Skilding & Haight v. Warren

| N.Y. Sup. Ct. | May 15, 1818

Spencer, J.

delivered the opinion of the court. It cannot be useful or necessary to review all the cases, upon the question whether a party whose name is on a negotiable paper, can be admitted as a witness to impeach it¿ by testifyt° facts arising subsequent to the execution of the note.

We have decided, that from principles of public policy, a man whose name is on such paper, cannot be admitted to show it void for usury, or for any other cause, at the time of its execution; but that as to facts subsequently arising, he may be admitted to testify, if he stands disinterested. I cannot perceive any essential difference between this case and that of Woodhull v. Holmes, (10 Johns. Rep. 231.) It was decided in that case, that the endorser was a competent witness to prove, that after the note was made and endorsed, it was delivered to a third person to be presented to a bank for discount, who, instead of offering it, fraudulently put it into the hands of a broker. The evidence of the endorser in that case, had he made out the facts, would have defeated a recovery, unless the holder had shown that he came fairly by the note. The evidence went to show that the note was an accommodation note ; that no consideration had passed between the immediate parties to it, and that the plaintiff had come unfairly into .the possession of the note, and this the court held, the endorser might prove, notwithstanding the rule in Winton v. Saidler, and Walton v. Shelly.

The facts proved by the endorser in this case, make out a case precisely similar in principle to that of Woodhull v. Holmes. Here the note was endorsed by the defendant as an accommodation note to enable the maker to borrow money. No value was received, and the act of endorsing was gratuitous. The makers of the note were solvent when the defendant lent his endorsement; they had become insolvent when the plain tills received the note. After the insolvency of the makers, they had promised the defendant not to negotiate the note. With a knowledge of these facts, and to secure about-250 dollars due the plaintiffs, they took this note, in a manner entirely out of the usual course of business. They held out to the makers of the note, encouragement to aid them in getting a letter of license from their creditors; they advanced a part of the money, and promised to wait two years before payment was exacted. It cannot be doubted that the plaintiffs are mala fide holders of the note, and that they took it with a view to charge a person, who from mere motives of friendship, had endorsed it to aid men who were in good circumstances, but who had become insolvent. The plaintiffs were warned that the note was functus officio, and yet they took it.

It was strenuously contended at the trial, and on the argument of the case, that the facts to which the endorser testified, were not facts arising subsequent to the execution of the note, but facts contemporaneous with the note, on this ground, that the note had no legal efficacy until it was endorsed.

The same objection existed to the testimony of the endorser in the case of Woodhull v. Holmes, for there the note was not efficacious until it came into the hands of a bona fide holder; for as between the immediate parties, there was no liability to each other until then ; and yet the testimony of the endorser, was admitted as to the facts subsequent to the making of the note; and by the terms, execution of the note, the court meant its signature.

I repeat it, there is no difference in principle between this case and that of Woodhull v. Holmes.

A point has been taken, that Jonathan Warren, the maker was interested, and ought to have been released ; it has been decisively answered, that the only objection made to his admission at the trial was the one already considered, and it may be added that he stood indifferent between the parties.

The other points subjoined to the case were not urged on the argument, and are not tenable.

Motion denied.