The opinion
BEAN, J.,
dissenting. In this suit it appears that on November 1, 1921, the defendant, Stanfield Fraternal association, a corporation, executed to the three plaintiffs, Annie Webster, Florence A. Webster and Florence E. Finney, six negotiable promissory notes, each for the sum of $1,000. The first was payable November 1, 1922, and the others annually on the first of November each year until 1927; also one note for the sum of $500, payable November 1, 1928. At the same time they executed a mortgage in favor of the payees upon certain real estate in the city of Stan-field, Umatilla county, Oregon, to secure the payment of such notes. The notes were each indorsed by the payees as follows: “Pay to the order of the First National Bank, Fargo, N. Dak.” signed by two of the payees, by their attorney-in-fact, and one by her agent.
About the time the first note matured the Bank of Fargo indorsed the note of $1,000, due November 1, 1922, as follows:
. “Without Recourse PAY ANY BANK OR BANKER, or order.
(Signed) First National Bank of Fargo, N. D., G-. W. Jensen, Cashier,”
and forwarded the note to the Bank of Stanfield, at Stanfield, Oregon, where the note was payable for collection.
The note not being paid when due, in November, 1923, Mrs. Anna M. Young, the intervener,, purchased the note through Frank Sloan, her son-in-law and agent, paying into the Bank of Stanfield the amount
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of the note and interest, amounting to $1,065.30: The bank turned the note over to Frank Sloan for Mrs. Young and he delivered the same to her. The note at the time was indorsed as it now is. However, it was not regularly indorsed. Instead of the Bank of Stan-field indorsing the note, which was payable to its order, in accordance with the indorsement of the First National Bank of Fargo, one M. B. Ling, an officer of the bank, struck out the name “First National Bank, Fargo, N. Dak.” by running a line through the same, and inserting the name of “Anna M. Young.” Mrs. Young retained the note and the Stanfield Fraternal association paid interest thereon to her for some time.
The Stanfield Fraternal association failed to pay any of the notes and on May 24, 1927, the payees commenced this suit in the circuit court for Umatilla county to foreclose the mortgage and for judgment for the amount of all the notes,- except the first one due November 1, 1922, alleging that the latter note had been paid. Mrs. Anna Young intervened in the suit and filed a cross-complaint, in which she claimed the note was sold to her by the payees, asking a judgment on the note of $1,000 and interest, also that the mortgage be foreclosed and that her judgment be paid first from the proceeds of sale.
A reply and answer to the cross-complaint of Mrs. Young was filed putting in issue the material allegations of the cross-complaint. The testimony was taken before the official reporter, as referee, and submitted to Circuit Judge J.
W.
Knowles, who rendered a decree foreclosing the mortgage and granting a judgment against the defendant Stanfield Fraternal association in favor of the intervener, Anna M. Young, for the sum of $1,000, with interest from November 1,
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1927, and attorney’s fees, and ordering the real estate to be sold and the proceeds of sale be applied proportionately to the amounts due the plaintiffs and intervener, Anna M. Young.
The plaintiffs, being dissatisfied with the decree, have appealed from that part of the decree in favor of the intervener. It is the claim and contention of the plaintiffs that the note in question, for $1,000, due November 1, 1922, claimed by intervener, Mrs. Anna M. Young, was paid and that no one who dealt with the note had authority to transfer the same to Mrs. Young.
The depositions of the payees of the notes, who are now living, were taken and their indorsement to the Bank of Fargo, is admitted, and the indorsement of the Bank of Fargo to any bank or banker, or order, and the sending of the note to the Bank of Stanfield is not questioned.
We have then for consideration a note transferred to the intervener for its full face value after the note was due without a regular indorsement. It may be well to state that, in so far as the testimony shows, there was no wrong intended in the irregular indorsement of the note to Mrs. Young. Instead of the bank indorsing it in a regular way, a short cut was taken and Mrs. Young’s name inserted as stated.
It is the contention of the plaintiff, as we understand the record, that the payees of the note never authorized the Bank of Stanfield, or any one, to transfer the note to Mrs. Young, or to any one. The suit appears to have been tried upon the theory that the note was transferred to Mrs. Young, or claimed to be, by or through an agent other than the Bank of Stanfield.
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In- regard to the claim of the plaintiffs that no authority was given by the payees of the note for a transfer of the note in question, we first notice the written indorsement of the plaintiffs and also the one made by their authority by the First National Bank of Fargo. When Mrs. Young purchased the note she, by her agent, Frank Sloan, who was an an officer of the: Bank of Stanfield, was allowed to take the note and present the same to attorneys at Pendleton in order to ascertain the regular status of the note and if Mrs. Young could legally purchase the same.
The note was then indorsed by the payees “Pay to the order of the First National Bank of Fargo, N. Dak.” and also the indorsement of the Bank of Fargo, “Pay to any bank or banker, or order.” We, therefore, see no reason for entering the realm of the oral testimony in regard to the authority given by the payees of the note to the First National Bank of Fargo, or to the Bank of Stanfield. The authority is plainly in writing, authorizing the note to be paid to the order of the Bank of Stanfield. This is not questioned by plaintiffs, except in so far as their conclusions differ therefrom.
We will, therefore, consider the transfer to Mrs. Young, and, first, -without considering that the note was indorsed to her in any manner. § 7841, O. L., provides in regard to the effect of a transfer .of a negotiable instrument without indorsement, as follows;
“Where the holder of an instrument payable to his order transfers it for value without indorsing it, the transfer vests in the transferee such title as the transferrer had therein, and the transferee acquires, in addition, the rights to have the indorsement of the transferrer; but for the purpose of determining
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whether- the transferee is a holder in due course, the negotiation takes effect as of the time when the indorsement is actually made.”
It is the rule, especially in this state, that the transfer without indorsement of a promissory note, payable to order, assigns, under the law merchant, only an equitable right, which could be enforced by suit in the name of the payee only; but under § 27, O. L., providing that every action, with certain exceptions, not pertinent here, shall be prosecuted in the name of the real party in interest, a person may maintain an action in his own name on a note transferred to him without indorsement:
First National Bank v. McCullough,
50 Or. 508 ( 126 Am. St. Rep. 758 ; 17 L. R. A. N. S., note, 93 P. 366 );
Simpson v. First National Bank,
94 Or. 147 ( 185 P. 913 ).
In this suit there are no equities, or defenses to the note by the makers to be taken into consideration. Any assignment of the note to Mrs. Young that would pass an ordinary chose in action was sufficient to transfer the note and authorize her to. maintain the suit. She bought the note in good faith and paid the full face value therefor and is entitled to maintain the suit, and the decree of the circuit1 court, while perhaps based upon a different reason than the one to which we have referred, and the case was tried upon a somewhat different theory, should be affirmed.
The case of
First National Bank v. McCullough,
supra, appears to be a leading one by the note to that case in 17 L. R. A. N. S. The rule therein enunciated has never been changed, but has been followed in this state. A mere fact that there was an irregularity in the indorsement of the nóte to Mrs. Young, or no indorsement at all, should not mitigate against her equitable right in a suit where equity will hold that
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to be done which ought to be done:
Simpson v. First Nat. Bank,
supra;
Farmers Loan & Trust Co. v. Brown,
182 Iowa, 1044 ( 165 N. W. 70 );
Hughes v. Nelson,
29 N. J. Eq. 547, 550.
As stated in I Daniel on Neg. Instruments, § 664, (a) quoted from in note to
Bank v. McCullough,
17 L. R. A. N. S., at 1106, “the transferee without indorsement takes it as a mere chose in action, and must aver and prove the consideration; and he takes it subject to all equities that attached to it in the hands of his transferrer.”
We read in that note as follows:
“Under the general rule as given above, there can be no question but that a note transferred by the payee without indorsement is subject, in the hands of the transferee or any subsequent holder, to all the equities existing in favor of the maker against the payee. ’ ’
The Stanfield Fraternal association never paid a cent upon the note in question, except interest. It never had the right to the possession of the note, or the right to do anything in regard thereto, except, to pay the same.
It is claimed in this ease that, after the transfer of the note to Mrs. Young, the Stanfield Fraternal association, through one M. R. Ling its officer, wrote to the agent of the payees, saying, among other things, in effect, that they had taken up the note, and that such ■statement indicated that the note had been paid. Whatever the Stanfield Fraternal association, or any of its officers, saw fit to write ..to the plaintiffs, could not by any stretch of imagination bind or affect Mrs. Young, and, as we view it, this testimony was immaterial.
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Frank Sloan was president of the Stanfield Fraternal association. It would appear that the only interest that the association had was to have it so arranged that they would have time to pay the note. Ling, at that time, by his letter evidently desired to bolster up, to a certain extent, the credit of the association.
There is a wealth of discussion of authorities in the brief of plaintiffs in regard to the proof of an authority of an agent, which we see no good reason to consider, as the indorsements on the note were in writing, plainly mailing the note payable to the order of the Bank of Stanfield, which in equity and good conscience should have indorsed the note to Mrs. Young. It might have been done without recourse and without costing the bank a cent. See
Simpson v. Bank,
supra.
The plaintiffs argue, in effect, that they transferred the note to the Bank of Fargo and it in turn sent the note to the Bank of Stanfield simply for collection; but they did more than that — by their indorsement they made the note not only payable to the Bank of Fargo but to its order. That bank, and its acts are not questioned by plaintiffs, made the note payable to the order of the Bank of Stanfield.
It is claimed by plaintiffs that their letter showed that the note was banked for collection only. Any secret instruction that plaintiff may have given to the bank, about which Mrs. Young knew nothing, could not affect her rights.
It appears that about the time the note was due the plaintiffs were taking over some property and had a large tax to pay in completing the arrangement. They were anxious to obtain the money on the note and wrote directly to the Stanfield Fraternal association.
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On August 23, 1923, the payee’s agent, W. H. Finney, wrote “M. R. Ling, Stanfield Fraternal Ass’n.” in regard to the notes in part, thus: “If you can ‘beg, borrow or steal’ the part that is coming to us on your deal I would very much appreciate it if you would send it on at once. ’ ’
Frank Sloan, Mrs. Young’s son-in-law and agent, testified in regard to the note, in part, that he got the money for Mrs. Young and left the $1,065.30 at the Bank of Stanfield. He stated:
“And I went to Echo, and got the money from Mrs. Young in a C. D. She had certificates of deposit in the Bank of Stanfield, in the amount of $1,250. When I returned to the Bank, this note had been indorsed as it is now, ‘Pay to the order of Anna M. Young,’ and I took this note and the $250 note to Echo and turned it over to Mrs. Young.”
The Bank of Stanfield forwarded the money by a cashier’s check to the Bank of Fargo for the plaintiffs.
Ling, being a viec president and director of the Bank of Stanfield and also an officer of the Stanfield association, complicated the matter and caused some misunderstanding, as it appears that after Sloan left the money at the bank it was placed to the credit of the Stanfield Fraternal association and then a check was drawn by the association in favor of the bank for the amount. This was a mere matter of bookkeeping and did not change the real transaction. As stated, the Stanfield Fraternal association had no right to the money or the note.
There is no ttestimony indicating that the note was ever paid by the Stanfield Fraternal association, except as to the interest. Ling was first called as a witness for plaintiff and then by Mrs. Young. He was. asked this question and gave the following answer:
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“Do you mean that the Stanfield Fraternal association sold the note to Mrs. Young? Ans. They did not.”
It is suggested that the Stanfield association paid the note and reissued it to Mrs. Young. This could not have been done as the association never paid the note or had the right of possession thereof, or to the money paid by Mrs. Young. Whatever Ling could legally do in regard to the transferring of the note must have been done by virtue of his authority as an officer of the Bank of Stanfield, notwithstanding how he, in his wisdom, might have considered the matter.
The payees of this note enclosed it and sent it out into the commercial world and Mrs. Young bought it. Plaintiffs ought not to complain. If any mistake or misunderstanding arose it was the fault of plaintiff’s bankers acting for them.
Mrs. Young was the owner and holder of the note, as she alleged in her cross-complaint. She paid the full amount therefor. The equities are all with her. She is entitled to her proportionate share of the mortgage property.
The decree of the circuit court should be affirmed.
Hamilton, Acting J., concurs in this opinion.