In re Home Furniture Co.

This is a petition for review of the referee’s order allowing the claim, of May E. Chappell. The facts, briefly stated, are that the Home Furniture Company, the bankrupt herein, executed two promissory notes, amounting to $5,500, to “A. A. Chamberlain, trustee, or order.” Chamberlain subsequently assigned these two notes, without indorsing them, to May E. Chappell. This transfer was accompanied by a written instrument signed by Chamberlain, in which it was stated that the notes were given and transferred “all as security for said May E. Chappell for indorsing my note in favor of the First National Bank of Vallejo in the principal sum of $5,000.” Unquestionably, therefore, the notes were assigned to Mrs. Chappell as collateral security for her indorsement of Chamberlain’s note to the bank.

Section 3130 of the Civil Code of California provides that: “Where the holder of an instrument payable to his order transfers it for value without indorsing it, the transfer vests in the transferee such title as the transferer had therein, and the transferee acquires, in addition, the right to have the indorsement of the transferer. But for the purpose of determining whether the transferee is a…