a contract, who gives value, and has no notice of any defense affecting the right acquired by him is subject to the same defenses, set-offs and counterclaims that the obligor could have made against the assignor if there had been no assignment. ASHE, J.: In the early history of the law, the transfer of all choses in action, including bills and notes, were forbidden by the common law, the rigid rule of which was first relaxed by the use of bills of exchange, which was the result of commercial convenience; and hence the law on this subject is termed the "Law Merchant." Promissory notes were first made negotiable in England, like inland bills of exchange, by the statute of 3 and 4 Anne, ch. 9, and in this state by our act of 1862, which is a literal copy of that statute. But to attain the negotiability intended to be conferred by that act, it must possess all the attributes of an inland bill of exchange as to certainty, &c., and if it should lack any of its essential qualities, it would still be a common law instrument and subject to the principles of law that in regard to choses in action. As for instance, where a nonnegotiable note is assigned, the action at law must be brought by the assignee in the name of the assignor; and the assignee is put by the assignment in no better condition than the assignor; and only steps into his shoes, and the note assigned is subject to all the equities and defenses which existed between the original parties before notice of the assignment; and it made no difference whether the note was assigned before or after maturity. The rule that the endorsee of a bill or note before maturity takes it freed from all equities and defenses, except endorsed payments, is a principle of the Law Merchant, and applies to negotiable instruments, but has no application to notes that are not negotiable. Where an action is brought on a note of the latter class by the assignee in the name of the assignor, the rule is that the equities set up by the defendant against the assignee must be such as subsisted at the time the defendant received notice of the assignment. 1 Danl. Neg. Instr., 555; 1 Par sons, 46; Harris v. Burweele, 65 N. C. 584. But the common law rule that an action by the assignee of a paper that is not negotiable must be brought in the name of the assignor has been changed in this state by Sec. 55 of the Code, so as to enable him to sue in his own name, but without prejudice to any set-off or other defense existing at the time of or before notice of assignment period. This section, it will be seen, makes no change whatever in the law, except as to allowing the assignee to sue in his own name, instead of that of the assignor. "There is no error, and the judgment of the Superior court of Wilson must be affirmed. "No error. Affirmed." Question 169: (1) What was the "rigid" and early rule of the common law as to right of a party to assign a contract right held by him against another? What exception was made by the "law merchant"? If a non-negotiable note is assigned, does the assignee take any risks that a transferee of negotiable paper does not take? In what form did an assignee of a non-negotiable right have to bring his suit? Does the statutory change permitting an assignee to sue in his own name give such assignee any greater rights of substance than he had before? (Note: As to the fact that a transferee of negotiable paper must take under certain conditions (i. e. as a holder in due course) in order to stand in a position superior to that of the transferor see Negotiable Paper, Chapter 58 post. The fact that an assignee is subject to same defenses as his assignor is shown by this old requirement that the assignee must maintain his action in the name of his assignor. Thus if A owes (apparently) B a sum of money, say $100, and B assigns his right to C and C sues A, the suit is entitled B (to use of C) vs. A. Therefore A can say, I have a defense against B (the nominal plaintiff). Statutes permitting C to sue A are simply statutes of simplification in pleading and do not enlarge the rights of the assignee.) § 155. (Contracts, Sec. 123.) Effect of assignment as to other party (debtor). Case 170. Skobis v. Ferge, 102 Wisconsin Reports, 122, 78 N. W. 426. 66* DODGE, J.: The next and much more disputed question is whether or not the Board of Regents is liable to these assignees, or any of them. The authorities are overwhelming, and almost without dissent, that no assignment of a chose in action can have any effect upon the debtor or fundholder, or interfere with his dealing with the fund until brought to his notice. Spain v. Hamilton's Ex'rs, 1 Wall. 604; Ward v. Morrison, 25 Vt. 593; Loomis v. Loomis, 26 Vt. 198; Schilling v. Mullen (Minn.) 56 N. W. 586; Mowry v. Crocker, 6 Wis. 326. The substitution of a new creditor is in derogation of the rights of the debtor, and was strictly prohibited by the ancient rules of the common law. It is only by relaxation of those rules, in reference to the convenience of trade, that such assignments have been recognized at all, and now enable a direct suit where the entire claim is assigned to one assignee, which formally, in equity, can now be at law, by virtue of such statutes as Sec. 2605, Rev. St. 1898. Bank v. McLoon, 73 Me. 498; Little v. City of Portland, 26 Ore. 235, 37 Pac. 911; Chatman v. Plummer, 36 Wis. 262, 266. The fact, however, of such substitution of a new creditor, must, in order to make the debtor liable to the assignee, be brought home to the debtor with much exactness and certainty before he has paid the debt. The rule of notice to him is much more stringent than that which may defeat the title of a purchaser of a chose in action or of real estate. The latter is free to purchase or refuse to purchase, as he chooses; and therefore it is his duty, before acting, to trace out any reasonable doubt, and inform himself of the true facts as soon as anything arises to put him on inquiry. But the debtor is not so situated. He must pay to his original creditor when the debt is due, unless he can establish affirmatively that some one else has a better right. The notice to him, therefore, must be of so exact and specific a character as to convince him that he is no longer liable to such original creditor, and to place in his hands the means of defense against him, or at least the information necessary to interplead the assignee. Christmas v. Russell, 14 Wall. 69, 84; Brady v. Loring, 70 Ill. App. 191; In re Tichener, 35 Beav. 317. In no case could general information that his creditor was likely to borrow on the credit of the debt, or that he had in other instances borrowed upon it, nor any mere suspicion that he might have made assignment to others, alone place the debtor in the predicament of paying his original creditor, at the peril of being held liable to any one who might prove to be an assignee. Question 170: To prevent the debtor from paying the origi nal creditor, what must the assignee do? If the debtor has some general and vague information that the creditor may have assigned or might assign his claim, must the debtor trace down the information and verify it in order to protect himself against liability before paying the original creditor? § 156. (Contracts, Sec. 124.) What constitutes assignment, drafts, checks, orders, etc. (Note: A negotiable bill of exchange, that is, an order by A on B to pay C, or order a certain sum of money and charge to A's account is not an assignment of any rights against B. It is drawn on A's general credit, and B may honor the order and pay it and hold A for reimbursement, whether there is any fund or not. And this even though it refers to a fund, provided it is not a direction to pay out of the fund, in which latter case it would not be a negotiable bill of exchange. So, a check is not an assignment of the funds of the drawer in the bank. In other words in case of a negotiable bill of exchange or check the drawee is not liable to the payee or other holder until acceptance (though he may be liable to the drawer). See Negotiable Paper, for further discussion.) § 157. (Contracts, Sec. 125.) Assignment by operation of law. (Note: The phrase "assignment by operation of law" is used to indicate that a successor to the original party to the contract (or his assignee) becomes entitled to the right by reason of the happening of some fact other than voluntary assignment of the party entitled to the right. Thus a trustee in bankruptcy, a conservator of an insane person, an administrator or executor |