12 Iowa 462 | Iowa | 1861
This case has been very fully argued by counsel; seldom have we found one more so. We have examined it with great care, and now proceed to state our conclusions, without much elaboration of the points made.
Three questions of fact, under the instructions of the court, were presented for the determination of the jury: First, Was the note obtained without consideration ? Second, Had plaintiffs notice of this before taking the same ? Third, If they had not this notice, did they take it for val-tue in the due course of trade. It is manifest that the jury* must have found for the defendant upon the first question, for this determined in favor of plaintiffs would have entitled them to a verdict. It is equally clear that their finding must have been in favor of defendant upon one or both of the other issues. The first, and either of the others, if decided in favor of defendant, entitled him to a verdict. Whereas, a contrary result as to the first, or that found for defendant and the other two against him, would have compelled a verdict for plaintiffs.
What was the consideration then, was the first material inquiry. Briefly, the defendant claims that at the time the note was given, he, a resident of Davenport, was about to
II. Did the plaintiffs take the note with notice ? With the question of facts here involved, we have nothing to do more than to say that if the jury found in the affirmative, we should entertain very heavy doubts of the correctness of the verdict. As the discussion of this question, however, will be immaterial, from the final view we shall take of the case, we shall confine ourselves to the law governing it as given by the court.
III. The question of most importance, and that most discussed by counsel, arises under the third branch of the case As already suggested, it is claimed by defendant, and the evidence tends to prove that plaintiffs received this note from Lambrite as collateral to secure a pre-existing indebtedness, and upon this subject the court instructed, that though plaintiffs took the note as collateral security for an antecedent debt, they are nevertheless, prima facie, though not conclusively, to be considered holders for value, and it is on the defendant to show they are not such holders. If it was taken for collateral security only; if plaintiffs parted with nothing, and agreed to give no time, and in fact, gave no consideration for it; agreed to relinquish no right, and did not suffer any damage, or injury as the consideration, or in consequence of receiving it, the plaintiffs would not be such holders. Other instructions upon the same point were given, and some asked by the parties refused, which, however, need not be recited, for if the foregoing is the law, it in our view, renders the consideration of all the others unimportant, and the same is true, if it is not the law.
Two propositions are said by Justice StoRY, to be laid up among the fundamentals of the law, and to require no authority or reasoning to support them. The first is, that
It was held by this court in Johnson v. Baney, 1 Iowa, 531, as settled by the current of decisions, that the rights of the holder of negotiable paper are the same whether the debt for which it is transferred is pre-existing or contracted at the time. This of course referred to a case where the instrument was taken, in satisfaction or payment of the pre-existing debt; for by reference to the case it will be found that while the question of the rights of a holder who takes the paper as collateral security on a previous liability was discussed by counsel, it was not decided, as the case was disposed of upon another point. At that time, however, the question was very elaborately discussed by able counsel, and the writer of this opinion, who is the only member of the present bench who heard the argument, concurred with those authorities which hold in accordance with the instructions given in this case. He has seen no reason to change the view then entertained, and this being the opinion of the other members of the court, is so held.
Authorities upon the subject are to be found, perhaps, in
Taking it for granted, that taking the note in payment and as collateral security merely, were the same in principle, as affecting the rights of the assignee, cases of the first character are decided, and then it is announced without the least necessity, or occasion for it, that the same rule applies in the second. And well might Justice CatroN, in the leading case of Swift v. Tyson, supra, say that what is incorporated in the principal opinion on this subject was aside from the case made by the record or argued by counsel.
The same thing occurs in effect in Bond v. Central Bank, 2 Kelley, 106, and based upon the reasoning there used to a great extent, Nesbet, J., decides the case of Gibson v. Conner, 3 Ib., 47. So in Allaine v. Hartshorne, 1 Zabriskie, 665. The note was transferred for a consideration then advanced in part, and though the question as applied to collaterals, did not arise, it was discussed and decided. The case in 11 Ohio, 172, is clearly one of payment, and all that is said about collaterals is obiter and nothing else. So again in the case of Blanchard v. Stevens, 3 Cush., 162, required nothing more than the recognition of the principle, that the receiving of the note in payment of a pre-existing debt, will exclude all equities between the original parties, and thus we might in almost numberless cases show the truth of the general remark above made. But these will suffice. Some cases are found where the question under discussion fairly and legitimately arose, and was decided as claimed by appellants. Of this character is the case in 8 Kelly, supra. (But see Meadow v. Bird, 22 Georgia, 246;)
Rut without further reference to these cases we conclude, that the correct rule is found clearly stated in Roxborough v. Meesick, 6 Ohio, St. R., 448, thus: “ When the note is transferred as collateral security and for value, such as a loan or further advancement, or a stipulation, express or implied, of further time to pay a pre-existing debt, or the like, the assignee will be protected from infirmities affecting the instrument before it was thus transferred. If, however, the note is transferred as collateral security to a pre-existing debt, without any consideration, so that the transfer is a mere voluntary act on the part of the debtor, and is received by the creditor without incurring any new responsibility, parting with any right, or subjecting himself to any loss or delay, and leaving the subsisting debt precisely in the condition it was before such transfer, the holder has not taken the note for value, nor in the usual course of trade.” “To hold otherwise” says SwáN, J., in that case “would be a departure from the established rules of law, governing the rights of parties to negotiable paper, and losing sight of the ground of public policy upon which the law is founded.”
And the annotators’ note, to Swift v. Tyson, 1 Am, Lead. Cases, 336, states this rule substantially as one that may be considered as settled, and to support it refers to cases in Pennsylvania, Connecticut, Maine, New Hampshire, Ohio, Kentucky, Illinois, Alabama, Michigan and Delaware.
Affirmed.