35 N.Y. 65 | NY | 1866
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *67 Upon the facts proved, it is manifest that the jury were right in finding that the defendants were bona fide holders of the paper in question.
The instructions of the learned judge, on this branch of the case were more favorable to the plaintiffs than the law would strictly justify. He gave them the benefit of the assumption that, though the defendants took the paper from the apparent owners for value, before it became due, and without notice of any defect in their title, the plaintiffs could reclaim the bills, if they proved the existence of circumstances which would have been likely to excite the suspicions of a cautious and vigilant purchaser. We cannot accept this as an accurate exposition of the rule applicable to the transfer of commercial paper, though it is in accordance with antecedent decisions in the Superior Court. (Kentgen v. Parks, 2 Sandf., 60; Pringle v. Phillips, 5 id., 157; Danforth v. Dart, 4 Duer, 101.)
We had occasion to express our views on this question in the case of Magee v. Badger, decided at the last December Term. One who, for full value, obtains from the apparent owner a transfer of negotiable paper before it matures, and who has no notice of any equities between the original parties, or of any defect in the title of the presumptive owner, is to be deemed abona fide holder. He does not owe to the party who puts such paper in circulation the duty of active inquiry, to avert the imputation of bad faith. The rights of the holder are to be determined by the simple test of honesty and good faith, and not by mere speculation as to his probable diligence or negligence. The authority mainly relied on, in the exceptional cases which have favored an opposite theory, is the decision in Gill v.Cubitt, reported in 3 Barn. Cress., 466. The doctrine of that case has been repeatedly overruled, as well in the English as in the American courts; and it cannot be recognized as authority without sanctioning an unwise innovation in our system of commercial law. (Goodman v. Harvey, 4 Adol. Ell., 870;Bank of Bengal v. Fagan, 7 Moore P.C., 61, 72; Raphael v.Bank of England, 33 Eng. Law Eq., 276; 2 Parsons on *69
Bills, 272, 279; Worcester County Bank v. Dorchester Bank, 10 Cush., 488; Brush v. Scribner,
The judge was right in rejecting the offer of the plaintiff to prove that the advances to the trust company, for which the paper was pledged, were made on an agreement by the latter to pay a rate of interest exceeding seven per cent. The proposed proof neither tended to show, that the defendants had notice that the acceptances were not the property of the company, nor that the transfer was made to secure the performance of a usurious and illegal agreement. The act of 1850 operated pro tanto as a repeal of the statutes prohibiting usury, so far as they were applicable to stipulations for a rate of interest exceeding seven per cent, where a corporation is the borrower. The contract which the plaintiff proposed to prove, between the Trust Company and the defendants, was one which the parties could lawfully make, and which it would have been the duty of the courts to enforce. (Session Laws 1850, ch. 172, p. 334; Rosa v. Butterfield,
The other questions raised by the exceptions were properly disposed of on the trial.
The judgment should be affirmed.
All the judges concurring,
Judgment affirmed. *70
