237 A.D. 795 | N.Y. App. Div. | 1933
Lead Opinion
.These two actions were tried together by stipulation. Both cases' are, so far as this appeal is concerned, governed by the same law and the same facts. The cases were tried once before and in that trial, as in the last trial, the jury gave defendants the verdict. The actions are brought upon trade acceptances issued by the defendants to the Otis Oil Burner Corporation, and, by the latter, negotiated and indorsed over to the plaintiff for value and before maturity. Judgments in favor of defendants, as a result of the first trial, were reversed by this court upon the ground that the trial court charged, in substance, that it was the duty of the plaintiff to make such inquiry as a careful man would make to learn whether there was any defect or infirmity in the trade acceptances before he purchased them. (Coopersmith v. Maunz, 227 App. Div. 119.)
Upon this trial, as upon the former, there was evidence to warrant the jury’s finding that the trade acceptances were procured by the Otis Company from defendants by means of fraud. But, even so, the plaintiff, purchasing them for value and before maturity, could recover on them unless he “ had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith.” (Neg. Inst. Law, § 95.) This is so, because we held upon the former appeal (Coopersmith v. Maunz, supra) that the trade acceptances were negotiable paper.
Infirmity in the instruments having been proven by defendants the burden was cast upon plaintiff to prove that he was a holder
It must be conceded that plaintiff bought the paper at a large discount — ten per cent on paper payable in two months. This alone is not enough. (Second National Bank v. Weston, 172 N. Y. 250.) (See, also, Eisenberg v. Lefkowitz, 142 App. Div. 569.)
The only other evidence in the record that is even claimed to show that plaintiff was not a taker of the paper in due course, is his own admission that he hired an accountant to go through the books of the Otis Company, and that the books showed a weak financial structure, and that it was apparent that the company was doing a rather large business on too small a capital. Plaintiff also admitted, in substance, that he knew he was taking paper that would not be attractive to banks. I do not regard these facts as sufficient to put plaintiff in the light of a taker in bad faith.
Finding, in the record, no substantial evidence to dispute plaintiff’s evidence that he took the paper in good faith, the judgment should be reversed on the law, with costs, and plaintiff’s motion for a direction of a verdict for the amount demanded in the respective complaints should be granted, with costs.
All concur, except Taylor and Thompson, JJ., who dissent and vote for affirmance in an opinion by Taylor, J.
Dissenting Opinion
I cannot join with the majority of the court in holding that this plaintiff should recover as a matter of law. On the appeal from prior judgments in favor of defendants we expressed the view that it was a fair jury question whether or not plaintiff had fulfilled his obligation (Neg. Inst. Law, § 98) to prove that he was a holder in due course (227 App. Div. 119, 122). I find nothing in the present record pointing to a different conclusion. The only additional testimony aiding plaintiff in this behalf is that of the witness Korn, and this testimony is of no material importance. The trade acceptances ran in series of three, becoming due in sixty, ninety and one hundred and twenty days. Plaintiff paid one hundred and fifty dollars for each two-hundred-dollar document; and when he received payment he retained twenty dollars for himself and paid thirty dollars into a “ reserve fund ”
“ The discount taken may be so great as to impeach the good faith of the purchaser, the same as a chattel may be bought at so much under its true value as to justify the inference that the purchaser knew or suspected that it had been dishonestly acquired by his vendor.” (Second National Bank v. Weston, 172 N. Y. 250, 257.)
It is well stated in Smathers v. Toxaway Hotel Co. (168 N. C. 69), that it must be a very plain and conclusive case to justify taking such question of good faith from the jury in favor of the party having the burden, since credibility of the evidence adduced in support of the claim of want of knowledge of good faith is for the jury to decide, and, if they do not believe the evidence, the holder has failed to discharge the burden resting on him by the terms of the statute; and the verdict should therefore be against him unless there is other evidence or circumstances sufficient for that purpose; and whether there is the jury at last must also decide.
If * * * the disclaimer of notice [of defect in the instrument] proceeds from an interested source and if there are circumstances in addition to arouse suspicion or incredulity, the jury and not the judge must say whether the burden of repelling notice has been adequately borne.” (New York Bankers, Inc., v. Duncan, 257 N. Y. 160, 165.)
I am advised of the general rule that business safety requires that the validity of genuine negotiable instruments should not be lightly questioned. But considering the parties involved — on
Thompson, J., concurs.
In each case: Judgment reversed on the law, with costs, and judgment for the plaintiff granted for the amount demanded in the complaint, with costs.