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Vol. II.]

MAITLAND V. THE CITIZENS' NATIONAL BANK OF BALTIMORE.

[No. 6.

to the extent of maintaining fully the doctrine of the cases in the supreme court, to which we have referred. In the case of the Cecil Bank v. Heald et al. 25 Md. 563, this court held that a bona fide holder of negotiable paper for value, without notice, will be protected against the antecedent equities existing between the original parties, and that such holder is entitled to protection where he has received the paper in payment of an antecedent debt, regarding such debt as a valuable consideration; and the case of Swift v. Tyson was so far approved, as it declared that the receiving of negotiable paper in payment of a preexisting debt is according to the known usual course of trade and business. The court however declined expressing any opinion upon the rights of a holder of a negotiable instrument received by him as security for a preexisting debt.

The case of Miller v. The Farmers' & Mechanics' Bank of Carroll Co. 30 Md. 392, has been relied on by the counsel of defendant, as maintaining a doctrine somewhat at variance with that maintained in Swift v. Tyson. But we are not of that opinion. The case of Miller v. The Bank was the ordinary case of a bank asserting its lien upon securities in its hands for the payment of balances due from its customers. According to the law of the land, the bank, a kind of factor in pecuniary transactions, was entitled to a lien upon all the securities for money of its customers in its hands for its advances to such customers, in the ordinary course of business, without reference to the true ownership of such securities, if the bank was without knowledge upon the subject; Davis v. Bowsher, 5 T. R. 488; Collins v. Martin, 1 B. & P. 648; Barnett v. Brandao, 6 M. & Gr. 630; and the question was, whether the bank had received the note from its customer, in its usual course of dealing, without notice of the true ownership, and whether any credit had been given on the faith of it.

There being then no adjudication in the state to restrict the application of the principle as maintained in the decisions of the supreme court to which we have referred, we have no hesitation in giving to it our full approval; believing it to be supported by reason, and the usual and ordinary course of dealing in the commercial community, as well as by a decided preponderance of judicial authority. Indeed so well established is the principle, as applicable to accommodation paper, that we find Mr. Parsons, in his work on Notes and Bills, 1 vol. p. 226, stating that it is universally conceded that the holder of an accommodation note, without restriction as to the mode of using it, may transfer it, either in payment, or as collateral security for an antecedent debt, and the maker will have no defence. See also Lord v. Ocean Bank, 20 Penn. St. 384.

Applying the principle just stated to the case before us, and there can be no doubt of the sufficiency of the consideration for the transfer of the note to the plaintiff, whether it was as collateral security for a preëxisting or a contemporaneous debt, or to secure future discounts or advances, or all combined. In either case, the consideration would be valuable in the sense of the rule which protects the holder of negotiable paper, and the plaintiff be entitled to the full benefit of the security, unless mala fides, or notice of such facts as will impeach its title to the note be shown. And this brings us to the consideration of the second question raised by the prayers of the defendant.

2. The defendant himself proved that the note was furnished the payees

Vol. II.]

MAITLAND V. THE CITIZENS' NATIONAL BANK OF BALTIMORE.

[No. 6.

to be used as security for the two drafts of the 10th of January, 1872, and any subsequent drafts that might be discounted by the plaintiff for the payees in the note, and for that purpose only; and consequently the payees exceeded their authority in the use of the note, if they did in fact pass it to the plaintiff as collateral security for prior discounts as well as those on the 10th of January, and any that might subsequently be made. But the question is, who is to bear the consequence of this excess of authority? Plainly, we think, not the plaintiff, unless it be shown that the note was taken by it with knowledge of the fact that the payees had exceeded their authority in the use of the note. If the fact of such knowledge be established, then, clearly, the plaintiff would be affected by it, and could have no right to recover except for amounts due on the discounts for which the note was authorized to be pledged. With such knowledge of the excess of authority, or misappropriation by the payees, the plaintiff in taking the note would have acted in bad faith, and having so acted would be liable to have its title to the note effectually impeached. It is a general proposition, laid down in all the authorities upon the subject, that, while it is no defence to an action by an indorsee for value against the maker of an accommodation note, who has received no consideration, that at the time the plaintiff took the note he knew it was such accommodation paper, yet, if he received it of a person who held it for a particular purpose, and was therefore guilty of a breach of duty in appropriating it to a different purpose from that intended, and the plaintiff at the time was aware of the fact, he cannot recover as against such maker of the note. Byles on Bills, 128; Stoddart v. Kimball, 6 Cush. 469; Small v. Smith, 1 Denio, 583. But if the defendant seek to impeach the plaintiff's title by alleging notice of the fraud or breach of duty by the payees, it is for him to prove it; as the transfer of a negotiable instrument before its maturity raises the presumption of the want of notice of any defence to it; and this presumption prevails until overcome by proof. Carpenter v. Longan, 16 Wall. 271.

In this case, in order to make the defence effectual, on the ground of the want of authority in the payees to pledge the note for past discounts, there should have been such proof as would have justified the conclusion that the plaintiff, through its agents or officers, had actual knowledge of the limited purpose for which the note was made, and, consequently, of the excess of authority by the payees in applying it to a different purpose. Nothing less than proof of knowledge of such facts would meet the requirement of the defence. The plaintiff was not bound to make inquiry, and mere negligence, however gross, not amounting to wilful and fraudulent blindness, while it may be evidence of mala fides, is not the same thing. Goodman v. Harvey, 4 Ad. & Ell. 870; Uther v. Rich, 10 Ad. & Ell. 784; Com. & Farmers' National Bank. v. First National Bank, 30 Md. 11, 26. The question whether the plaintiff had such knowledge or not, was one of fact for the jury. Goodman v. Simonds, 20 How. 366. But, upon a careful examination of the record, we think the court below entirely correct in instructing the jury, as was done by granting the plaintiff's second prayer, that there was no evidence before them, legally sufficient, from which they could find that the plaintiff had such knowledge or notice of the excess of authority by the payees of the note. And al

Vol. II.]

MAITLAND V. THE CITIZENS' NATIONAL BANK OF BALTIMORE.

[No. 6.

though the question was, by the plaintiff's third prayer, submitted to the finding of the jury, yet that is an error of which the defendant cannot complain.

With the views entertained, and which we have expressed in regard to the two main questions involved, we are of opinion that there was no error committed by the court below in granting the three prayers offered by the plaintiff. Those prayers were founded upon the theory that the plaintiff was holder of the note for sufficient consideration, and as such entitled to protection against the defence of the want of authority in the payees to pledge the note as collateral security for a preexisting indebtedness as well as for debts contracted on the faith of it; and that, in order to affect the plaintiff's title to the note, it was necessary to bring home to it, at the time the note was taken, knowledge that the note was being used by the payees for a purpose different from that for which it was obtained from the defendant. This, we think, upon the facts enumerated in the prayers, was a fair and proper presentation of the case to the jury.

It has been objected to those prayers that they should not have been granted, because some of the propositions of fact contained in them were not supported by the evidence. But we think the objection should not prevail. The defects pointed at by the objection amount to nothing more than discrepancies between the evidence of the witnesses and the facts stated in the prayers, in regard to immaterial matters, and therefore could form no sufficient ground for reversal.

As to the three first prayers of the defendant, they presented propositions nearly, if not entirely, the converse of those presented by the prayers of the plaintiff, which were granted. And as we have said that the plaintiff's prayers were in principle correct, it follows that the three prayers of the defendant were properly refused by the court below.

3. The only remaining question to be considered is that in regard to the onus of proof, as to what debts and the amount thereof for which the plaintiff is entitled to recover. This question is presented by the fourth prayer of the defendant.

It must be recollected that this action is brought, not for the recovery of the face of the note unconditionally and in all events, without reference to the debts intended to be secured by it, but for the recovery only of the amount due on the debts for which the note was taken as collateral security. This is all that the plaintiff, in its prayers for instruction to the jury, claimed to recover. And, indeed, that is all that it is entitled to recover, it being conceded that the note was taken as collateral security merely. In such case, while the plaintiff is entitled to be treated as a holder for value, it is only so to the extent necessary to protect the debts intended to be secured. Stoddard v. Kimball, 4 Cush. 604; 6 Ib. 469; Roche v. Ladd, 1 Allen, 436; Williams v. Chaney, 3 Gray, 215; Mayo v. Moore, 28 Ill. 428; Gillen v. Hubber, 4 Green, 155; Grant v. Kidwell, 30 Mo. 455; Tarbell v. Sturtevant, 26 Vt. 513; Williams v. Smith, 2 Hill, 301. Such being the case, it was clearly incumbent upon the plaintiff to show what debts were embraced by the security, and the amount due thereon. This was the measure of the plaintiff's right of recovery, and, as in all other cases, it was the right of the defendant to insist that the plaintiff should establish the existence and extent of its claim. There

Vol. II.]

PARKINSON v. LASALLE.

[No. 6.

was no presumption the one way or the other as to the state of the account between the plaintiff and the payees in the note. What amount of drafts was discounted before, or what amount after, the receipt of the note by the plaintiff, was fixed by no presumption. And as the plaintiff did not sue for or claim the face of the note unconditionally, but as collateral security merely, the jury could have had no criterion by which to ascertain the amount of their verdict, independent of proof as to what was due on the debts intended to be secured by the note. The onus of this proof was clearly on the plaintiff. In re Boys, L. R. 10 Eq. 467. The presumption in support of the plaintiff's title to the note is a matter quite distinct from the question of the extent of its right of recovery thereon, in a case like the present. The fourth prayer of the defendant, as we read it, was a concession of the plaintiff's right to recover on the note, as well in respect to preëxisting as to contemporaneous or subsequent debts, for which the note may have been taken as collateral security; but it called upon the court to instruct the jury, that if they found that the note had been furnished the payees to be pledged to the plaintiff as security for certain debts, but not preexisting debts, and the plaintiff sought to recover in respect to any preëxisting debt, the onus of proof was upon it to show that such debt was contemplated and intended to be secured by the indorsement of the note. This the plaintiff was bound to do, to entitle it to recover any amount claimed to be due on a preëxisting debt. The plaintiff was bound to show what debts were intended to be secured by the note, and the amounts remaining due in respect thereof. We think, therefore, that the fourth prayer of the defendant should have been granted, as by its refusal some disadvantage may have been suffered.

Being of opinion that there was error in the ruling of the court below in the first exception, and in its rejection of the defendant's fourth prayer, we must reverse the judgment, and award a new trial.

Judgment reversed and new trial awarded.

CIRCUIT COURT OF THE UNITED STATES. DISTRICT OF

COPYRIGHT.

STATUTES.

CALIFORNIA.

[APRIL, 1875.]

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CONSTRUCTION OF SECTIONS 4952 AND 4956, REVISED
REQUISITES OF BILL TO RESTRAIN INFRINGEMENT.

PARKINSON v. LASALLE.1

The rule laid down in Wheaton v. Peters, that the performance of every act required by the statute is essential to the acquirement of a copyright, is not changed by the pro

1 The following opinion of the accomplished judge of the district court for the Southern District of New York, upon the cognate statute affecting trade-marks, elucidates points concerning which not a little misconception exists. The opinion was delivered

upon a motion for a preliminary injunction in the case of Smith v. Reynolds, and is as follows: :

BLATCHFORD, J. This bill is founded on a statutory right to a trade-mark claimed under the provisions of sections 77 to 84 of the Act

Vol. II.]

PARKINSON v. LASALLE.

[No. 6.

visions of the Revised Statutes. Under sections 4952 and 4956 an author cannot obtain an exclusive right to his work unless, before publication, he delivers to the Librarian of Congress, or deposits in the mail addressed to him, a printed copy of the title of the work; and, also, within ten days from the publication, delivers to the Librarian of Congress, or deposits in the mail addressed to him, two copies thereof. A bill which does not allege the performance of the acts required by the statute is insufficient.

SAWYER, C. J. This is a bill in equity to restrain the infringement of a copyright to a map of the Comstock lode. The defendant demurs spe

some

of July 8, 1870 (16 U. S. Stat. at Large, 210 to 212). Section 77 provides that any firm domiciled in the United States, " and who are entitled to the exclusive use of any lawful trade-mark, or who intend to adopt and use any trade-mark for exclusive use within the United States, may obtain protection for such lawful trade-mark by complying with the following requirements." One of those requirements is the filing" in the patent office "of a declaration under the oath of . . member of the firm, to the effect that the party claiming protection for the trade-mark has a right to the use of the same, and that no other person, firm, or corporation, has the right to such use, either in the identical form or having such near resemblance thereto as might be calculated to deceive, and that the description and fac-similes presented for record are true copies of the trade-mark sought to be protected." On complying with these requirements, the trade-mark is to remain in force for thirty years from the date of the registration.

The bill avers the filing of such declaration. The defendants, in their answer, put in issue this allegation among others, and require proof of the same. No proof is given that such declaration was filed. A certificate is produced, signed by the commissioner of patents and under the seal of the patent office, setting forth that " J. Lee Smith & Co.," of New York (which is a firm composed of the plaintiffs), did, on the 30th of December, 1870, deposit in the patent office for registra tion "

a certain trade-mark for paints, of which a copy is hereto annexed; that they filed therewith the annexed statement, and having paid into the treasury of the United States the sum of twenty-five dollars, and otherwise complied with the act of Congress in such case made and provided, the said trade-mark has been duly registered and recorded in the said patent office, and will remain in force for thirty years from the 21st day of February, 1871."

The statement annexed to the certificate does not contain any such declaration as that referred to. The declaration is required to be "filed." The only thing certified to have been "filed" is the "annexed statement."

It is urged that the certificate that the parties have otherwise complied with the act of Congress in such case made and provided," and that the trade-mark" will remain in force for thirty years" from the day named, covers

the point; and that, in analogy to letters patent for an invention, the certificate is evidence of a compliance with the requisite preliminary steps. But I do not think this position is a sound one. A patent being authorized to be granted on evidence on which the commissioner of patents is to decide, the fact that he grants the patent is held to be prima facie evidence that the proper proofs were laid before him and were satisfactory, he being made by the statute the proper judge of the sufficiency and competency of the proofs. Phil. & Trenton R. R. Co. v. Stimpson, 14 Peters, 448, 458; Seymour v. Osborne, 11 Wallace, 516, 540. But in respect to a trade-mark, the statute does not authorize the commissioner of patents to issue any letters patent therefor, or to issue any certificate containing a grant thereof. The only certificate he is authorized to issue in reference to the original registration of a trade-mark is that provided for by section 80, which enacts as follows: "The time of the receipt of any trade-mark at the patent office for registration shall be noted and recorded, and copies of the trade-mark and of the date of the receipt thereof, and of the statement filed therewith, under the seal of the patent office, certified by the commissioner, shall be evidence in any suit in which such trade-mark shall be brought in controversy." A certified copy of the trade-mark, of the date of its receipt, and of the statement filed therewith, —— that is, a copy of everything filed and recorded, and of the memorandum of the date of the receipt thereof, is made evidence. But such copy is evidence only that what is shown by it to have been filed was filed. It is not evidence that anything required by the statute to be filed, and not shown by the certificate or by the statement annexed to it to have been filed, was filed. The certificate of the commissioner, that the parties "otherwise complied" with the act, cannot be substituted for the judgment which a court must pass as to whether there was a declaration filed, and one under oath, and one complying, as to its contents, with the statute. The court is to judge from the "statement" whether the requirements of recording "the class of merchandise and the particular description of goods comprised in such class, by which the trade-mark has been or is intended to be appropriated," has been complied with, and whether the requirement of recording a description of the mode in which the trade-mark "has been or is intended to be applied and

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