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3. Where a bill is transferred without indorsement, the transferee takes it subject to such defenses as were available against the payee.

4. The signature of the payee on the back of the draft attached to a bill of sale of the goods for the price of which the draft was made is not such an "indorsement" as will pass the legal title to the draft, especially where it is followed by the printed statement: "Draft not good unless above bill of sale is signed, and draft also properly indorsed."

5. The question whether the bill sued on had been properly indorsed was one of law for the court, and should not have been submitted to the jury.

6. The fact that the drawee had paid other drafts transferred without indorsement did not preclude him from making any defense to the draft sued on which he might have made against the payee.

7. A bill drawn by an agent on his principal, and transferred by the payee without indorse ment, is in legal effect merely the note of the principal, and subject, in the hands of the assignee, to all defenses which the principal had against the payee.

8. The surrender to the payee of a note against him is a sufficient consideration to support the transfer of a bill of exchange.

9. Where an agent drew a bill on his principal on Sunday, and antedated it, the principal will not be heard to say, as against a purchaser of the bill, that the date which his agent gave it was not the true one.

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-Which I have this day inspected, and received from J. H. Flora. advanced on ties in woods. Names of land named in contract for Gray Tie & Lumber Company, and have branded same with

"C. W. Neel. "To Gray Tie & Lumber Co., Evansville, Ind."

This draft was upon a printed form, on the back of which appears the following (a printed form signed by the payee): "Have this day delivered to C. W. Neel, for Gray Tie & Lumber Co., the ties named in this draft,

and said ties are free from all liens and incumbrances of any character; and I hereby agree to pay all landing or yard rent, bankage, or wharfage on the ties named in this draft until said ties are removed. J. H. Flora."

Immediately beneath the signature above appears the following printed statement: "Draft not good unless above bill of sale is signed, and draft also properly indorsed."

The J. H. Flora named was a citizen of Kentucky at the time of the transactions herein recited, and within two or three days after the date of the draft sold and delivered it to appellee, taking in exchange, and as consideration for its transfer, his note for $1,500 owing appellee, and on which it is stated were other solvent names as sureties. The draft, being forwarded in the usual channel for collection, was not paid on presentment. Thereupon this suit was instituted.

Appellant set up numerous defenses, among them the following: (1) The draft was executed on Sunday, but was antedated by the drawer and payee, and, being in violation of the Sunday statute, was void, not being a work of necessity or an act of charity, etc. (2) That Neel, the drawer, was not authorized by appellant to draw this draft, and appellant owed him nothing, and had no fund or property of his in possession. (3) That Neel, the drawer, was appellant's agent in buying and receiving railroad ties, and that the payee, Flora, fraudulently and falsely, and with intent to deceive appellant's agent, represented to him that he, the said Flora, had 17,000 to 20,000 of ties in the woods at a certain point designated, the agent relying on the statements as true, and not knowing otherwise, when in fact Flora had not the ties named, or any considerable part thereof, and thereby committed a fraud upon appellant and his agent, the draft being in consideration of the sale to appellant of the number of ties named. (4) Appellant denied that appellee had purchased or discounted the draft for value, and denied that it had been indorsed to the bank by Flora.

It is necessary that the last-named plea should be sustained before any of the others, save the second, could be considered by the jury. We may say that the states of the Union are "foreign," each to the other, for the purpose of fixing the character of bills of exchange. Therefore a draft drawn in Kentucky upon, and payable by, a person in Indiana, is a foreign bill of exchange, and if sold or discounted for value, and indorsed to an indorsee, it is not subject to the defenses interposed in the four grounds first named, if the drawer had authority, as the drawee's agent, to draw this draft. It is alleged, and we think sufficiently proven, that Neel was the agent of the drawee, the Gray Tie & Lumber Company, engaged for it in the business of buying, receiving, and paying for ties, and to draw drafts on his principal

therefor. This being true, it was equivalent to a draft drawn by the drawee on itself, and consequently an acceptance by the drawee was not necessary to bind it. A foreign bill of exchange, under the law merchant, is negotiable, so as to prevent defenses, after it has passed into the hands of innocent purchasers, for value, by the methods recognized and provided by the law. An indorsement of a bill, made payable to order, is as essential to this end as is any other necessary attribute of the bill. In 1 Daniel, Neg. Inst. § 641, it is stated that, where a bill payable "to order" is transferred without indorsement, the transferee takes, not the legal, but only the equitable, title. "The holder can only stand in the shoes of his assignor, and recover subject to such defenses as were available against him, although he took it in good faith for value." Id. § 664a. And this was held to be equally true, although the failure of the payee to indorse was by his mistake. Bank v. Bingham (N. Y. App.) 23 N. E. 180. In the early case of Instone v. Williamson, 2 Bibb, 83, this court stated the distinction between a transfer by "assignment" and by "indorsement." Certain notes and other choses were by the act of 1748 made "assignable." It was contended in that case that they could not be transferred by assignment on another piece of paper, or otherwise than by "indorsement," as provided in the law merchant. Said the court, in noting the distinction: "We are aware that bills of exchange could be transferred only by indorsement, which ex vi termini means an assignment on the back of the instrument."

The question then arises whether the matter on the back of this bill, signed by the payee, is an "indorsement," within the meaning of the law. The customary method of indorsing a bill of exchange is merely the writing the name of the indorser on the back of the instrument, where an unqualified indorsement is intended. The law then implies the contract intended by this act, which, extended, would be that the indorser "intends to incur the liability of a party who warrants payment of the instrument, provided it is duly presented to the principal at maturity, not paid by him, and such fact is duly notified to the indorser." 1 Daniel, Neg. Inst. § €66. He impliedly "engages (1) that the bill or note will be accepted or paid, as the case may be, according to its purport, but this engagement is conditioned upon due presentment or demand and notice; he also engages (2) that it is in every respect genuine; (3) that it is the valid instrument it purports to Be: (4) that the ostensible parties are competent; (5) and that he has lawful title to it, and the right to indorse it." Id. § 669a. This is the contract, and the only contract, the law imputes to the indorser by his act. He makes this contract to the indorsee or subsequent holder, not to the antecedent parties to the instrument. He may enlarge this contract by waiving protest or notice of it.

He may diminish the implied contract by special matter inserted above his signature showing such a purpose. In the case at bar it is earnestly argued that the holder, the bank, had the right to fill in with appropriate words, above Flora's signature, the contract above implied. This would undoubtedly have been true had Flora merely signed his name across the back of the instrument. But it cannot be said that the holder can make a contract entirely different from the one intended by the payee when he signed the writing quoted. He did not leave it to conjecture or implication what was intended. On the contrary, he merely asserts, for the benefit of the drawee of the paper, and as an assurance concerning the consideration thereof, that he has delivered ties to the drawee's agent, and will not claim wharfage or bankage on them. The statement appears complete in itself, bears not the slightest resemblance to, or suggestion of, the contract of indorsement, and, furthermore, is made directly to the drawee, and not to any indorsee. The construction put by the parties themselves upon this statement, that it was not an indorsement, is the printed statement below it that the draft is not "good unless the above bill of sale is signed, and draft is also properly indorsed." As was said by the court in Instone v. Williamson, supra, indorsement is included in "assignment," as a species of the genus; the distinction being that "indorsement," under the law merchant, was as above set forth, while "assignment" might be by such indorsement or by a separate instrument. Therefore an indorsement not only implies the particular contract above set out, but it operates as a transfer of the payee's title to the bill. Could it be contended that Flora, by the execution of the writing on the back of this bill, thereby parted with his title to it? Appellee did not so regard the effect of its appearance; for it joined Flora as a party defendant, and properly so, if the bank took only the "equitable title" to it. If that bill, as it appears in the record, had been lost, and found and presented for payment by a stranger, would it have been a protection to the drawee to have honored it in the hands of another than the payee? Yet, if appellee's argument that Flora had properly indorsed it is well founded, it thereby became payable to bearer.

It is not infrequent that extraneous matter is indorsed or written upon a bill. When done, generally it is taken to be merely a memorandum (1 Daniel, Neg. Inst. § 170) for the use of the original parties. So, in this case, this matter appearing on the back of the bill, though signed by the payee, appears clearly to be but a memorandum, neither affecting its integrity, nor complying with the legal requirements of an indorsement; and all who may handle it are so notified and must take notice of the printed statement that follows to that effect. Bank v. Ewing, 78 Ky. 266. Parol evidence

was not admissible to enlarge or to vary the legal effect of the writing sued upon. And the fact, if it was a fact, that appellant sometimes paid drafts without indorsement, cannot be held to change the law giving negotiable qualities to certain paper. The question whether the bill had been properly indorsed in this case was one of law, and the court should not have submitted it to the jury under an instruction to find for the plaintiff if they believed from the evidence that Flora had, "before it was presented for payment, sold, transferred, and assigned it to plaintiff." From the lack of an indorsement by the payee, the paper lost the quality of a negotiable instrument that was not subject to defenses available to the drawee as against the original payee. We think this paper may be properly described in the language used by the superior court in Stafford v. Bratcher, 4 Ky. Law. Rep. 996: "If an order drawn by an agent on his principal be tested as if drawn by the principal on himself, it is, in legal effect, a promissory note, and liable, in the hands of an assignee, to all defenses which the principal had against the payee." The surrender of Flora's note by the bank was a sufficient consideration for the transfer. Smith v. Lockridge, 8 Bush, 427.

We think it was immaterial that the bill was drawn on Sunday. Appellant's agent drew it, and antedated it, and that, we have held, is equivalent to appellant's own act. Not having retracted it, but suffered it to be sold, appellant cannot now be heard to say that the date its agent gave it was not the true one.

Upon a return of the case, the question of Flora's alleged fraud, as affecting the consideration of the bill sued on, should be submitted to the jury, under appropriate instructions.

There was another issue made by the pleadings as to whether appellee did not agree with appellant, subsequent to the protest of the $1,500 draft sued on, to surrender it in consideration of a certain $750 draft and $388 draft drawn on appellant by its agent in favor of Flora, and alleged to have been assigned by him to appellee. We think instructions Nos. 3 and 5 given the jury properly submitted to them that question. The judgment below is reversed, and cause remanded for proceedings consistent herewith.

SPARKS v. COLSON et al.1 (Court of Appeals of Kentucky. Feb. 1, 1901.) HUSBAND AND WIFE-TRANSFER IN FRAUD OF CREDITORS-JUDGES-DISQUALIFICATION-RELATIONSHIP.

1. Where the wife's father paid one-third of the consideration for land purchased by the husband under an agreement, to which the wife was a party, that she should own one

Reported by Edward W. Hines, Esq., of the Frankfort bar, and formerly state reporter.

third of the land and its proceeds, but the husband took the title to himself, a deed executed by him after he became insolvent, and after the wife's death, conveying one-third of the land to her infant son by direction of her father, will not be set aside at the instance of the husband's creditors.

2. Neither the fact that a brother-in-law and a brother of the judge had each married an aunt of the infant plaintiff, nor that the judge was decidedly partial to plaintiff and his father, and was on the most intimate terms of friendship with the father, was sufficient to disqualify him to act in the case.

3. The mere statement of a party in his affidavit that the judge is personally hostile to him, without any statement of facts, is not sufficient to make a prima facie showing of prejudice.

Appeal from circuit court, Bell county. "To be officially reported."

Action by J. M. Colson, by next friend, against James Sparks and another, to enjoin the execution of a writ of possession. Judgment for plaintiff, and defendant James Sparks appeals. Affirmed.

N. B. Hays, for appellant. A. K. Cook, for appellees.

O'REAR, J. It appears from this proceeding that W. G. Colson was possessed of considerable property in Bell county, Ky., from 1883 to about 1890, some by inheritance and some by purchase. He had married a daughter of J. M. Wheeler, who also owned an estate of some $40,000. While in solvent circumstances, Colson purchased a tract of land, for speculation apparently, situated in Bell county, his father-in-law paying one-third the consideration for it, and Colson the remainder, the title to which was taken to Colson under an agreement with the fatherin-law and the wife that she was to own one-third of the land and its proceeds. It is not shown that Mrs. Colson ever knew that her husband took title to this tract of land to himself alone, or that she consented that he might do so. The proven agreement was that she was to own one-third of the land and its proceeds. Subsequently Colson sold this land and other property to the Pine Mountain Iron & Coal Company, taking in exchange about $1,300 in cash, and notes to himself for $5,000, and agreeing to take the two lots in controversy in this suit, being lots Nos. 10 and 11 of block 13, Pine Mountain Iron & Coal Company's addition to the town of Pineville. This was during the boom period, when values of all properties in that section were more or less inflated, and of town lots especially so. The sale of the land known as the "Collins Tract," in which Mrs. Colson or her father had the interest stated, was made in 1890, during her lifetime (she having died in August, 1890), but was not conveyed until January, 1891. Then it seems that Colson, in attempted fulfillment of his agreement with his wife and the father-in-law, started to have the deeds to the Pineville lots made to Wheeler, but at Wheeler's direction caused the deed to

be made to Colson's infant son, the appellee, J. M. Colson, son of his deceased wife. At that time Colson seems to have become extensively involved in debt, and was striving for time as against his creditors, resorting to many methods familiar in such transactions. Appellant, Sparks, subsequently procured a judgment against W. G. Colson for $97.93, and some $13 costs, on a liability antecedent to the deed to J. M. Colson, and caused the execution to be levied on the two lots, and became the purchaser at the sheriff's sale at the amount of his debt and costs. The lots were appraised at $1,000 ($500 each), which is shown to have been their fair value. Appellee, the infant, by his next friend, brought this action against the creditor and the sheriff, seeking to enjoin the execution of the writ of possession, the infant not having been a party to the proceeding under which the lots were attempted to be sold. The circuit court upheld the title of the infant, and perpetuated the injunction.

The principal questions for our consideration are: (1) Was the agreement and transaction between the debtor, W. G. Colson, and his wife and father-in-law, such as could have been enforced against Colson? And (2) is that transaction, and Colson's attempt to execute that agreement, in violation of appellant's rights as Colson's creditor? Even in the absence of the numerous high authorities on the subject, we would have no hesitancy in adopting the views herein expressed. These authorities include many examined, but not cited. Those from this court, covering a long period, and the services of many of its most illustrious members, are deemed sufficient. The facts above stated are proven beyond question; indeed, are proved by witnesses introduced by appellant. There is no evidence to the contrary. The usual difficulty in applying the principles of this decision to cases attempted to be brought within their operation is the proof of the consideration moving the conveyance, and the question of fraud on the part of the debtor. The fact that the man is largely in debt, insolvent, and makes a preferential conveyance to his wife, are circumstances calculated to arouse suspicion, bringing seriously into question the truthfulness of the alleged agreement. An examination of the cases where the principles of this decision have been denied will show generally that the proof was not satisfactory, or tended to show positive fraud, or that the personalty of the wife had been reduced to possession by the husband without any agreement, and that the agreement for settlement on her and the settlement were made after he became insolvent, and many years after he had received her property. If this were an action by Mrs. Colson against her husband to compel the execution of the contract between them, we do not doubt that the chancellor would be amply justified in decreeing its specific performance. He agreed with her and her father that, if he was given

the possession of this $1,000 which the father held for her, he would invest it in land, and that, to the extent her money paid for it, it should be her land, and, when sold, she should have a corresponding right to the proceeds. This was a commendable and lawful contract, with sufficient valuable consideration to uphold it. Having received the consideration on the terms named, he was morally and legally bound to convey to her the agreed interest in the land, or, in event of its sale, an equal interest in its proceeds. The proceeds of the sale included the lots in controversy, and, as the husband took to himself the cash and cash notes received for the land, leaving only the lots of no greater value than her interest in the original tract, he would have been compelled at her suit to have conveyed them to her. That he has voluntarily done what in good conscience and under the law he was bound to do can detract nothing from the act. In the case of Lyne v. Bank, 5 J. J. Marsh, 552, the court denied the wife's claim because it was not founded on an antenuptial contract, or an agreement made before the husband had reduced the wife's property to possession. In Latimer v. Glenn, 2 Bush, 535, it seems the husband reduced his wife's personalty to his possession without an express agreement to reimburse, but subsequently, when proposing to convey some of his land, in which she held potential dower, he agreed to make a settlement upon her equivalent to what he had received from her, if she would relinquish the dower; she having refused to do so until he made such an agreement. The court upheld that contract, and, the husband having conveyed to her, while in failing circumstances, a homestead of no greater value than her property received by him, the transaction was upheld as against his creditors. In Miller v. Edwards, 7 Bush, 394, the wife owned real and personal estate in her own right, but not her "separate estate," which her husband took upon the marriage, converting the personalty, and afterwards the proceeds of the realty, which they conveyed, he agreeing to reinvest the proceeds in other realty in her name. However, he took the title to himself "for reasons consistent with the husband's integrity," without her knowledge or consent. They afterwards sold this last-named land, and he again agreed with the wife to reinvest the proceeds in land, to be secured to her as the former should have been; "but without her knowledge or consent the title was again conveyed to the husband for a singular reason, but consistent with his honor." They afterwards sold and conveyed this tract, too; but a portion of the proceeds-not more than what the husband had received of his wife's property-was evidenced by notes, which were agreed to be placed in the hands of a stranger to hold in trust for her. The husband's creditors attached, attacking this last-named transaction as to the notes as fraudulent as to the cred

itors. Responding to this attack of the creditors, this court, speaking through Chief Justice Robertson, said: "The foregoing facts show that the appellant, Nannie, without any voluntary act for placing the ostensible title in her husband, and without the semblance of fraud in any respect, has already, through her husband and his creditors, lost at least half of her patrimonial estate; and, if the judgment in this case be affirmed, she will have lost nearly the whole of it. But such loss cannot be sanctioned by the facts and the established principles of equity. Such a contract as that made with her husband before her land was sold is valid and enforceable, as between the parties to it, as a prudent mode of preserving her estate against his improvidence or capricious power. Even without any explicit stipulation, an available trust resulted by implication, unaffected by the statute of frauds or of conveyances. This principle now requires no citation of authorities in its support. Nor does section 20, c. 80, of our Revised Statutes, affect the trust, because the title was conveyed to her husband against her will, and in violation of fiducial faith. There is no ground to presume that the husband ever intended to convert the wife's estate or its proceeds to his own use, or that any act of hers sanctioned any such conversion. As between themselves, therefore, all that remains is equitably as much hers as ever it was. The execution of the notes to her separate use was, consequently, not a voluntary settlement of which creditors could complain, but only a partial fulfillment of a long antecedent trust, founded on not only a valuable, but sacred, and much more than a commensurable, consideration. The notes, expressing the trust on their face, could deceive no creditor, and would give notice to any purchaser or other assignee. The appellees do not stand in the attitude of purchasers, and in that of creditors their equity is less meritorious than that of the appellant, Nannie, and long posterior to its origin continuously preserved. Before they became creditors they had constructive notice of her rights, and a court of equity should not help them to devest her of this fragment of her inheritance." This court again, in the more recent case of Sanders v. Miller, 79 Ky. 519, reaffirms the same salutary principle in the following language: "While contracts made between husband and wife, as a general rule, are void, still if a husband voluntarily enter into a contract to make, or he does make, a settlement upon his wife in discharge of an obligation arising out of the reception of her property under an agreement made before its receipt or reduction to possession, such as the chancellor would, on her application, make upon her, neither the contract nor the settlement would be regarded as fraudulent against creditors." The fact that the conveyance was made by the husband to his wife's child at the instance of her father after her decease, while

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not a literal compliance with his contract, was nevertheless an attempt on his part to do so in such manner as was satisfactory to, and directed by, the only one of the parties to the agreement who was alive, and whose interest in his daughter's offspring would naturally prompt him to look after their welfare as against their father's interest. Whether the infant plaintiff took the complete title to the lots, or holds it in trust for his deceased mother's other children, is not necessary now to determine; for, in either event, he was entitled to be protected in its complete possession as against the writ sought to be enforced by appellant.

After the issue in this case had been formed, demurrers and motions to strike from pleadings having been filed and acted on by the court (whose rulings in determining them we think were correct), appellant filed his affidavit with the clerk, of the court attempting. to show cause against the regular judge's presiding in the case, and moved the court that an election be held for a special judge to try this case. The court overruled the motion. The affidavit stated that the affiant (appellant) had learned since the issues in the case were joined that the Honorable M. J. Moss, judge of the court, was related to some of the parties to the action, and proceeded to state the relationship. The affiant says that the judge's wife's brother married a sister of the infant plaintiff's father, that the next friend suing for the infant plaintiff had married said infant's cousin, and that the judge's brother had married a sister of the plaintiff's father. We are of the opinion that this relationship, if it can be termed more than a "visiting" one, is too remote to have in any probability biased the judgment of the judge, or even a juror.

The next point made in the affidavit wasthat the judge's brother-in-law was surety on a supersedeas bond executed to stay proceedings on the judgment rendered in that court awarding the possession of the lots in controversy to the affiant, and that the decision of this case would determine the liability of the parties to that bond. The affiant was in error, in our opinion, as to the legal effect of the supersedeas bond in question. That bond had been executed in another proceeding. The appeal had been prosecuted and dismissed. The liability of the parties to the bond thereby became fixed, and in no wise could the determination of this suit affect it.

The affidavit further stated that the judge and his brother-in-law, J. S. Bingham, and the infant plaintiff's father, W. G. Colson, were, and had always been, on the most intimate terms (of friendship, it is presumed), and engaged in many business transactionstogether, and "that said Moss has a decided partiality for co-defendant, W. G. Colson, and the plaintiff, J. M. Colson." In the nature of our judiciary system, the judges are selected from lawyers resident of the dis

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