4 Barb. 304 | N.Y. Sup. Ct. | 1848
In 1835, William Jackson and seven others purchased a farm of land, known as lot 203 of the Onondaga Salt Springs Reservation, of Aaron Burt, and executed their joint bond and mortgage to Burt for $14,000, the purchase price. Prior to the making the notes which are the subject matter of this suit, the bond and mortgage had been assigned to the defendant Colvin, who had obtained a judgment
Colvin, who answered without oath, denied the alleged agreement, and also that the notes were deposited under any such condition, claiming them as absolute owner, except that which had been transferred to Earll. Earll answered on oath, and denied all fraud, and any notice of the facts set up to avoid the notes, and alleged a bona fide purchase of the note before it fell due.
Unfortunately, however, for the defendant Colvin, this was not enough to make him the owner of the notes. The bill, at folio 13, avers that the notes were signed by Mickles and endorsed by Bradley on the express representation and condition that they were not to take effect until the aforesaid arrangement should be consummated by all the parties, and a release given of the joint liability, for all but the amount secured by the notes. And the witness Jackson, at the 8th folio of his testimony, substantially proves that allegation to be true. Now if this be true, the absolute delivery of the notes by Jackson, was an unlawful diversion of them from the purpose for which they were made and endorsed ; and Colvin got no title to them, unless he was a bona fide purchaser, without notice, and for value paid. (See 9 Wend. 170; 6 Hill, 93.) We do not think that he was a bona fide purchaser, within the authorities. He. received' the notes either.in part payment or in part security for a precedent debt, viz. an existing judgment—which has neither been satisfied nor cancelled. The old security (the judgment) has not been surrendered, nor in any manner affected, by the deposit of the notes with Mr. Outwater. (21 Wend. 499.)
A very different question arises as to the note transferred to Earll, and on which he has brought a suit. The bill charges that Earll is a mere nominal party, Colvin being the beneficial owner of the note; or if not so, that he purchased the note with notice, or took it for a precedent debt, and is not a bona fide holder, and calls for an answer on oath on all those points. The answer, explicitly denies all the charges in the bill, in relation to the alleged mala fides of the transfer and holding of the note, and alleges a consideration in an exchange of notes. It is not denied that this answer is responsive. It is so, upon the authorities. (See the cases cited in Cowen & Hill’s Notes, 285, 286.) Being responsive, and being uncontradicted, it is conclusive, unless it has stated some fact which is incompatible with the bona fides of the transfer of the note. The fact that seems to have struck the vice chancellor with considerable force, was the consideration of the transfer, viz. the note of Earll payable in six months. It is true that- the defendant did not, in his
Again. Colvin was sworn for the defendant Earll, under an objection, and whether that objection was well taken or not, it was waived on the argument, and the testimony is to be regarded as properly before the court. The exchange of notes is a good consideration between the parties. It has even been decided that when two persons exchange their notes, payable to each other, with the view of raising money on them, the property in the notes respectively passes by the exchange and delivery, so that the subsequent sale of the notes at a discpunt is not usurious. (Rice v. Mather, 3 Wend. 62.) Colvin then became the actual owner of Earll’s note, and Earll the actual owner of the note in question. Now were the circumstances such as to render the exchange, for the reason alleged by Colvin, a fair and probable transaction ? or rather, does the explanation of Colvin disclose a fact which overthrows the allegations of the answer 1 It seems to us that the explanation of Colvin not only does not tend to impair the credit of the answer, but, on the contrary, shows that the taking of the note by Earll was a very natural transaction. He was told, and had reason to believe, that on the note he received, which was payable at a bank shortly thereafter, he would be able to receive the money which he was endeavoring to raise; and we do not perceive that be had any ground to suspect Colvin of misstating the facts in relation to the note; nor that the transaction was such as to charge him with notice of . the circumstances that constitute the
It is said that the release executed by Earll to Colvin, to make him a witness in the progress of this cause, has discharged the other parties to the note, and that such release is available to the complainants and fatal to the defendant Earll in this suit. We are not called on to express an opinion of the effect of proof of this fact under a proper issue in the suit at law; but it is sufficient to say that it is not within the issue presented by the pleadings in this case, and cannot, for that reason alone, be made the ground of a decree against the defendant. (See 6 John. 5,43, 559, 565; 1 John. Ch. Rep. 117; 16 Wheat. 189; 1 Barbour's Ch. Pr. 339.)
Again. We are asked, (in the event of our finding the transfer to Earll bona fide,) to modify the decree of the vice chancellor, so as to make Colvin chargeable with the amount of the note which he has transferred in fraud of the complainants’ rights. A conclusive objection to this relief is that there are no appropriate allegations in the bill to warrant such a decree. The bill is not framed with a double aspect; it positively asserts Earll to be a mala fide holder of the note in question, and does not allege that it was in fraud of the rights of the complainants, assigned to Earll so as to vest the title in him; and thus claim relief against Colvin, founded on that state of facts. Such an allegation we deem indispensable, so long as a party is bound to recover, if at all, according to his allegations as well as his proofs.
The decree of the vice chancellor must therefore be modified as respects Earll and the note transferred to him; so as to declare him a bona fide holder of the note, and dismissing the bill, as to him, for that cause.