Senft v. Schaefler, 142 N.Y.S. 380

Senft v. Schaefler

142 N.Y.S. 380 | N.Y. Sup. Ct. | 1913

Lehman, J.

The plaintiff sues the defendant upon a note indorsed by him .for the accommodation of the payee. It is not disputed that the plaintiff discounted the note for value. The defendant, however, denies that he had any notice of the nonpayment of the note, and sets up various affirmative defenses, including that the note was diverted from the purpose for which it was given. It is not denied that the note was made for *153the payee’s accommodation, and was discounted by him. The defendant, however, claims that he indorsed the note for the purpose of discounting it himself at his bank; that the bank refused to discount it without another indorsement, and_that he delivered-the note to the payee to obtain the second indorsement. The mere fact that the payee discounted the note with a third party, instead of at the bank where it was intended to discount the note, would ordinarily constitute no diversion, if the defendant indorsed the note to permit the payee to obtain the money. The mere fact that he discounted the note with some third party instead of at the bank where the parties originally intended that it should be discounted would be immaterial, for the purpose for which the defendant lent his credit would be fulfilled, and no additional burden would be placed upon him. Powell v. Waters, 17 Johns. 176 If, however, the defendant actually made the discounting of the note at' the bank a condition of its delivery to the payee, then, however immaterial the condition may seem, the payee had no right to use the note except subject to this condition. Even in that case, however, the diversion of the note would be no defense as against a bona fide holder for value, for, “ where the instrument is in the hands of the holder in due course, a valid delivery thereof by all parties prior to him so as to make them liable to Mm is conclusively presumed. ’ ’ Neg. Inst. Law, § 35. In this case the plaintiff claims that he discounted the note without notice that it was delivered subject to any condition. While this is denied, it was a question for the jury, and the trial justice erred in refusing to instruct the jury as to the rights of a bona fide holder. It is, of course, immaterial that the jury’s verdict in favor of the defendant may have been found on some other theory than that the note was diverted. This issue was submitted to the *154jury, and any material error in the charge on this branch of the case requires a reversal of the judgment, for we cannot speculate upon how the jury arrived at its conclusion.

The appellant raises various questions upon the trial justice’s rulings on the evidence, and I -think it is unnecessary to consider them in detail, since in any event there must be a new trial, except to point out that the admission of the judgment-roll in the City Court action was clearly- erroneous.

Judgment should be reversed and a new trial ordered, with costs to appellant t-o abide the event.

Bulb and Whitakeb, JJ., concur.

Judgment reversed and new trial ordered, with costs to appellant to abide event.