50 N.Y. 69 | NY | 1872
The order of the General Term does not state that it was made upon any error of fact. It must, therefore, be assumed by this court that the judgment was reversed and a new trial granted upon legal errors only. An exception was taken by the respondent to the finding by the referee of the fact that the plaintiff had notice, before he purchased the note, that the indorsements made by Brown upon the note were made after it had passed into the hands of Brown with Bennet's indorsement upon it. This exception raises the question in this court whether there was any evidence in support of the finding. The plaintiff, in his testimony, speaking of these indorsements, says: "I can't say when they were put on; it was done, that is, both of these instruments, signed by Brown, during the negotiation of the sale of the note to me. Hine brought all the notes to me to sell them to me." The witness had before testified that he purchased several other notes of Hine at the same time he bought this. Other testimony shows that Bennet's indorsement was put upon the note a long time before the purchase by the plaintiff. It follows that when the plaintiff first saw the note it had been indorsed by Bennet and not by Brown. This sustained the material part of the finding. Whether the note had been in Brown's hands was not material; but if so, that fact might be inferred from the testimony. This brings us to the real question in the case, which is whether the legal conclusion of the referee, from the facts found, that the plaintiff was not entitled to recover against Bennet, was correct. The substance of the facts so found is that Scudder
Redfield made the note in suit payable to the order of James E. Brown, and, after being indorsed by the defendant Bennet, was by them delivered to Brown the payee. That the note, before maturity, was transferred by Brown to one Hine; and by Hine, before due, transferred to the plaintiff absolutely, without condition for a valuable consideration. That at the time of *72
the transfer to the plaintiff he knew nothing of any defence to the note; and that it then had on it, in addition to the indorsement of Bennet, the following indorsement, made by Brown, written above the indorsement of Bennet, viz.: "For the purpose of making this note negotiable I indorse the same, payable to the order of Solomon Bennet, without recourse to me as indorser;" and the following, written below the indorsement of Bennet: "For value received of Isaac N. Hine I hereby guarantee to the said Hine, or bearer, the collection of the within note of the makers, and Bennet, the indorser," signed by Brown. That the plaintiff had notice, before he purchased the note, that the indorsement made by Brown upon the note was made after it had passed into the hands of Brown with Bennet's indorsement upon it. There would, at first view, appear to be an inconsistency between the finding that the plaintiff, at the time of his purchase, knew of no defence to the note, and the one in substance, that he did, at that time, know that the note, after being made and indorsed by Bennet, was, by the maker, delivered to Brown, who, after that, made his indorsements upon the note, provided the latter finding constituted a defence for Bennet upon the note, as held by the referee. Be this as it may, full effect must be given to this latter finding upon the same principle that a general verdict is controlled by a special finding of fact. From this finding it appears that the plaintiff did know that the note had been indorsed by Bennet before Brown made the special indorsement thereon. This presents the questions whether Brown, had he retained the note, could have recovered against Bennet as indorser; and if not, whether he could transfer any such right to a purchaser from him. In Herrick v. Carman (12 Johnson, 159) it was held that the payee of a note, made payable to his order, and indorsed by a third person previous to its delivery to the payee, could not recover against such indorser; that the face of the paper showed that the payee occupied the position of first indorser as to the one previously indorsing, and could not, therefore, be permitted to recover against one in the position as to him of *73
second indorser. In Herrick v. Carman (10 John., 224) it was held, upon a like note, that the party who had so indorsed might, in an action against him by an indorser of the payee, show that the plaintiff held the note as agent of the payee; and that this fact would defeat a recovery for the reason that the payee, as to the defendant, stood in the position of first indorser, and could not therefore recover of him. In Tillman v. Wheeler (17 John., 325) the same rule was held and applied in deciding the case. It may be remarked that in each of these cases it appeared that the payees received the notes from the makers for value, pursuant to an agreement by the maker to give notes with an indorser; but it was held that this fact was of no avail to the plaintiffs, unless it was further proved that the person indorsing did so with intent to become surety for the makers to the payees. It is clear that a party having no right of action upon a note himself can transfer none to another knowing all the facts. In the present case the plaintiff not only himself knew the facts, but the case shows that they were also known to Hine, of whom he purchased the note. In Moore v. Cross
(
The judge at General Term fell into the error of supposing that the facts set out in the complaint, bringing the case within the principle of Moore v. Cross, were admitted in the answer. The answer explicitly denies that the defendant Bennet indorsed with intent to become liable as surety to the payee.
The order of the General Term must be reversed, and the judgment entered upon the report of the referee affirmed, with costs.
All concur, except RAPALLO, J., not voting.
Order reversed and judgment accordingly. *76