59 How. Pr. 118 | New York Court of Common Pleas | 1879
Muirheid was indebted to Wheeler on a note which was past due. Wheeler pressed Muirheid for payment, and Muirheid asked if Wheeler would take a new note at three months, with Ira A. Allen, the defendant, as indorser. Wheeler said he would, and Muirheid then applied to Allen to indorse his note, for discount, at the Sixth National Bank. Allen inquired what Muirheid wanted to do with the money ; Muirheid said, “ to pay bills.” Allen had no interest in the application of the avails of the note to any particular purpose. Allen then indorsed the note, and Muirheid took it to Wheeler, who surrendered the old note to Muirheid, by whom it was at once destroyed.
The defendant interposed two objections to the recovery which the court directed against him; or, rather, his defense consists of two branches, the loss of either one of which is fatal to his case.
1st. He insists that the nóte was, fraudulently diverted, because it was not discounted at the Sixth National Bank.
The indorser, if injured by the discounting of the note at a different bank from the one at which he believed the discount would be obtained, or if injured by the application of the proceeds of the note to a purpose different from that for which he became indorser, may set up the defense of misappropriation against any one but a bona fide holder. If, however, he has no interest in the way in which the proceeds of the note are to be used, it is no defense to him that he was told that the note was to be discounted by a bank, though it was in fact the intention of the maker, whom he accommodated, to use the note in paying an antecedent debt, and though the note be so. used (Mohawk Bank agt. Corey, 1 Hill, 515; Montross agt. Clark, 2 Sand., 115; Edwards on Bills, 322; Daniels on Negotiable Instruments, secs. 792-794).
In this case there is nothing to show a misappropriation of the note. It was perfectly proper, therefore, to overrule the defense, even though the plaintiff were shown to hold the note as collateral security for an antecedent debt (Schepp agt. Carpenter, 51 N. Y., 602; Grocers' Bank agt. Penfield, 69 N. Y., 502). But there was another reason for directing a verdict for the plaintiff; he was a bona fide holder for value, before maturity and in the regular course of business. He surrendered the old note, which was destroyed by Huirheid. The giving up o’f the old note made him a holder for value. The law on this point is settled by a long course of decisions, and Moore agt. Ryder does not lay down a different doctrine. The judgment and order appealed from should be affirmed, with costs.
Halt, O. J., concurred.