Reddick v. . Jones

28 N.C. 107 | N.C. | 1845

This is an action of debt, brought under the statute, by the plaintiff as indorsee of a sealed note bearing date 19 October, 1841, for $300, payable six months after date, which was given in this State by Daniel Jones to the defendant Taylor, and by Taylor indorsed to James Owens, and then by Owens indorsed in Virginia to the plaintiff, before the note became due, in payment of a debt which Owens owned the plaintiff.

(108) On nil debet pleaded, the case was this: The obligor, Jones, was indebted to Owens in the sum of $300, and executed the note therefore, but made it payable to Taylor in order to get his indorsement as additional security. Jones and Owens requested Taylor to indorse the note, but he refused; and then Owens told him that his indorsement would not make him liable for the money mentioned in the note, but he wished it in order to enable him, Owens, to pass it off; and thereupon Taylor, being an unlettered man, did indorse the note to Owens, who then carried it to Virginia and indorsed it to the plaintiff.

The counsel for the defendant thereupon insisted that as his indorsement had been fraudulently obtained without consideration, the plaintiff could not recover, though he took the note bona fide from Owens, because the plaintiff was not a purchaser for a valuable consideration, but took the note in payment of a preexisting debt from Owens to him.

The counsel further insisted that the plaintiff could not recover because the indorsement was made to him in Virginia, and he had not shown that the note was negotiable and would pass by indorsement by the laws of that State.

The court refused to give the instructions, and directed the jury that the plaintiff was entitled to their verdict. The jury found for the plaintiff, and from the judgment the defendant appealed. As it would be impossible for a purchaser to ascertain all the latent defects or equities that might be set up against a bill or note, it was early found indispensable to the credit of negotiable instruments to hold that a person who takes them bona fide for a valuable consideration, before they are due and without notice of their infirmity, is not affected by the failure or the want of a (109) consideration, or even a fraud between previous parties, but may recover the money due thereon. This has been long held in this State, Black v.Bird, 2 N.C. 273; and it is needless to cite other authorities, as every treatise on Bills and Notes thus lays down the doctrine. The only exceptions are founded upon the positive enactments of statutes which forbid the making of certain contracts, and declare the securities void: as, for example, gaming and usurious contracts. Those the law must of necessity hold void in the hands of the most innocent; otherwise, the statutes would always be evaded by assignments. But that is altered in this State, as to usury, by the act of 1842, ch. 2; and, with the exceptions of the character, the rule is uniform. It may, probably, be found that receiving negotiable paper merely as a security for a preexisting debt will not make the creditor a purchaser, as he gives up nothing therefor, unless there be a stipulation for forbearance as a new consideration, or the like. We do not, however enter into that question. We believe that it has been always understood in this State that taking paper in payment of a precedent debt constitutes a purchase of it for value. What is a valuable consideration? It is generally defined to be a benefit to one party, or labor or loss on the other; and they both concur in this case; for the holder gives up his debt on one man as the price of a debt on another transferred to him, and the former debtor of the holder pays his debt therewith and gives up the securities by which he had before been bound. We are not aware of any cases to the contrary in England, or in any respectable courts of this country, except some in New York at one period, which were opposed to those that were earlier and others that are more recent. Notwithstanding those intermediate decisions, not being, indeed, those of the Court of Errors, Chancellor Kent, in the latest edition of his valuable Commentaries, sec. 44, p. 80, lays the rule (110) down, as we hold it here, and in conformity with his own previous opinion, judicially delivered, in Bay v. Coddington, 5 John. C. C., 54, that a preexisting debt is a valuable consideration to sustain a note in the hands of an indorsee, who will hold it unaffected by any equities, if he take it without notice of any facts which implicate its validity as between the prior parties. He is fully sustained therein by the cases on which he relies, and particularly by the elaborate reasoning and review of all the previous adjudications on the subject to be found in Brush v.Scribner, 11 Conn. 388, and Swift v. Tyson, 16 Peters, 1. Those decisions seem to us conclusive of the point, and relieve us from the necessity of entering into a further discussion of it.

Upon the other point, the opinion of the Court is also against the defendant. As the note was made in this State, and is not expressed to be payable at any particular place, and is negotiable by our law, that property, it would seem, became inherent in it as a part of its nature, so as, perhaps, to make it negotiable everywhere. But if that be not so, it is, at all events, negotiable in every country whose laws do not forbid it. Therefore, the onus was on the defendant to show the law of Virginia, if that makes it unlawful to negotiate these notes made in another country, which are negotiable by the law of the country of their origin; for no such want of comity can be presumed in one sister State towards another. But if such an indorsement would not be sustained in a forum of Virginia, in deference to the law of the place of the origin of the contract, and also of the place of its performance, yet clearly such an indorsement must by our courts be understood to have been made in reference to the law of this State, and, therefore, be held to entitle the holder to a remedy here against all persons, who here became parties to the instrument. But of De la Chaumette v. Bank, 2 Barn. Adolp., 385, thus decides the point, as a mere matter of construction of the (111) statute of Anne, and is directly applicable here, as our acts of 1762 and 1786 are taken from the English statute. It was there held that on a note made in England, and transferred in France, the holder might have an action in England, although by the law of France it was not negotiable there. The words of the acts do not restrict the negotiability to any particular place, and their object is to enlarge the credit and circulation of paper of this kind; and, therefore, the courts of the State ought to uphold the fair transfer of it anywhere, as advancing the policy of the statutes as well as conforming to the original nature of the contract.

PER CURIAM. No error.

Cited: Grace v. Hannah, 51 N.C. 96; Baggarly v. Gaither, 55 N.C. 82;Potts v. Blackwell, 57 N.C. 67; Toms v. Jones, 127 N.C. 466.