Y
26 FEDERAL nsronrsn.
ferred on this court by section 1 of the judiciary act of 1875, (18
St. 470,) and which includes this case, on account of the citizen-
ship of the parties; is thus qualified; “Nor shall any circuit or dis-
trict court have cognizance of any suit founded on contract in favor
of an assignee, unless a suit might have been prosecuted in such
court to recover thereon if no assignment had been made, except
in case of promissory notes negotiable by the law-merchant, and
bills of exchange." But the contention of the defendants on this
point is not supported by the law-merchant, according to which ne-
gotiable paper continues such as long as it exists unpaid. At com-
mon law no contract was assignable so as to give the assignee a `
right of action thereon in his own name. In time, by the growth
and recognition of whatis called the "law-merchant," bills of exchange
first, and then promissory notes payable to order or bearer, became
exceptions to this rule. They are known as "negotiable paper," which
means they may be transferred by indorsement or delivery so as to
give the holder a right to sue on the contract in his own name. At-
tendant on this quality of negotiability are certain consequences; as
the liability of the indorser, if due demand is made on the acceptor
or maker, and notice given of his default; and the right of a bona jide
holder, before maturity, to enforce the bill or note against the ac-
ceptor or maker, irrespective of any defense which might be set up in
an action by the payee thereof. As was said by Mr. Justice Sraonc
in Shaw v. Railroad O0., 101 U. S. 563, from whose instructive opin-
ion therein I have substantially condensed the foregoing statement of -
the law:
"But none of these consequences are necessary attendants or constituents
of negotiability or negotiation. That may exist without them. A bill or
note past due is negotiable if it be payable to order or bearer, but its indorse-
ment or delivery does not cutoff the defenses of the maker or acceptor against
it."
In 1 Daniel on Negotiable Instruments, § 724, it is said, substan-
tially, that negotiable paper may be transferred by indorsement or
by delivery, "either before it has fallen due or afterwards;" and, al-
though dishonored for non-payment or non—acceptance, it is still ne-
gotiable, and "passes from hand to hand, ad. iiyinilztm, until paid."
And although the direct remedy on the note may be barred by lapse
of time, the debt created by it is not thereby extinguished, but still
exists for the purpose of enforcing any lien or pledge given to secure
its payment, and the transfer of the note after such lapse of time will
carry with it this right. Hiclcox v. Elliott, 10 Sawy. 422; S. C. 22
Fed. Rep. 13 ; Sichcl v. Carrillo, 42 Cal. 493; 1 Jones, Mortg. § 1204;
Myer V. Beal, 5 Or. 130.
My conclusion is: (1) 'I‘hese notes, when transferred to the plain-
tiff, were "negotiable according to the law-merchant," and therefore
he can maintain suit on them in this court without reference to the
citizenship of his assignors. (2) The transfer of the notes carried