160 N.Y.S. 251 | N.Y. App. Div. | 1916
This is an action on a promissory note and against appellant as indorser. At the close of the evidence the attorney for plaintiff moved for a direction of a verdict on the ground that the evidence material to the right of his client to recover, consisting of the testimony of the witness Lackey, was uncontroverted; and the attorney for the appellant thereupon conceding that his client was liable for $500, but claiming that to be the extent of the liability, moved for a direction of a verdict for plaintiff for that amount. Both parties thus submitted the facts to the court and neither party attempted to withdraw the submission by requesting to go to the jury on any question of fact or otherwise. It must, therefore, be deemed that all controverted questions of fact have been resolved in favor of plaintiff (Reed v. Spear, 107 App. Div. 144; Zeller v. Leiter, 114 id. 148), and this necessarily involves questions of fact involving the credibility of witnesses although not controverted by other evidence. The indorsement and delivery of the note by appellant were admitted, and due presentment and protest and notice thereof were proved. The sole ground upon which appellant defended is that the note was diverted from the purposes for which it was made and for which he indorsed it, and that plaintiff faffed to bear the burden of showing that it was a holder in due course, which rested upon it on proof of diversion of the note. The note was for $2,500 and was signed “Boot-Knight Go., Inc., M. J. Boot, Pres., W. L. Smith, Treas.,” and was payable 120 days after date to the order of “ ourselves.” It was indorsed precisely the same as it was signed. The appellant’s indorsement was next, and after it were indorsements by said Boot and Smith individually, and by one Van Nostrand and by the plaintiff.
The appellant testified that he was a stockholder in and director of the maker of the note, and that at the request of said Boot, the president, he indorsed it in blank to be used to take up, by renewal, a like note which was soon thereafter to fall due at the Harriman National Bank, and that the note was not used for that purpose. The plaintiff, with a view to showing that it received the note in due course before maturity, that is for value and without notice that it had been indorsed by
Appellant through his counsel concedes that if his indorsement and the delivery were without restriction as to the use of the note he would be liable, even if plaintiff or its transferor took the note in conditional payment or as collateral security for an antecedent debt, and such is the rule of law. (Neg. Inst. Law, §§ 2, 51; Grocers’ Bank v. Penfield, 69 N. Y. 502; Continental Nat. Bank v. Townsend, 87 id. 8; Milius v. Kauffmann, 104 App. Div. 442; Isaacs v. Cohn, 10 id. 216.) The only evidence with respect to a restriction in the use of the note is the uncorroborated testimony of the appellant. The judgment can be sustained on the ground that his credibility was for the trial court and that it does not appear that his testimony has been or should have been accepted as true. He was a stockholder and director and his interest in the company was such that he was acting as accommodation indorser for it. Its relations with the Scot-Mint Company are not fully disclosed, but its letter heads show that it was advertising the business of the other company. The facts with respect to the transaction by which the Scot-Mint Company became the owner of the note were not brought out; but it was not necessary for plaintiff on proof of diversion to show the title of all prior holders. It is sufficient to entitle plaintiff to recover the full amount of the note, notwithstanding the diversion, to show either that it or any former owner, was a holder in due course. (Neg. Inst. Law, §§ 98, 51, 52, 55, 91, 96; Sutherland v. Mead, 80 App. Div. 103, 107; Mindlin v. Appelbaun, 62 Misc. Rep. 300.) It is not necessary to rest affirmance on the ground that appellant did not satisfactorily bear the burden of showing that the note was diverted, for, assuming that it was diverted, the evidence fairly' warrants the inference that the plaintiff received it before maturity in due course for full value and without notice that it was indorsed and delivered for a special purpose, and I think that the Street Railways Advertising Company was also a holder in due course. The testimony of Lackey to that effect
It is further claimed in effect that Lackey, who represented the plaintiff in the transfer of the note to it, knew of the relations between Root and Van Nostrand and the Root-Knight Company and Scot-Mint Company. The facts, with respect to such knowledge on his part were not very fully developed. The note was not payable to or indorsed by the Scot-Mint Company and" presumably Lackey knew that. He also knew that the check for the cash was drawn to the order of the maker. It is contended that these facts constituted notice to him which was imputable to the plaintiff that the note had been diverted; but manifestly under the rule which now obtains by which honesty and good faith are the tests and not mere notice of suspicious circumstances or notice or knowledge of facts from which on inquiry the infirmity might be discovered (See Neg. Inst. Law, § 91; Cheever v. Pittsburgh, etc., R. R. Co., 150 N. Y. 59; Cole v. Harrison, 167 App. Div. 336; Oliner v. Goldenberg, 168 id. 874) such facts and knowledge are insufficient to' show that plaintiff or the Street Railways Advertising Company was not a holder in due course. In fact the contrary was conceded in appellant’s motion for a direction of a verdict for plaintiff for $500.
It follows that the judgment and order should be affirmed, with costs.
Clarke, P. J., Dowling, Page and Davis, JJ., concurred.
Judgment and order affirmed, with costs.