10 Wend. 85 | N.Y. Sup. Ct. | 1833
By the Court,
The judge charged the jury that it was immaterial whether the note was negotiated in payment of a precedent debt, or for a valuable consideration paid at the time. This is certainly not the law as settled by the court for the correction of errors in the case of Coddington v. Bay, 20 Johns. R. 637. Mr. Justice Woodworth states the rule to be this i that where negotiable paper is tranferred for a valuable consideration and without notice of any fraud, the right of the holder shall prevail against the true owner; but that valuable consideration which shall produce this effect is not merely such a consideration as is good between the party transferring and the party receiving such paper; the holder must have incurred loss by giving credit to the paper, and have paid a fair equivalent; he must have made advances or incurred responsibilities upon the credit of the paper. If the holder has done neither, but has taken it for a previous claim, his condition is improved, if he recovers, but he loses nothing if he fails; his equity is not superior to the owner. Ch. J. Spencer remarks, that all the cases cited were those where notes or bills were taken in the usual course of trade, and for a present consideration paid; not where they were received in security of an antecedent debt. The holder, to recover, must have paid a valuable consideration by giving money or money and goods for them in the usual course of trade. It follows from the principle of this case, that the holder of a note negotiable on its face, who receives it in payment of a precedent debt or responsibility incurred, takes it subject to all the equities existing between the original parties. In the language of the commercial law, he has not paid value for it, and therefore is in no better situation than the payee. Since the case of Coddington v. Bay this principle has not been departed from. The plaintiff in this case gave no value for the note.
New trial granted ; costs to abide the event.