The opinion of the Court, after advisement, was prepared by
Weston C. J.The free circulation of negotiable paper, has been found to be useful in the community. When, therefore, such paper has been negotiated, before it has become due, the law will not suffer it to be impeached, or sustain any matter in defence, by way of offset, in the hands of a bona fide holder, without notice. Unless where notes are payable to hearer, when the legal title passes by delivery, the settled mode of transferring negotiable notes is by indorsement. This not only passes the property, but it entitles the holder to sue in his own name. It had been doubted, whether the sum due could be assigued in any other mode, but in Jones v. Witter, 13 Mass. R. 304, it was held, that it would pass by a delivery of the note, for a valuable consideration.
The effect of this is, to pass the equitable interest to the as-signee, who is thereby substituted for the payee. His equitable claim extends no further. Such a note is not negotiated in the usual course of business, without the indorsement of the payee. When this is done, the holder is protected, unless the note has been dishonored, or received under circumstances, calculated to excite suspicion, or to put the party on his guard. It is the circulation of *400negotiable paper, in tlie usual and ordinary course of business, that it is the policy of the law to aid and protect.
If a purchaser will be satisfied with an equitable assignment, without having the title duly and legally transferred, we are aware of no reason, which should place him in any better condition, than any other assignee of a chose in action. If any thing is due, or whatever is due, at the time of the assignment, he is entitled to the benefit of it. Beyond this, as it is a transaction not in the usual course of business, he does not appear to us to have any just claim. In Cone v. Baldwin, 12 Pick. 545, the note in suit was payable to bearer. If the plaintiff is by the assignment only substituted for the payee, every ground of defence is open, which existed at that time. In our opinion therefore, proof on the part of the defendant of the want of a consideration, or of fraud in the payee, was legally admissible. The exceptions are accordingly sustained, the verdict set aside, and a new trial granted.