
    *Norton v. Rose.
    
    October Term, 1796.
    Assignments — Assignee Takes Subject to Equities.-— The assignee of a bond, though for valuable consideration and without notice, takes the same, subject to all the equity of the obligor against the obligee.
    This was a bill exhibited in the High Court of Chancery by the appellant, to be relieved against a judgment at law recovered against him by the appellee, upon an assigned agreement for the payment of money.
    The equity stated was, that the plaintiff had bound himself to pay to George Anderson, £4-50, being the balance supposed due upon a settlement of account; that he had insisted upon certain credits for money paid by Charles Harris, to George Anderson, to a part of which, he, the plaintiff, was entitled. But that the plaintiff, relying upon Anderson’s assurances, that no payments had been made to him by Harris, and that he was insolvent, executed the following agreement viz: “We John H. Norton and George Anderson, have this day entered into a final settlement of all our accounts of every denomination whether in bonds, open accounts, bills, money, or traffic of all and every kind, from the earliest period to this day, and we agree, that there shall be paid to the said George Anderson by the said Norton, (as soon as he can possibly effect the same) .«£450, which is to be considered as full payment for every debt that may have been due, and is due at the present date from the said Norton to the said Anderson, as also for all and every transaction the said Anderson has had with any person in which the said Norton held an interest in any manner whatsoever. The above payment to be made on, or before the 1st of January next.” This agreement was signed and sealed by Norton, who at the same time received a counterpart thereof, sealed by Anderson.
    The bill further states, that after the execution of the above deed, the plaintiff drew an order upon Wilson and John Nicholas, in favor of Anderson, for .£450, in discharge of the sum mentioned in the above deed, but that it was neither accepted, paid, nor returned to the appellant.
    The bill prayed an injunction against a judgment obtained upon the aforesaid _ agreement by the defendant Rose, as as- * signee thereof, to be allowed all discounts which he could make appear *against Anderson, and for general relief. An injunction till further order was awarded.
    The defendant Rose by his answer denied any notice of the plaintiff’s equity, at the time of the assignment made to him, and insisted that he was a bona fide purchaser of the debt in question for valuable consideration paid to Anderson.
    The depositions in the cause established the receipt of a sum of money by Anderson from Harris; but no proof of the plaintiff’s title to any part of it, or respecting the order drawn upon Nicholas, was exhibited.
    The cause being set down as to the defendant Rose, (Anderson not having answered,) the court delivered the following opinion, “that the order stated in the bill to have been drawn by the plaintiff upon Wilson and John Nicholas, payable to the defendant George Anderson, could not have been legally discounted against the debt claimed by the other defendants in virtue of the deed acknowledged by the bill to have been executed by the plaintiff; and that the plaintiff cannot set off against the said debt any equitable demand which he may have a right to claim from the said defendant George Anderson.” The bill was dismissed as to the defendant Rose, and the cause continued as to Anderson.
    From this decree, Norton appealed.
    Wickham for the appellant.
    The question is, whether a bond, in the hands of an assignee without notice, is discharged of an original equity existing against it? I shall contend, that it is not. 1st, Upon general principles of law, and 2dly, upon the just construction of the act of Assembly which permits bonds to be assigned.
    The assignment of a chose in action, cannot so far change the subject of negotiation, as to make it the evidence of a debt in the hands of an assignee, when in truth, no debt exists. If it were originally void, the assignment cannot give it validity.
    The case of Turton and Benson, 1 P. Will. 497, is conclusive upon this point to prove, that the equity which was originally attached to the bond, follows it into the hands of an assignee, with, or without notice.
    *The ground upon which this court relieves is, that the plaintiff, ought not in equity to recover, because no debt ■was due. The assignment can only transfer the right of the obligee, and will not create a right.
    Thus the question stands upon general principles; but 2dly, upon the just construction of the act of 1748, Ch. 27, $ 7, there is less room for maintaining a contrary opinion. The law after authorising the assignment of bonds, and permitting the assignee to sue in his own name, provides, “that in any suit upon such bond, bill, or note, so assigned, the plaintiff shall allow all discounts that the defendant can prove, either against the plaintiff himself, or against the first obligee, before notice of such assignment was given to the defendant.”
    The act makes no distinction, between legal and equitable discounts. The word, discount, is much broader than payment, and was intended to let in the obligor to any defence against the assignee, which he might have set up against the obligee. Would it not be strange, that the obligor should be protected against the assignee, as to partial payments made to the obligee, and yet, that he should be left exposed to his entire demand, where in equity no part of the bond was due? As to discounts, the assignee buys at his peril, and consequently, it becomes his duty to be satisfied upon that subject, before he concludes the negociation. At the same time, and with equal convenience he may, and ought to know from the obligor, if he hath any, and what objections to the payment of the bond. This observation is intended to anticipate the argument of inconvenience, which may probably be insisted upon, and to shew, that bonds were not considered by the legislature in the same light with those negociable papers, which on account of their use in mercantile transactions, are rendered as current as possible, and are on that account, subject to different rules. There is a wide distinction between bills of exchange and bonds; the former are drawn for the transmission of money from one country to another; they pass through many hands, and if every person who became an assignee, were under a necessity of applying to the drawer and indorsers to know whether they had objections to paying the bill, it would stop their circulation altogether. It is on this account, that an equity originally attached to a bill, does not follow it into the hands of an assignee without notice. On the other hand, bonds seldom circulate out of the neighborhood in which they were created; they scarcely ever travel into foreign countries, and there is therefore little or no inconvenience, *in gaining all necessary information respecting them, from the person who is to pay. Whoever therefore takes a bond without enquiry, takes it upon the faith of the assignor, and if he be deceived, he must suffer in the mean time for his misplaced confidence, and seek for reparation from the person who had deceived him.
    Washington for the appellee.
    I shall make two points; 1st, That the appellant has not established an equity of any sort, against Anderson. 2dly, if he had, that, that equity would not follow the bond into-the hands of an assignee, for valuable consideration, and without notice.
    The first point depends upon the evidence-which is contained in the record. The bill, states, that the appellant was entitled to a proportion of the sales of certain goods, which were put into the hands of Charles-Harris, by Anderson. The proof is complete as to the delivery of the goods, and the amount for which they were sold; but: there is no evidence, that the appellant had any interest in them, and consequently, this important fact rests altogether upon, the allegations in the bill.
    As to the order upon Nicholas, it is exposed to the same observation; there is no-evidence respecting it, and if there were, the appellant by his own shewing could set up no equity on that account: for he admits, that it was neither accepted, nor' paid by the drawee, and that he had no-funds in his hands belonging to the drawer. So that notice of the refusal, or the return of the order was immaterial to the appellant.
    The second point is new in this court, and of great importance to this country, in whatever manner it may be decided. It is-admitted, that in the case of bills of exchange, the indorsee is not chargeable with any original equity attached to the-bill. It is equally indisputable, that this principle applies to all negociable papers in England; and the law of this state, which makes bonds assignable, brings, them within the reason an influence of the same principle. The application of this, rule to bonds, is to be defended, 1st, upon the policy of the thing, and 2dly, upon longestablished maxims which prevail in this, court.
    As to the first, it is not difficult to foresee, that if the assignee of a bond must take it subject to any concealed equity which may be attached to it, the negocia-bility of such papers, would be at an end. The design of the legislature, in making bonds assignable, was to create a kind of circulating medium, in order to supply the want of real money, and to accommodate the ,*planters of this country. But if it be necessary for the person who is about to purchase a bond, to go-from one part of the state to the other, in search of the obligor, in order to obtain information concerning its validity, he-would rather relinquish it altogether.
    As to the principle itself, it is interwoven with the best established maxima which prevail in courts of equity. The as-signee of a negociable paper, acquires a legal right to the money, of-which the paper is the evidence; of course, he has the law in his favor. The obligor, may oppose the demand, by the equity which was originally attached to it. But the assignee being a purchaser for valuable consideration, and without notice, has at least as much equity to receive, as the obligor or drawer has to withhold payment. The equity then being equal, the law must prevail, nay, so far does this principle go, that in contests of a merely equitable nature, if either has obtained an advantage, tho’ not a legal one, the court will not deprive him of it, but will leave him to make such «ce of it as he can. Brow. Ch. Rep. 301. This court, when applied to for relief against a judgment obtained by the assignee at law, must be assured that there is superior equity on the side of the person asking its aid. But if the parties stand equal in point of ■equity, it will not interfere between them. It is admitted, that this principle applies ■to bills of exchange. When notes of hand were made assignable, they became of course subject to the same rule, not on account of commercial considerations, but because they were thereby brought within a rule of equity, which in its operation is universal. Cunning. Bills 119. But where ■the assignment transfers no legal right, there, if the equity be equal, he who has the prior equity must prevail. Upon this ■latter rule, the cases of Turton and Benson, 1 P. Will. 496, 10 Mod. 450, and Hill and Caillovel, 1 Vez. 123, were decided. The assignment of a bond, in England, can only pass an equity; the meaning of it is, that the assignee is to have all equitable advantages from it, which the assignor possessed. But if he had n-o equitable right to the money, he could transfer none.
    Observe how the principle runs through all cases coming within it, tho’ totally unconnected with commerce.
    If a trustee sell land to a third person, for valuable consideration, and without notice of the trust, the purchaser is discharged from the claim of the cestui que trust, because he has the law in his favor, and has also equal equity. As to the in-
    convenience of this doctrine to the obligor, it is easily avoided; he *ma3r give notice of his equity in the pub-
    lic news-papers, or he maj' institute a suit against the obligee, which would be notice to the whole world, and would thereby render any subsequent assignee, a lite pen-dente purchaser.
    Wickham. It is admitted, that in equity, bonds were assignable before the act of 1748; and that the equity originally attached to them, followed into the hands of an as-signee. What then was the object of this law? Not to render bonds subjects of commercial negotiations, nor to make them an article of traffic. No merchant would purchase a bond, unless for usurious purposes, •since they could never answer the end of transmitting money to a foreign country, as bills of exchange do. The obvious intention of making bonds assignable was, to prevent circuity of action, and to do away the necessity of accompanying them with powers of attorney, as formerly. It enabled men more easily to settle with each other, the debts which they respectively owed. A, being indebted to B, and C, to A, the assignment of C’s bond, prevents the necessity of more than one suit.
    But what I principally rely upon is, that the act of Assembly, by allowing the obli-gor to avail himself of all just discounts against the obligee, as well as the assignee, before notice of the assignment, forms a most decided difference between the case of bonds, and bills of exchange. In the first place, it affords a complete answer to the inconvenience which is so much relied upon by the counsel for the appellee, if the assignee should be compelled to make en-quiry before he receives it, and which it is supposed, would tend to prevent their ne-gociability altogether. For since every shilling of the bond may have been paid, if the assignment be accepted without en-quiry, as to that point, the assignee must suffer for his neglect. The statute therefore, imposes it as a duty upon him, to make the enquiry, let the inconvenience be what it may; or if he do not, he acts at his peril. What is to prevent him from extending his enquiries to other circumstances, respecting the validity of the bond? When it is considered, that this very law, speaks also of bills of exchange, without making similar provision as to discounts, I cannot fail to deduce this principle from it; that the legislature considered the two cases as entirely dissimilar, and by making bonds assignable, they did not thereby intend to regulate their nego-ciability, by rules which by the law of merchants were applicable to bills of exchange. It is fair to contend, that if the case of an original objection to the bond, be not within *the letter of this law, which permits discounts to be claimed, it is within the spirit and equity of the provision. If the obligor be suffered to defeat the assignee of a part of his claim, by proving that so much hath been discharged, what should prevent him from a similar advantage, if instead of its having been discharged, it had never been justly due? It is not an unusual thing, to consider cases which are not strictly within the letter of a statute, to be within the equity of it. Thus the act of limitations, does not literally apply to an equitable demand, since it speaks only of actions known in course of law; yet the court of Chancery has adopted the statute by analogy, because suits in that court, are equally within the equity of the statute. If no good reason can be assigned, for distinguishing between legal, and equitable discounts, can it be supposed, that the legislature intended a distinction?
    As to bills of exchange, they are in every respect different from bonds, and the principle which is contended for as applicable to them, may be supported by strong reasons. They are always remitted to foreign countries; they there pass through many hands, and answer all the purposes of actual money. To subject them to legal, or to equitable discounts, would defeat their use entirely, and of course, they are protected, by the law of merchants, from all objections on the part of the drawer and indor-sers, whether they be such, as were originally attached to them, or such, as might afterwards have arisen. The reason, that notes in England are considered as being within the same principle, is, that the words of the statute of Ann, strongly assimilate them to bills of exchange. But above all, there is no provision in that statute, similar to that, which so evidently distinguishes the case of bonds from bills by our law, and which prevents a construction, which could tend to assimilate them to each other.
    It is attempted to remedy the inconvenience which the obligor must labor under, if the principle contended for be correct, by saying, that he may give notice of his equity in the public news-papers.
    But surely, this would seldom better the situation of purchasers, it would seldom afford actual notice to any person, and it would certainly never be considered as implied notice.
    The rule that where equity is equal, he who has the law in his favor must prevail, is in general correct, but in this case, it is inapplicable. The equity is not equal, because it being the duty of the assignee to inform himself, whether the bond *be justly due, before he throws away his money, he can never be permitted to found an equity upon his own negligence. If he might have had notice, and ought to have sought it, he is as culpable as if he had actually obtained it. As to Norton, the same charge is not imputable to him. It is necessary that there should be confidence between man and man. He was himself deceived by Anderson, and was of course a stranger to the injustice which had been done him. I admit, that if a trustee sell land without notice to a stranger, the rule is as it has been stated. But if on the face of the deed, or from other circumstances, the purchaser might have ground io suspect that a trust existed, he would be chargeable with the equity of the cestui que trust, on account of his neglect. The case of assignees of a bankrupt, is more analogous to this, than any which the opposite counsel has cited. The legal estate is vested in them by the assignment; they may bring suits in their own names, and being generally, if not always creditors, they are assignees for valuable consideration. Yet it will not be questioned, but that a debtor who has an equity against the bankrupt, may set it up against the assignees.
    Randolph on the same side.
    I will not bottom the arguments which I shall use, upon the policy or convenience of extending, or of limiting the negociability of bonds; but at the same time, it will not be improper that this should be considered. We see that, whilst in Great Britain notes of hand are made negociable, it is not deemed a wise measure to render bonds so. The former were introduced for the purposes of internal commerce, and having been preceded by Goldsmith’s notes, which circulated like bills of exchange, it was thought wise to place notes of hand upon the same footing, and to assimilate them to the two former. But can it be supposed, that at the time when bonds were made assignable in this country, it was intended to increase the circulation of paper credit? The very reverse was the policy which governed that country, to whom we owed the liberty of passing laws. In the year 1705, notes of hand in England, assumed, by legislative authority, the high ground upon which they now stand. Yet the Assembly of Virginia, with that law before them, did not think proper to exalt bonds to the same station. And yet this law of our own country, will answer all the beneficial purposes for which it was made, although our construction of it should be found to be accurate.
    *If the equity be subsequent in time to the creation of the bond, it is admitted, that it attaches itself to it, and accompanies the bond into the hands of an assignee. Suppose it to be coeval with the bond; the English cases prove that the same consequences follow: Suppose A gives his bond to B, and B gives a like bond to A: though I shall assign the bond of B to a third person, yet would it be contended, that B might not offer A’s bond as a discount, notwithstanding it was coeval with his?
    The legislature of 1786 revise this subject, and pass a law similar to that of 1748; that still hold out protection to the obligor, against all just discounts which he can establish against the obligee, as well as against the assignee, and they again subject the latter, to the necessity of enquir-ing into the nature of the debt which he is about to purchase. With a full knowledge that bills of exchange were exempt from this clog, no disposition to assimilate the one to the other is to be discovered. Could language have expressed, more decidedly, the legislative construction of the former law, and their present determination to distinguish these negociable papers, from each other? They say, that the assignment of bonds, notes &c. shall be valid; meaning, that the assignee shall thereby gain a legal right to sue in his own name: and this was the sole object of the former, as well as of the latter law.
    But it is particularly worthy of observation, that though notes of hand, according to the statute of Ann, were placed upon the same ground with bills of exchange, and of course governed by the same rules, that the legislature of 1748, by assimilating them in every respect to bonds, rendered them unlike to bills of exchange in this country, and thereby gave a convincing proof, that it was not their intention, to suffer bonds to be governed by those rules, which applied to bilis. And after such proofs of the legislative mind, can the court by any principles of sound construction, suffer a case, which is so evidently within the spirit and meaning of the law, to be without the operation of it; or permit the obligor, to avail himself of a discount' against part of the debt, and yet leave him unprotected, if he set up a well founded objection to the whole.
    It may not be improper in me to mention, that a similar question with this has been determined by the supreme court of Pennsylvania, upon a law of that state, similar to the statute of Ann, by which notes of hand were made assignable; but the strong words in that statute, “like to bills of exchange” were 'omitted *in the act of the Pennsylvania legislature; the court determined, that the assignee of a note was chargeable with the equity originally attached to it. Dali. Rep. 23.
    This case, though not authority here, still deserves our respect, as being the decision of the supreme court of a sister state, and as shewing the opinions entertained in other parts of the union, respecting the former policy of this country, upon the subject of negociable papers.
    If we ask, what have been the British decisions upon this subject, in cases of bonds, it is agreed on all hands, that the situation of the assignee is in no respect better than that of the obligee. Turton and Benson, is an express authority, that the assignee is considered as standing in the shoes of the obligee, because, say the judges, it is his fault if he do not enquire into the validity of the bond, and the nature of the debt, before he takes the assignment.
    But it is insisted that the principle of that case is inapplicable to the present, because the assignment of a bond in England, does not transfer a legal right to the money. It is obvious, that the distinction is not a sound one, for since by the rules of equity in that country, and by the laws of this, the assignee is expected to enquire into the nature of the debt before he obtains an assignment: his negligence in not making that enquirjr forbids him in either case to say, that he has equal equity with the obligor. Of course, the assignee’s legal right will not avail him, since by his negligence he has deprived himself of that equity, which would have counterbalanced the equity of the obligor.
    If this case be considered upon principle, independent of authority, nothing can be more clear, than that the rule laid down in Turton and Benson, is bottomed upon the soundest reason. For what could be more absurd or unjust, than that a bond, however fraudulently obtained, should acquire a binding quality by passing into the hands of an assignee, when, at the moment of the assignment, it was invalid or ineffectual? Even in the case of a bill of exchange, (the peculiar favorite of British courts,) if it be drawn for a gaming, or usurious consideration, it is void, as well in the hands of an indorsee, as in those of the original payee. And altho’ in other instances, where the same principle of justice prevails, it is compelled to yield to reasons of policy founded in commercial considerations, yet, where those reasons do not apply, the principle can never be done away. If bonds be not essential to commercial negocia tions, as *they certainly are not, there can be no reason for applj'ing the same rules to them which prevail in cases of bills of exchange; and if so, whjr should a bond which has been paid off, which was obtained by duress, or fraud, be more binding in the hands of the assignee, than it was previous to the assignment? In every point of view it seems clear, that not only English decisions, but the municipal regulations of our own country, favor the doctrine, that an original or subsequent equity against a bond, follows it into the hands of an assignee.
    Washington in reply.
    The principle, that where equity is equal, he who has gained a legal advantage must prevail, is admitted. But it is denied to be applicable for two reasons:
    1st, That the assignee has not equal equity:
    2d, That under the equity of the act of Assemblj', the rule is in this case to be rejected.
    1st, The assignee it is said has not equal equity, because he is guilty of' culpable negligence, in not enquiring of the obligor before he takes the assignment, into the nature of the debt. This however is a petitio principii. That he is obliged to make the enquiry is proved by no case, except that of Turton and Benson, which can only apply, where, by the assignment, a merely equitable right passes. In such a case, the assignor can only dispose of a naked equity, and of course, the assignee can acquire no greater interest. If the former has not an equitable interest in him, he can dispose of none. The posterior equity of the assignee, unsupported by a legal right, cannot prevail against the prior and equal equity of the obligor. It is this, and not the neglect of the assignee which defeats his equity: in a case of that sort, the principle of caveat emptor applies in its full force.
    But why is not the indorsee of a bill of exchange obliged to enquire? The answer is, that for the sake of commerce, the law of merchants does not require it.
    I must allow the entire credit of this reason to the counsel, since there is no case in which it is assigned as the cause of the decision. But if it were, it will apply with almost equal force to bonds. Though bills are used for the purposes of remittance, and are therefore paid in foreign countries, yet they are drawn, and generally endorsed in this country; so that, it will be as easy to enquire, of the drawer in the one case, as of the obligor in the other, into the circumstances of the debt. But why should inland bills, and notes of hand be governed bjT the same rule of *law, when it must be admitted, that the reason assigned as to foreign bills, cannot apply to these cases, more than to bonds?
    It was observed by one of the court, that the reason for applying the rule I contend for to the case of bills of exchange, might be, that every indorser is considered as a new drawer; consequently, a new contract arises which might discharge the pre-exist-ing equity. With submission, I cannot think that this will furnish a sufficient reason. If the indorser claimed an equity, it might be so; but surely, his assignment could not discharge the prior equity of the drawer, merely because that assignment created a new contract on the part of the indorser. The indorser is so far a new drawer, that he obliges himself to pay the amount of the bill, in case the drawee do not. But the drawer is not privy to this latter contract, and cannot therefore lose his prior rights, because the indorsee has gained a new security. I should rather suppose, that if this consideration could have any influence, the indorsee, having obtained additional security, will have less reason for defeating the equity of the drawer.
    But why does the principle I am attempting to maintain, extend to other cases, than the transfer of choses in action? For example, an absolute conveyance by a trustee, to a third person, without notice; a sale by a mortgagee, having an absolute conveyance, though in fact intended only as a security for money, to a stranger, without notice; a conveyance by the vendee of land, where the vendor has a Hen upon it, for the consideration money; in these cases, the equitable rights of the cestui qui trust, mortgagor, and vendor, are defeated, and yet the purchaser, might have enquired, particularly in the two latter cases, of the mortgagor and vendor, if they had any equitable claims to the land. But this is not necessary; and yet in all those cases the grantee takes the land discharged of the equity, because, having acquired a legal title, and being a purchaser for valuable consideration and without notice, he must prevail.
    Ror what reason should the enquiry be made? The bond upon the face of it furnishes no cause for suspicion; the obligor could but confirm by parol declarations, what he had before solemnly acknowledged under his hand and seal. Suppose the en-quiry in this case had been made, and Norton, had made parol declarations similar to those expressed in the bond, he being still under the deception which his counsel impute to him: could he set up an after-discovered equity? If he could, then *the enquiry would be unavailing to the assignee; if otherwise, then, the obligor could not be benefited by it. The equity which the obligor may have, is always coeval with, or posterior to the bond. If coeval with it, it is either then, or after-wards known to the obligor; if then known, it is a fraud upon the public to send into circulation a negociable paper, which may deceive others, and therefore, every principle of equity is stifled by the fraud: if not known, but suspected, the case is the same; for then, the bond should express what is suspected, that third persons may not be imposed upon. In this case, Mr. Norton states in his bill, that he knew of the-credit, now made the ground work of his application for relief in equity, and insisted upon its being allowed; but that he was deceived by Anderson, into a belief, that he was not entitled to it. Why then did he not reserve the right of claiming this credit, in case he should afterwards discover that he was entitled to it, and by a memorandum on the bond, give notice to the world, of this latent equity? The charge of neglect therefore, is returned upon Mr. Norton’s hands, and his counsel very welt know the influence it will have in defeating an equity. If the equity be neither known, nor suspected at the time the bond is given, then the principle which applies in all contests de darano evitando, must be resorted to: it is, that wherever one of two innocent persons must suffer, by the act of a third, he who hath enabled such third person to occasion the loss, must sustain it. Lickbarro v. Mason, 2 Durnf. and East 63. As soon as the equity is discovered, the obligor should immediately give notice of it; this may easily be done in the public prints, or by suit. Amb. Rep. 66. But the answer to this remedy is, that the bond may have been previously assigned, if so, then the enquiry would not have bettered the situation of the assignee, or of the obligor, for the latter, must then have acknowledged, what he had before done with more solemnity, that he knew of no equity against the bond: If not previously assigned, then the notice would prevent its transfer.
    On the other hand, the trouble and inconvenience of making the enquiry, and the difficulty of proving the re-acknowledgment, would put a stop to the negociability of bonds, & would entirely defeat the intention of the law which made them assignable.
    It is contended, that it is essential, that the parties to a bond should have confidence in each other. Be it so; but let it also be conceded, that he who places the confidence, should take the consequences of having misplaced it, and not seek to throw *it upon a third person, who was not privy to the transaction. In commercial matters, confidence is peculiarly neces-sar3r; and yet this court determined in the case of Hooe and Harrison v. Oxley and Hancock, (ante vol. 1, p. 19,) that if an agent, who is authorised to draw bills for special purposes, abuses the trust, and misapplies the money, the principal who gave the confidence must suffer.
    It is said, that the statute of Ann, assimilates notes, to bills, by the expressions it uses. It declares, that they may be assigned like bills, but it does not assimilate them in any of their consequences, or collateral points.
    It is then contended. 2dly, That this case is within the equity of the act of Assembly, which, it is said, essentially distinguishes it from the ca.ses which have been cited respecting bills, notes &c.
    There is an apparent inconsistency in the arguments respecting this law. It is obstinately insisted upon, that the equity originally attached to a bond, would follow it into the hands of an assignee, upon principles unaffected by this law; if so why was this law made?
    The legislature, when engaged in the business of altering a general principle of law, are not to be supposed ignorant of the full extent of that principle. If without legislative interference the obligor could not have protected himself against an as-signee even for actual payments made before notice of the assignment, (and that he could not, was evidently the sense of the legislature, otherwise their interference was unnecessary,) much less could he set up an original, and concealed equity; for the former case, an express provision is made. There is no ambiguitjr in the language of the proviso, nor is it even contended, that the case of an original equity comes strictly within it. But it is contended to be with the spirit of the proviso. There are cases, I admit where it is justifiable to take liberties of this sort, with the words which the legislature uses: but there should be an apparent necessity for it, and I hold it to be always unwarrantable, if a reason for excluding the case which is sought to be constructively included, can be assigned. A little reflection, will furnish, a satisfactory reason for the discrimination, between posterior discounts, and original equity.
    In the first, the obligor has done what by the terms of his contract he had stipulated to perform. He has made partial payments, or has entirely discharged the debt; it was his duty to do this; ana therefore, he who is about to purchase, ought to *suppose that to have been done, which the contract stipulated to be done; here, there is a cause of suspicion growing out of the instrument itself, strong enough to prompt an enquiry, and if the assignee be hardy enough to calculate against this reasonable presumption in consequence of the confidence he may repose in the obligor, it is perhaps not improper to leave him to his recourse against the person who has deceived him.
    But it is far otherwise with respect to an original equity. To presume that the debt was never due, would be to form a conclusion against the words of the contract itself, which import the contrary. The ■obligor has declared the debt to be due, and that he will pay. This solemn acknowledgment of its justice, he has confirmed with his signature and seal. If it were not due, he would not, and certainly ought not to have obliged himself to pay it, and that too in a manner calculated to deceive those who trust in this declaration. It is not enough to say that he was ignorant of the objections to the claim at the time he gave the bond, or was imposed upon by the ob-ligee ; it was his duty to investigate the subject, before he sent forth a negociable paper, which in every change it underwent, possessed the power of deceiving, and of injuring fair purchasers. In this case, the assignee could have no cause to suspect an original equity contrary to the express letter of the contract. To enquire of the obligor, if he meant the reverse of what he has declared, would be an absurdity, which the legislature could never mean to require of the assignee. The difference between discounts, and an original equity, is this ; in the first, the assignee purchases upon the faith of the obligee, since nothing but his assurances could repel the natural conclusion, that payment had been made; in the latter, he purchases upon the faith of the obligor, that the debt was due when the bond was executed, because he has said so, arid that in the most solemn manner.
    The legislature therefore, were influenced by the strongest motives to make the discrimination.
    If the legislature state a particular case, and might by apt language have expressed themselves generally, if they had meant to do so, it is too much like legislating, for the court to make a construction broader than the words which are used will warrant.
    If an original equity had been intended, the proviso would have permitted the ob-ligor, “to make any defence in law or equity, which he might have made, in case no assignment had been made,’’ and it is contended, that the court should construe the word discount, so as to mean the same thing.
    *It is said, that the act of limitations, though it does not extend to the courts of equity in express terms, is nevertheless adopted by analogy. This is true; and I do not object to courts of equity permitting the obligor, to avail himself of discounts against the assignee, in the same manner, as he might at law; what I contend is, that neither courts of law, nor of equity, can extend the construction of the proviso, beyond the fair meaning of it. The act of limitations is restricted, or rather disregarded in equity in many cases ; but it is never extended beyond the periods prescribed by the law.
    No two cases can be more unlike, than this, and the case of assignees of a bankrupt; in the latter case, the assignees are merely trustees, and are no more entitled to avoid an equity against the bankrupt, than the bankrupt himself would have been.
    
      
       Picket and Morris, was first argued, and one of tbe points discussed in that cause involving the only question in Norton and Rose, the latter was brought on before a decision was given in the former.
    
    
      
       Assignments — Assignee Takes Subject to Equities.— The assignee of a nonnegotiable chose in action takes it subject to all the equities of the debtor against the assignor existing at the date of the assignment or which arise after the assignment and before the debtor has notice of it, although the as-signee has taken the assignment for value, bona fide, and without notice of the equity. The principal case is cited, in support of this proposition in Etheridge v. Parker, 76 Va. 252: Stebbins v. Bruce, ?,0 Va. 397: Stoner v. Harris, 81 Va. 456; E’eazle v. Dillard, 5 Leigh 34: Garland v. Richeson, 4 Rand. 289; Mayo v. Giles, 1 Munf. 536, 537; Vanscoy v. Stinchcomb, 29 W. Va. 275,11S. E. Rep. 931. The principal case is cited in Upham v. Brooks. 28 Fed. Gas. 830; Cabell v. Rogers, 6 Rand. 582. See monographic note on “Assignments'’ appended to Ragsdale v. Hagy. 9 Gratt. 409. See Stockton v. Cook, 3 Mnnf. 68.
      Same — Construction of Statute — Suit in Assignee’s Own Name. — The principal case is cited in Gordon y. Rixey, 76 Va. 704, as authority for the proposition that the statute authorizing the assignee of common-law obligations to sue in his own name, was not intended to abridge the rights of the obligee, or to enlarge those of the assignee beyond that of suing in his own name. The principal case is cited in Catón v. Lenox. 5 Rand. 40, 42.
      Same — Bills and Notes — Bonds—Distinction between. —See the principal case cited in Barksdale v. Fen-wick, 4 Call 502, 509; Dunlop v. Harris, 5 Call 53.
    
   ROANE, J.

There are some points in this cause, which are not controverted by either side. It is admitted, that upon the principles of the common law, a chose in action is not assignable; that is, the assignment does not give to the assignee, a right to maintain an action in his own name.

It is also conceded, that in England, the assignee of a bond, takes it charged with every species of equity, which was attached to it in the hands of the obligee. If a different principle prevail in this country, it must grow out of the acts of Assembly, which authorised the assignment of bonds. The acts of 1730, and 1748, upon this subject, are precisely the same as to the present question. I should have been glad to have seen the act of 170S, but I have not been able to meet with it. This case, depends upon the just construction of the act of 1748. The intention of it, was to alter the common law, so far as it prevented bonds from being assigned, and to give to the assignee, a right to sue in his own name, in the same manner, as the obligee might have done.

It was not intended to abridge the rights of the obligor, or to enlarge those of the assignee, beyond that of suing in his own name ; and since it is clear, that prior to this law, an original equity attached to the bond, followed it into the hands of the assignee, this law, does not expressly, nor by implication, destroy that principle. Notes of hand are now assignable in England, and it is admitted, that the assignee is discharged of any equity, which existed against the assignor, unless the note was given for an usurious, or for a gaming consideration.

*The reason of this, is not that the principle attached to them as a legal consequence of their being made assignable, but because this rule for commercial purposes, applied to bills of exchange; and the statute of Ann, declaring notes assignable, in like manner as bills of exchange, shewed an intention, as it was supposed, to render the former, as highly negociable, and as current in internal, as the latter was in external commerce. The act of our Assembly, embraces equally the subject of bonds and notes, but contains no expressions tending to induce a belief, that the making them assignable, was intended for purposes of commerce. The design certainly was, to make them transferable to a certain extent; the provision points out the limits of their negociability, and fixes a strong mark of distinction between them, and bills of exchange. As to the latter, they were always assignable, and the indorsement transferred a legal right to the in-dorsee. They did not owe this quality to statutory provisions, and of course, they continued within that principle which had attached to them, and of which they were not deprived by any statute.

Lord Mansfield lays it down in the case of Peacock v. Rhodes, Dougl. 636, “that the holder of a bill of exchange, or promissory note, is not to be considered in the light of an assignee of the payee. An as-signee must take the thing assigned, subject to all the equity to which the original party was subject: if this rule applied to bills and promissory notes, it would stop their currency.” So in Cunningham’s laws of bills of exchange, p. 65, the Chancellor refused to relieve against the assignee of a bill, “because it would tend to destroy trade, which is carried on every where by bills of exchange, and he would not lessen an honest creditor’s security.” And we are informed by Domat, 131, Tit. 16, $ 4, p. 231, that the covenant which passes between the person who gives the money, and him who undertakes to remit it to another place, hath in it some particular character which distinguish it from other kinds of covenants, that seem to have some resemblance with it.

It is therefore, not because, the indorsee is an assignee of the legal right to such bills and promissory notes, that the equity is bared by the indorsement, bat because of their quality as a currency, and from the necessity of adopting such a principle, for the convenience of trade and commerce with respect to such currency. But bonds, are not to be considered as a currency, and within the reason of the principle laid down in Peacock and Rhodes; for that principle is founded upon commercial considerations *altogether, and not upon a distinction between legal, and equitable assignments.

With respect to the proviso in the act of 1748, it contemplates legal discounts only. The words, “the plaintiff shall allow all discounts which the defendant can prove,” were meant to extend those discounts beyond the credits which might be endorsed on the bond; and the latter words, “before notice of such assignment was given to the defendant, ” were meant to restrain the discounts to such as existed prior to notice of the assignment. This enlarging and restraining proviso was necessary, in order to express clearly the meaning of the legislature; but neither the proviso, nor any other part of this act, was intended to extend to, or to abridge equitable discounts, which were not in the contemplation of the legislature who made this law.

The inconvenience, which it is apprehended will result from rejecting the application of the principle contended for, is certainly not real, or if it be, it was not so considered by the legislature. The as-signee, it is admitted, takes the bond at his peril, so far at least, as the possible claim of the obligor to discounts may extend. If he chuse not to . encounter this risk, or to repose entire confidence in the obligee, he must enquire of the obligor, and from him obtain information, respecting (at least) this part of the subject. With the same convenience, may the enquiry extend to any equitable objections attached to the bond. The two cases are precisely within the same reason, and I can discover no principle of policy or justice, which should so widely distinguish them. The assignee of a note given by an infant, feme covert, or for a gaming, or usurious consideration, does not take it discharged of those objections, but the contrary. In those cases, as well as in respect of discounts, he must take care what he purchases; he acts at his peril, and must therefore act with caution. For what reason then, shall an equity, originally incorporated with the bond, and which should destroy its obligation, be discharged in the hands of an assignee? The provision of this act has long governed the assignment of bonds, and it is but of late years that the existence of such a principle as has been contended for in this cause, has been thought of, as applicable to bonds and notes. This consideration, though it would not direct, has much weight in confirming the opinion which I clearly entertain upon this subject. The appellee may suffer in consequence of it; but this is preferable to the establishment of a principle, which may produce great public mischief, and injustice.

* Although I am clear in the opinion, that an equity existing against a bond, is not lost or extinguished by an assignment for valuable consideration and without notice, yet it may be lost by length of time or other circumstances. In this case however it does not appear, when the deception practised by Anderson was found out by Norton, or that Norton delayed an unreasonable length of time, in coming forward to assert his equity. It is true, that his interest in the goods sold by Harris is not established in the proof, but the ground of the Chancellor’s decree, being wrong, it must be reversed, and the cause remanded for further proceedings, so as to let in Mr. Norton to the proof of his equity. The decree so far as it respects the order on Nicholas, with reference to the present appellee, I think is right.

CARRINGTON, J.

To consider this case upon general principles; the question is, whether an equity, originally attached to a bond, follows it into the hands of an as-signee without notice. In England, notes of hand were not assignable, until the 3d and 4th of Queen Ann, so as to enable the assignee to bring a suit at law in his own name. Courts of Equity were of course resorted to, where the maker of the note was not precluded from setting up any equitable defence, which he might have. Frequent attempts were made by the bankers and traders, to bring them within the custom of merchants, and to place them upon the same footing of negociability with bills of exchange. But the judges still considered them merely as evidences of debt. At length, the statute was procured, conformably with the wishes of the trading part of the community, making them assignable, in like manner as bills of exchange. The likeness thus strongly sanctioned by legislative authority, produced similar decisions in cases, where their negociability were concerned.

But no efforts were made in favor of bonds, and they remain in the same situation in England, as they stood at common law.

This country was then a part of the British empire, and our legislature, assimilated its laws, to those of the mother country, so far, as our local situation and state of society authorised it. In 1705, shortly after the English statute passed respecting notes of hand, the Assembly, passed a law, authorising the assignment of bonds and notes. This law, I cannot meet with, but it was repealed by proclamation in 1730, and in the same year, another law was enacted, exactly similar to the act of *1748. With the English statute before their eyes, the legislature did not chuse to adopt it altogether, or to introduce into it a principle, which should defeat the equity of the obligor, as it was secured to him at common law. Those expressions in the statute, which assimilated notes to bills of exchange, were omitted in our law, and in the room of them, others were introduced, which established an opposing principle. The negociability of bonds and notes, was qualified and restricted within bounds, consistent with the commercial station of this countrj'. There was no necessity for exalting those hinds of paper to the high ground, on which the commercial world had placed bills of exchange, and the whole complexion of the law shews, that it was intended to be avoided. The doctrine which has been stated and relied upon, as applicable to foreign bills of exchange, is consequently inapplicable to the present discussion. These considerations have produced conclusions in the public mind, as to the construction of the law in question, the very reverse of what has been contended for by the counsel for the appellee. I should be unwilling to unsettle these long formed opinions, unless the expressions of the law rendered it absolutely necessary.

That a bond fraudulent and void in its creation, cannot be cleansed of its impurity, and rendered valid by assignment is settled by the case of Turton and Benson and has uniformly been so decided in the courts of this country. No man can by the mere act of assignment transfer a greater interest than he holds; dispose of an interest where he has nothing, or make good and valid, that which was originally vicious and void. In this enlightened age though former decisions are rejected, and a new mode of attaining justice is discovered. But is it true, that the means are adequate to the object? It is urged as a reason for the rejection of former opinions upon this subject, that they tended to impose deceptions upon the public, and to cramp commerce, by destroying the negociability of bonds and notes. As it strikes me, they rather tend to prevent, than to countenance those frauds, and if the other consequences will, follow, it is preferable to sacrificing a majority of the public, to thí averice and injustice of a few. But I cannot perceive, how commerce, or that sort of it which is most useful to society can be injured. That their negotiability will be restrained I admit, but they will answer the purposes for which the law intended them, by facilitating the collection of debts and thereby affording a convenient, and desirable accommodation to the people of this country.

*The case now under consideration, comes fully within those principles which seem to me correct. Norton and Anderson were concerned together in trade, and upon a settlement of accounts, Norton claimed a credit for the proceeds of a quantity of goods in the hands of Harris. But Harris assuring him that he had received no part of those proceeds, Norton, unsuspi-cious of the truth, gave his bond .for the balance as it stood. Eose, it is admitted, was a fair, bona fide purchaser of the bond. He is chargeable only with neglect; he might and ought to have satisfied himself, that the debt was justly due before he received it. If upon an enquiry, Norton had assented to the payment, or acknowledged he had no objections to it, this would have deprived him of his equity against Eose. It was easy for any person wishing to take an assignment of the bond, to make the enquiry; they would know at once, where to make the application. On the other hand, Norton could not give a special notice to the person who was about to obtain it and the public papers would afford a very uncertain channel of information.

Upon the whole I am clear that the decree is erroneous and ought to be reversed.

EYONS, J.

This has been truly said, to be a cause of considerable importance, on account of the precedent to be established. In order to discover the legislative intention, when the act of 1730 (of which that of 1748 is an exact copy, as to this question,) was passed and to comprehend more clearly the consequences of the construction contended for by the appellee, I shall consider this case as if it had be~n to be decided upon at that time. If Norton had given this bond before assignments were sanctioned by legislative authority, it is admitted to all hands, that his equity would have followed the bond, into the hands of an assignee. If so, is it possible that the legislature could have meditated so much injustice, as to exclude him from setting up an objection to the debt, which but for the law, he might have made? Could it mean to protect fraud, and to give validity to an instrument, which was originally void and founded in deception? Whatever would then have been the construction of the law, must be the construction of it at this day. I mention this to shew that the legislature by making bonds assignable, did not thereby mean to deprive the obligors of any equitable objections, which they might have to them. Until this act passed, bonds were not assignable. Bills of exchange could not answer the purposes of internal negociation, *between the planters and the merchants; the former from their situation, were under a necessity of having credit from the latter, and to secure this, it was deemed proper to make bonds assignable, by which means, the factors, who often took them in their own names, were enabled to pass them away in the purchase of commodities, or might, when necessary, transfer them over to their principals. This history of bonds will.evince, that as there was no necessity, so it never could have been the legislative intention, to give to them all the high privileges attached to bills of exchange, and particularly that, which has been contended for by the appellee. Independent of this, the law upon the face of it, repels a construction, calculated to deprive the obligor of his equitable objections. It saves to him the right of opposing the claim by all just discounts which he can make, and consequently could not mean to deprive him of an equity, strong enough to invalidate the whole claim. The law, so far from being designed to grant favors to the.assignee, is calculated to protect the obligor; the former, is obliged to admit all discounts against the obligee, and at his peril to give notice of-the assignment, under the penalty of being bound by payments made, after the obligee has parted with his right to receive them.

The accuracy of the principle laid down by the appellee’s counsel is not questioned; its application to this case is. For since it is admitted, that if the law had not permitted the assignment of bonds, an equity existing against the oblijgee would have accompanied the bond into the hands of an assignee, the single enquiry which remains is, does the law take away this right, previously possessed by the obligor? I have endeavored to shew, that so far from doing this, the law itself displays a careful attention to the rights and interest of the obligor.

The arguments which were used to assimilate this, to the case of a bill of exchange and promissory note, are totally without foundation. The reason of the law as applicable to those cases, is not founded upon the principle stated by the counsel for the appellee, but upon considerations altogether of a commercial nature.

Upon the whole, I concur in opinion with the other judges.

The opinion and decree of the court, was entered as follows: “The Court is of opinion, that an assignee of a bond or obligation, takes the same, subject to all the equitjr of the obligor, and that the appellant ought to be allowed to set off *and discount against the debt claimed by the appellee as assignee of George Anderson, the other defendant in the decree named, any equitable-demand respecting the said debt, which he had a right to claim from the said George Anderson, the original obligee.” Decree reversed with costs, and the cause remanded to the High Court of Chancery for further proceedings to be had therein, according to the principles of this decree.  