brought *for the benefit of McCleary, [376 he baving no personal interest in it.

See also American Bank v. Doolittle, 14 Pick. 123; Smith v. Lusher, 5 Cow. 688; Smyth v. Strader, 9 Port. 446; Norton v Downer, 15 Vt. 569

Where a note is made payable to two of the makers, their indorsement will pass the property in the pote. Pitcher v. Barrows, 17 Pick. 361.

3. But it is said the right of action was suspended. If there never was a right of action on this note, there never could have been a suspension of that right. But the law of 1850 (Swan's R. S. 250, sec. 183) preserves the right to this action in the name of the corporation. See Stetson v. City Bank of New Orleans, 2 Ohio St. 167.

4. It is further argued that Rossman had a right to pay the note and sue the principal, or to notify the holder to put it in suit, or proceed in equity to compel the principal to pay the note; and that these rights were all unavailable, for the bolder was the maker, and could not sue upon it. I admit that he had all these rights, but deny that one of them was unavailable. They were all at his command. Suppose that he had notified the holders in writing, under the statute; could they not have sued him alone upon his several agreement to pay it? This will not be denied. What obstacle was there in the way of Rossman proceeding in equity to compel the principal to pay it, or to pay it himself, and then sue McCleary & Johnson? It appears to me none.

If Rossman had

Rossman v. McFarland.

notified the holders in writing to sue, true they might have sued him alone at law, or gone into cquity for the settlement of the whole matter; but he would immediately have had his remedy against the principals.

Clark & Millikin, for plaintiff in error, in reply:

It is claimed by defendant in error that the plaintiff in error is estopped from denying the character of the assignees, having 377] treated them as such assignees. But the *doctrine of estoppel does not apply when the party stands in a character which is against the policy of the law. The capacity which we are estopped from denying must be one which the law will tolerate.

Much is claimed by the defendant in error from the fact that the promissory note sued upon is several as well as joint. The case of Chandler's Ex'rs v. Shehan, 7 Ala. 251, is directly in point, and, with the authorities cited in it, clearly establishes the following propositions, peculiarly applicable to the case before the court : 1. Where one of several joint trustees, with a surety, executes a joint and several promissory note to himself and his co-trustees, the amount of the note, when it falls due, if it still remains in the hands of the trustees, and if the maker still continues to be one of the trustees, becomes assets in the hands of the trustee who is maker, and is treated as if paid to him ; 2. In such a case, the trustees who are not makers, can not sue their co-trustee and his surety, even in equity; 3. A payment by one of several joint trustees to his co-trustees, of a debt due from him to all the trustees, will not discharge him from his liability to account to the beneficiaries of the trust.

To the position that if Rossman had notified the holders of the note to sue upon it, in pursuance of the “ act for the relief of sureties and bail," an action might have been commenced against him alone, we reply: 1. When a surety has given notice under the statute, a suit against him alone is not a sufficient compliance with it. Sterling v. Buttles, 2 Ohio, 304. 2. We have already shown that no suit, either at law or in equity, could have been sustained by the assignees, or any of them, against either principals or surety, on the note in question, because it had become extinguished by payment, eo instanti that it fell due.

l'ECK, J. The only points relied on for the reversal of the judg.

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