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The defendants proved that the note in suit had been diverted from the purpose for which it had been delivered to Smith by the maker as his agent. This cast upon the plaintiff the onus of showing that it was a bona fide holder, or had succeeded to the rights of such a holder. (Edwards on Bills, 319; Wendell v.Howell, 9 Wend., 170.) The facts found by the referee show that the plaintiff was such holder. The counsel for the appellant insists that the plaintiff's president received the note under circumstances of suspicion sufficient to put him upon inquiry, and that such inquiry would have led to a discovery of the diversion. There is no exception in the case raising this question, but if there was it would not be available to the defendant. The only circumstances relied upon in support of the position are that Colborn, from whom the plaintiff received the note, kept his accounts with it as agent, and that the president of the plaintiff knew that he was embarrassed in his circumstances. But it was also proved that he was doing business as a broker in New York, and was in the habit of procuring notes made and indorsed by others to be discounted by the plaintiff, of an amount as large as the one in question, which had been paid. Under these facts there was nothing to excite suspicion as to his ownership of the note, much less to induce a belief that the plaintiff did not take it in good faith. (See Magee v.Badger, 34 N.Y., 247.) The exceptions to the findings of fact by the referee raise in this court the question only, whether there was any evidence in support of the finding. In the Supreme Court the question upon such an exception is, whether the finding is against the weight of evidence, but the latter question cannot be considered here. The finding by the referee that the note was delivered to the plaintiff by Colborn, with other collaterals, as security for what Colborn owed the plaintiff, or might become indebted to it, was sustained by the testimony of Colborn, and the account of the plaintiff with him shows that, after such delivery, Colborn was permitted to overdraw his account to an extent that, on the 22d of November, the account was overdrawn
upward of $8,000. The plaintiff was a bona fide holder of the note, as security for this amount. It is further found, that upon the 22d of November, 1866, the plaintiff discounted for Colborn his note for $18,000, and received from him this note, together with other notes, as security for the payment of the note, and credited the proceeds in Colborn's account; that he then drew upward of $9,000 from the plaintiff, leaving a balance to his credit after satisfying the amount due the plaintiff upon the overdraft. The plaintiff was a bona fide holder of the note, as security for the payment of the $18,000 note, and had the right as such to enforce payment, so far as necessary to satisfy such note. It is clear that this right is not affected by the application of a portion of the proceeds to the payment of the debt due the plaintiff from Colborn. The General Term corrected the error of the referee in stating the account of the amount received by the plaintiff from the collaterals other than the note in suit, so as to give the defendant the benefit of all such payments. None of the exceptions to the rulings of the referee as to the competency of evidence were well taken, except such as were obviated by the subsequent withdrawal by the plaintiff of the objections made, and giving the defendant an opportunity to introduce the testimony. The judgment appealed from must be affirmed.
All concur.
Judgment affirmed.