Opinion
Argued April 1st, 1870
Decided June 23d 1870
Samuel Hand, for the appellant.
Francis C. Barlow, for the respondent.
The plaintiff was, upon the preceding statement of facts, entitled to judgment. Assuming (but not conceding) that there was an unlawful or fraudulent diversion of the notes from the special purpose for which they were made or lent, it does not show that the plaintiff had any knowledge or notice of that fact, nor does it appear that a claim to that effect, or any objection to a recovery on that ground, was made on the trial.
After the court had said that there was no defence, stating that the plaintiff had given up collaterals, the question of the defendant's counsel, by way of inquiry and suggestion as to the legal effect of the request of the president to borrow this paper, and of his knowledge that it was not bona fide paper, did not direct, nor was it calculated to direct, the attention of either the opposite counsel or of the court to the question of such diversion; and the answer of the judge, saying he would charge it was accommodation paper, and would assume that Mr. Howes, the president, knew it, clearly shows that he understood it to apply to the matters referred to by him, and to those only; and if it was introduced to include any other matter, and especially that of the improper appropriation of the notes, it was the duty of the counsel to refer to it specifically. That would have given the plaintiff an opportunity to disprove such knowledge and notice.
The question is then presented, whether the fact that the notes were given for the accommodation of the payees, and that the plaintiff knew it, was a defence. The bank, as was stated by the court without objection, "gave up collaterals" when it received those notes, and the proof fully justified that statement. The surrender of those notes, under the decision in Brown v. Leavitt ( 31 N.Y., 113), and the cases there cited, made the bank a holder for value, and entitled it to recover the full amount claimed in those actions, without deducting the amount of the note of Parks.
The fact that the plaintiff still continued to hold the note of $2,000 discounted by it, and that the notes in question and those surrendered, were taken as collateral only (while as to those surrendered the evidence of indebtedness was canceled), is, in my opinion, immaterial.
The general principle deducible from those decisions is, that a party will be protected as holder of negotiable paper, although fraudulently transferred, when he has received it before maturity, without notice of the fraud, and in good faith, and parted with something of value for it at the time of its transfer.
Upon the application of that principle to the undisputed facts in this case, the plaintiff was clearly entitled to recover, and the direction to that effect to the jury was unexceptionable.
It is evident, from what transpired on the trial after the close of the testimony, that there was no dispute or question raised as to the facts; the ground taken by the defendant's counsel in his points, that the case was not fairly submitted to the jury, is therefore wholly unwarranted. If he wished any matters to be passed on by the jury, it was his duty to call the attention of the court to them and ask for their submission.
It follows, from the views above expressed, that the judgment appealed from should be affirmed, with costs.
All concurred. Judgment affirmed.