Watervliet Bank v. White, 1 Denio 608

1 Denio 608 | Court for the Trial of Impeachments and Correction of Errors | 1845

By the Court, Jewett, J.

Worth to whom, or order, the note in question was payable, endorsed it-in blank, as also did' Egbert Olcott, who borrowed the note of the defendant. Olcott procured it to be discounted in the usual course of business, by the Mechanics’ and Farmers’ Bank, according to the understanding between the parties when it was made, and received the proceeds. Although as' between the defendant and Worth and Olcott, the former had a right to be protected from its payment, by the two latter, it being made for their accommodation; yet the bank was a bona fide holder after discounting it for value, and as such had the right to look to either or all of the previous parties for payment.

It is insisted by the defendant that the payment by the Watervliet Bank to the Mechanics’ and Farmers’ Bank, and the debiting of the amount to the defendant’s account by the former and marking the note with the hammer, operated in judgment of law as a payment and extinguishment of the note, and that it could not serve the plaintiff any purpose afterwards but as a voucher in an account with the defendant; and that therefore the plaintiff cannot maintain this suit. It is not pretended that the note was in fact paid to either of the banks by the maker or either of the endorsers; and I do not think that it can be deemed, paid or cancelled as between the parties to this suit.

The Watervliet Bank was a stranger to the. making and the negotiation of the note and to the parties, and having paid it to the holders, took it as a purchaser and acquired their rights, and is entitled to the same remedies which the -holders "had, to sue and collect the amount due upon it. (Mertens v. Winnington, 1 Esp. N. P. 112; Chit. on Bills, 542, 3, 5, 6,9; Ogilby v. Wallace, 2 Hall’s Rep. 553; Canal Bank v. Bank of Albany, 1 Hill, 292.)

But it is objected that no formal transfer of the note has been made to the Watervliet Bank; the last endorsement being special to “ E. Olcott, Esq. Cash, or order,” and there appearing to .be no further endorsement from him. .One answer to this objection I think is, that it is not necessary for the plaintiff to show a formal transfer from Olcott by endorsement. They may make a formal title or right to sue under the blank endorsement made by the payee. That endorsement has never been filled up: it remains blank, and hence the note passed after-wards- by delivery, notwithstanding the special endorsement. (Havens v. Huntington, 1 Cowen, 387; Williams v. Matthews, 3 id. 252; Story on Bills of Ex. § 207; Peacock v. Rhodes, Doug. 633 : Chit. on Bills, 9th Am. ed. 253, 256,257; Wilkinson v. Nicklin, 2 Dall. Rep. 396.) Besides, the special endorsement' was made merely to create an agency for the purpose of collection, and may be stricken out at any time. (Manhattan Company v. Reynolds, 2 Hill, 140.)

It cannot with any show of propriety be pretended that Olcott by that endorsement acquired any interest in or right to the note. If he, instead of the Watervliet Bank, had paid it at maturity, or if he had acquired -it by purchase or otherwise bona fide, it is true the maker would, under the circumstances, have been discharged; for as between him and Olcott, the latter was bound to discharge it. But I think the endorsement to Olcott in his official capacity as cashier of the Watervliet Bank, súfficiently shows that the transfer was made to that bank;.especially after the bank in fact paid the former holder the amount of the note. This principle was carried so far in the case of Folger v. Chase, (18 Pick. R. 63,) as to allow the name of the corporation to be prefixed to such an endorsement made by its cashier on the trial of an action brought by the holder against the first endorser. (See also Hartford Bank v. Barry, 17 Mass. R. 94.)

The plaintiff, therefore, I think, was the legal holder of the' note for value, and as such had a right to maintain this suit. At all events, neither of the parties to the suit having paid it, the plaintiff having possession not mala fide, cannot be defeated on the ground that the note is the property of a third person. (Gage v. Kendall, 15 Wend. 640.)

I have not been able to discover any fraud committed by either of the parties to the note, or by the persons interested. It is true the defendant has ample evidence to satisfy him that his confidence in Olcott’s engagement to indemnify him was misplaced; but it does not follow that the latter acted fraudulently. He may have honestly supposed that he could do as he agreed, and have intended to do so. That he did not, furnishes no evidence to impute fraud to him.

I do not see that the evidence of Worth, sustains any defence to the action. The testimony given by him as to the making of the note, its being for the accommodation of himself and Olcott, was improperly received;' the defendant had not put himself in a situation to impeach the consideration of the note, or to show that he merely lent it to Olcott and Worth. The plaintiff was not chargeable with notice of the transaction. It was a transaction between the defendant Worth and Olcott, as individuals, and did not even take place at the banking house. The Watervliet Bank took the note as purchaser from the Mechanics’ and Farmers’ Bank, and having become such, after or at the time it became payable, the utmost that can be claimed as against them, is, that they took the note subject to such defence as "could have been made against it by the parties to it, in the hands of the Mechanics’ and Farmers’ Bank. ( Williams v. Matthews, 3 Cowen, 260.)

The report of the referees must be set aside.

Motion granted.