24 Conn. 605 | Conn. | 1856
The court dismiss all enquiry into those claims of fact and law, made by the parties, which have reference to a former note of which the plaintiff was holder, and the defendant was endorser. Our view of other aspects of the ease renders it unnecessary to decide whether the defendant, being directly indebted to the plaintiff, on account of having been legally charged with a liability, as such endorser, caused the note now in suit to be delivered to the latter, in satisfaction of that indebtedness, or whether, as claimed by the defendant, there was no such indebtedness at all, by reason of the want, not only of actual notice to him, of non-payment, but also of its legal equivalent, due diligence in the attempts made on the plaintiff’s behalf to ascertain the defendant’s residence.
There is as little occasion, as will be seen, to decide whether, according to the laws of the state of New York, or of any other jurisdiction, a recovery can be had upon the common counts, in assumpsit, in favor of the endorsee of such a note, as that on which this action is founded, against the endorser. In coming to the conclusion that the plaintiff is entitled to a judgment, we have not looked beyond the note itself, and the ordinary relation of the endorser of negotiable paper to its' bona fide holder.
The contract, which is the subject of the present suit, was made in the state of New York, and by its terms, to be executed within the same jurisdiction. Its validity, operation and effect, at least, are therefore to be determined according
As early as the year 1822, if not before, the courts of New York took the ground, that a party, whose legal or equitable rights had been violated by the unauthorized transfer of negotiable paper, had a superior equity to that of a holder, however innocent, who had received it merely as a security against an existing liability, and without parting with something of value, or relinquishing any other security at the time; and that, although he held by what would be a valid consideration between him, and the party, who had fraudulently negotiated the paper to him, he could not however be said to have given value for the note, and was not therefore to be treated as a bona fide holder, as against parties having prior equities, either as makers or former holders. Coddington v. Bay, 20 Johns., 637. This doctrine was recognized in several intervening cases, but the distinction suggested (as it would seem,) by the language of the court, between the receipt of negotiable paper, as collateral security for a debt, and its acceptance, in discharge of such debt, was explicitly recognized in subsequent decisions. Bank of Salina v. Babcock, 21 Wend. R., 499. Bank of Sandusky v. Scoville, 24 Wend. R., 115.
The opinion however, so far as it can be construed as rejecting the distinction between the transfer of negotiable paper as a collateral security for an outstanding debt, and as payment of such debt, was subsequently disavowed as extrajudicial, and was considered by Justice Duer, a departure “ from a general and undoubted rule of mercantile law.” White v. Springfield Bank, 3 Sand. Sup. Ct. 222.
The doctrine was, nevertheless, again called in question in 1864, in the case of Youngs v. Lee, 18 Barb. R., 187. It appeared that the note, on which the suit was brought, had been improperly diverted from its proper application, and fraudulently transferred by its holder to a creditor of his own, in payment of a note given by him for goods purchased and then not quite due. The creditors at once withdrew their own security from the bank, where it had been placed for collection, and delivered it up to their debtor to be cancelled. The supreme court held, that such a transaction is in the usual course of business, if the negotiable paper is thus received before its maturity, in payment and discharge of an outstanding indebtedness. The case was then brought before the court of appeals, 2 Kern. R., 551, where the decis
Judgment should therefore be rendered for the plaintiff.
In this opinion, the other Judges, Ellsworth and Hinman, concurred.
Judgment for the plaintiff.