3 Wend. 13 | N.Y. Sup. Ct. | 1829
By the Court,
Several questions were raised in the progress of the trial, which will be noticed in their order.
1. It was objected that the plaintiffs could not declare as endorsees, but should have declared specially as receivers. The judge decided that the action was well brought by the plaintiffs as endorsees. To this decision, I can see no objection. 'In point of form, the paintiffs shew a good title to the nóte, and in point of fact, they had title as receivers, if not as assignees; and, as the defendant was not thereby deprived of any defence which he would have had if they had declared as receivers, there is no good reason for supporting this objection.
2. The judge decided that the transfer of the note and the assignment of the 28th July, were void by virtue of the sixth •section of the act to prevent fraudulent bankruptcies by incorporated companies, (Statutes, vol. 7, p. 450 a.) That section prohibits áh assignment of any property to any officer
But perhaps it is not important in this case whether the assignment of the 28th July was valid or not, as the plaintiffs Were appointed receivers on the 14th August, before the note declared on was due. This appointment of receivers constituted the plaintiffs trustees, -not for the bank, but for the creditors of the bank. The note was a negotiable note, transferred before due, and the set off can no more be allowed than , if the parties here had been individuals. Where the payee transfers a note before due, while the maker holds a note against him, or has any other demand against him, nothing
The cases cited of The Bank of Niagara v. McCracken, (18 Johns. R. 493,) and Jefferson Co. Bank v. Chapman, (19 Johns. R. 322,) are not applicable_ here. In the first, the demand was assigned after the note was due; in the second, there was no assignment in the case. The set off was excluded because the right did not exist at the commencement of the suit. Nor do the cases under the English bankrupt act apply.' They are decided upon those acts, and do not seem to me to be analogous.
The grounds upon which I have placed the decision are applicable to all the other cases relating to the Greene County Bank, decided at the last October term, and render it unnecessary to decide a point raised here, and also in one of those cases; I mean' the case against Edward T. Stevens.
Whether a bank notes, payable on demand without specifying any place of payment, may be prosecuted without a demand at the banking house from which it issued, seems not to have received a judicial decision in this court. In the case of The Bank of Utica v. Magher, (18 Johns. R. 441,) it was held that no action lay upon the bills issued by the branch at Canandaigua, unless first demanded there. The act authorizing the establishment of an office of discount and deposit at Canandaigua, directed that no notes should be issued at such office unless countersigned by the cashier; and when so countersigned, they should be considered as paya
If I am right, then, the defendant, Bishop, might have prosecuted the bank upon the notes which he held, previous to the appointment of the receivers in this case; and had the note upon which this suit is brought been then due, according to the case of The Niagara Bank v. McCracken, the notes which he held on the 31st July would be a good set off; and if the defendant was correct in his position that the plaintiffs are trustees for the bank, the set off should be allowed. But in the case of The Niagara Bank v. McCracken, either the doctrine of set off was not understood as it now is, or the court did not consider the interest of the assignees, the suit not being in their names. Upon the whole case, I consider these propositions as established: 1. That the plaintiffs, either as assignees or as receivers of the court of chancery, are trustees for the creditors of the bank, but not for the bank itself) or its stockholders; 2. That the plaintiffs having a lawful title to the note on which this suit is brought, may set out any correct legal title, either as endorsees or as' receivers ; 3. That the set off cannot be admitted—because, 1. The note on which this suit is brought, was assigned by the bank for the benefit of their creditors, before the defendant bought the notes which he seeks to set off; and 2. Even if that assignment was void, the note passed before it was due into the hands of the plaintiffs as receivers of the court of chancery, and trustees for all the creditors ; and the note being negotiable, and having been negotiated before it was due, the maker cannot set up a defence of set off; 3. The maker of a promissory note can never, under any circumstancds, set off" against the endorsee a demand against the payee, provided the note was endorsed bona fide, and for a valuable consideration, before maturity. Although, therefore I consider the notes which the defendant purchased of Sanford, a legal demand against the bank, and one which he had a right to prosecute without any demand, still that demand cannot avail him in this suit, the note haying been transferred before it was due. Had the note become due before the transfer, and had the defendant made any payment
In my opinion, the plaintiffs made out a case entitling them to recover; and as the verdict was for the defendant, a new trial must be awarded, with,costs to abide the event.
New trial granted.
See note at end of case.
At the last October term of this court, there were four cases decided in actions brought by the same plaintiffs as receivers of the Greene County Bank, in which substantially the same questions arose as in this cause. One of them was the case of Haxtun & Brace v. Stevens, referred to in the opinion of the chief justice. This cause was tried before the Hon. Ogden Edwards, in April, 1826. The suit was on a promissory note for $125, due the 24th August, 1826. The defendant offered to prove, that previous to the assignment of the 28th July, and previous to the appointment of the plaintiffs as receivers on the 14th August, 1826, he was possessed of bank notes of the Greene County Bank, payable generally on demand, to the amount of $80 ; and that on the 24th August, he tendered to a clerk of the bank and of the plaintiffs, $125 of the bills of that bank, in payment of his note, which was refused to be accepted. The judge rejected tire evidence, deciding that the $80 could not be set off, because a demand of payment had not been made prior to the appointment of the ^plaintiffs as receivers; and as the residue of the sum of $125, that it could not be set off, because when the defendant became possessed of the same, his note had been virtually assigned for the benefit of the creditors of the bank. A .verdict was rendered for the plaintiffs, and on application to this court, a new trial was refused. It will be perceived, that although the court in the principal case do not sanction the doctrine that a demand is necessary previous to a suit brought on a bapk note payable on demand generally, still that the set off as to both sums was inadmissible, within the principles established by that case.