McKim v. King

RoBiifSOJsr, J., delivered, the opinion of the Court. Certain overdue coupons of the first mortgage bonds of the Western Maryland Railroad Company, belonging to the appellees, were delivered by them to John S. Harden, Jr., a clerk in the office of said company, for the purpose of being refunded. These coupons were subsequently deposited by Harden with the appellants, as collateral security for a loan of money made by them to him The coupons were payable to bearer on a day named, and had. been overdue for some time. The main question in this appeal is, whether the appellants are entitled to hold the coupons thus deposited with them by Harden, as against the demand of the 'appellees ?

By a series of decisions in both the Federal and State Courts, coupons payable to bearer or order are treated as promissory notes, possessing all the incidents of negotiable paper, and as such entitling the holder to all the privileges and subjecting him to the liabilities of ordinary commercial paper, by the law-merchant. Moran, et al. vs. The Commissioners of Miami County, 2 Black, 722 ; Gelpecke vs. City of Dubuque, 1 Wallace, 175; Thompson vs. Lee County, 3 Wall., 327 ; Smith vs. Sac County, 11 Wall., 139 ; County of Ray vs. Vansycle, 96 U. S., 675 ; County of Bates vs. Winters, 97 U. S., 83 ; Burroughs on Public Securities, 581. If passed before maturity, the holder thereby acquires a perfect title, without regard to the mode or manner by which such title was obtained by the transferer, and unaffected by the equities attaching to them in the hands of the original parties. On the- other hand, if they are transferred after maturity, the holder takes no better title than the transferer had, and if they were obtained by him by fraud or theft, no title passes against the lawful owner.

Burroughs on Public Securities, 581-3; Jones on Railroad Securities, secs. 324-5; Evertson vs. National Bank of Newport, 66 New York, 14; Fisher vs. Leland, et al., 4 Cush., 456 . ⁵⁰⁵ At one time it was doubted whether the mere fact that a negotiable note was overdue at the time of the transfer, was in itself sufficient to affect the title of the holder, and whether it was not necessary that there should be something on the face of the paper, besides the day of payment, to show that it had been actually dishonored. This doubt was