18 Barb. 187 | N.Y. Sup. Ct. | 1854
It is objected on the part of the defendant Lee, that the notice of the dishonor of the note was insufficient. The objections are, 1st, that the notice does not sufficiently identify the note; and 2d, that it does not state that the note had been presented for payment, and payment refused; nor any other facts conveying information to the indorser that the steps had been taken by the holder which were necessary to fix the liability of the indorser. In the case of Beals v. Peck, (12 Barb. 245,) the notice was similar to the one in this case, and the same objections to it, among others, were urged, as in the present case. We there held the notice sufficient in both particulars. For the reasons stated in the Case referred to, we think the objections made to the notice in this case cannot be sustained.
It was also objected at the trial that the notice was not served in season, it having been deposited in the post office the next day after the maturity and protest of the note. This is not now made a point by the defendant, and may be regarded as abandoned. The notice was clearly served in time.
A more difficult and important question involved in the case, is, whether the'plaintiffs are to be regarded as bona fide purchasers of the note in question, within the commercial sense of that expression. Evidence was given at the trial tending to show that the note was indorsed by the defendant Lee at the request and for the accommodation of Bell & Goodman, the makers, under and in pursuance of an agreement between them and Lee, that the former should procure the same to be discounted, and obtain the money thereon at any bank they might choose, or at which they might be able to procure it to be discounted, and apply such money to the payment of another note of the same amount, previously made by them, and indorsed for their accommodation by said Lee, and negotiated by said Bell & Goodman, and then outstanding and about to become due.
We will consider the question, whether, assuming that Lee had been compelled to pay that note, or is now liable upon it, the plaintiffs received the note in suit under such circumstances as to render it an available security in their hands, against the defendant Lee, who was an accommodation indorser for the makers, by whom it was transferred to the plaintiffs, who received the same in good faith, and upon a consideration suffi
The general rule in relation to the sale of property, real and personal, including choses in action, is, that the purchaser can acquire no other or better title or right of action, than his vendor had in the subject of the sale. A prominent exception to this rule, is, that in the case of the transfer of commercial paper, if the purchaser receives it in the usual course of business, before maturity, without fraud and for a valuable consideration paid or given at the time of the transfer, he takes it discharged from all the objections and equities existing against it at the time of the transfer, in favor of any of the parties to it. This exception to the general rule is one of great importance, and is founded upon principles of commercial policy. In this, as in many of the reported cases, the question turns upon whether the plaintiffs paid, at the time of the transfer, a valuable consideration for the note upon which the action is brought.
It is objected on behalf of this defendant that the plaintiffs received the note in question upon a pre-existing debt, and that in delivering up and canceling the note of $943.31, they parted with no substantial right, inasmuch as, in case the endorser is not liable to them upon this note, their right of action for the goods sold to Bell & Goodman, for which the note of $943.31 was given, would not be thereby affected. It is undoubtedly true that where a note made by a third person is transferred by' a debtor to his creditor, on account of a pre-existing debt, the creditor takes it subject to all the equities existing in relation to it, in the hands of the debtor. He is not, in such case, a bona fide purchaser, within the rule, or rather, the exception to the general rule. But this, I apprehend is to be taken as applicable only to cases where no security is surrendered and the preexisting debt is not thereby discharged ; and that where even the negotiable paper of the debtor alone is given up and canceled, the purchaser will be protected. Admitting that the plain
In the case of The Bank of Salina v. Babcock, (21 Wend. 499,) Nelson, Ch. J., said, “ The court ought not to speculate about the probability of reviving these canceled securities, in case the paper, upon the strength of which they were canceled, should turn out to be unavailable; much less ought we to go into a calculation of the chances of revival as the ground of defeating the substituted security.” See also Bank of Sandusky v. Scoville and others, (24 Wend. 115,) and White and Sheffield v. The Springfield Bank and others, (3 Sandf. S. C. R. 222.). All these cases, and particularly the last one, hold the doctrine, that the mere discharge of an antecedent debt is a valuable consideration, within the meaning of the rule which protects and confirms the title of the holder, for value, of negotiable paper, when the transaction is made in the usual course of business, before the paper has arrived at maturity. None of the cases to which we have been referred, nor any which I have met with, establish a contrary doctrine.
I am aware that expressions are to be found in the opinions of judges in some of the cases, which seem to favor the position of the defendant in this case ; but they are invariably mere obiter dicta, not called for by the facts in the cases, and unnecessary to their decision.
If-I have taken a correct view of the question, it follows that the plaintiffs are bona fide purchasers and holders of the note upon which the action is brought, and entitled to recover from, the indorser, as well as the makers, the amount they paid for it with interest, and no more. (Stalker v McDonald, 6 Hill, 93 to
Ordered accordingly.
Johnson, T. R. Strong and Welles, Justices.]