Case ID: johns_2/html/0049-01.html
Source: Caselaw Access Project
Author: {"author": "Livingston, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Russel against Ball, Cook and Cook.
    This was an action of assumpsit, brought by the plaintiff as indorsee, of a promissory note, against the makersr The cause was tried before Mr. Justice Tompkins, at the Columbia circuit, in July, 1806.
    
      Where a note tvasmade payable to order, and the payee made a special indorsement by which he was not to be nlade liable, 'and declaring: that he did not know on what consideration the note was made. In an action by anindorsee against the makers, it was held, that such a special indorsement did not render it necessary for the plaintiff to show h« gave a consideration for the note, nor did it authorise the defendants to impeach the note for want of consideration or fraud. •
    On the trial, the making of the note was proved. The note was dated the 16th oí September, 1796, and payable the 3d of October, 1798, to Booth, or,order. When the note became due, payment was demanded in the name of one Schamp, who was then the holder of the note, and the defendants then admitted the noté to be justly due, and promised to pay the money, but said they were not then able to do it.
    " The note was indorsed by Booth in the words following “ Vergennes, 5th of February, 1798. I do hereby appoint the contents of this note to be paid to John Russel, or order, at his or any future endorsees risk of collecting the same of the drawers of said note, and it is understood, that I am not to be made liable to pay the same, on the failure of the drawers or any indorser, as the note was taken without my knowledge. Z. Booths
    
    
      ' It appeared that when Booth was requested to indorse the note to the plaintiff, he objected, as the note had been taken by his partner in business, and he did not know for what it was taken, and did not wish to make himself liable as indorser, but he consented to sign a special indorsement, which would not render him liable.
    The jury found a verdict for the plaintiff.
    . On a motion for a new trial, the question raised for the consideration of the court was, whether the defendants could have been permitted to impeach the note, by-showing a want of consideration, or .that it was fraudulently obtained, and without showing that the indorsee was not a fair and bona fide holder, for a valuable consideration. • ,
    
      Russel, for .the. plaintiff,- was- stopped by the court.-
    
      Whiting and Cady, for the defendants.
    Where a party takes a note not negotiable in-the usual course of trad© aiid under circumstances which induce a suspicion of fraud, or want of consideration, he ought not to be enti-tied to recover, unless he shows that he came fairly by the note, and for a valuable consideration. The man* ner of the indorsement was suspicious, and ought to have put the plaintiff on his guard. It is not a usual or proper indorsement; it is accompanied with no responsibility of the indorser, who declares the note to be taken without his knowledge. The holder, in such a case ought to be considered as taking the note subsequent to all the equity, or right of set-off, existing between the original parties.
    
    
      
      
         ¿)av¿s¡ 3 Term, 80,
    
   Livingston, J.

delivered the opinion of the court. Though there be cases in which, after the negotiation of a promissory note, a maker will be let into proof of its having been fraudulently obtained, none have gone so far as to admit of this defence, where .the passing was prior to its becoming due, unless the noté, being payable to bearer, is transferred by delivery only, and that too under suspicious circumstances. If made payable to order, it is, perhaps, never necessary for the indorsee to prove that he gave value for it; nor has the maker been permitted to go into its real consideration, unless it be such as to render it void by statute, or unless it had become due before it was transferred. Now although the plaintiff here has shown no consideration, the in-dorsement imports one ; and no circumstances are to be discovered in the transaction to justify the application of a rule, which in securities intended to pass as cash, cannot be too much restricted. If a man carelessly, or by imposition, gives a negotiable note, it is better that he should pay it, than to allow him, on light grounds, to shake the title of a third person. The payee’s qualified indorsement, or his declaration, that he did not know on what consideration it was made, cannot impair tbe 3ndorsee’s right acquired under his transfer. The not# had been obtained by the plaintiff of Booth’s partner. Booth, therefore, though a payee, might very well be ignorant of the transaction, and unwilling to make himself liable. Nor could the plaintiff, who probably acquired the note by a negociation with the partner, compel him to indorse it in any other way. lie must have been glad to obtain it on any terms, as without the indorsement no suit could be brought in his name. Without, therefore, relying on the defendants’ promise to pay, when called on by the agent of a subsequent indorsee, there is nothing disclosed in this case which would have Tendered it proper to receive evidence, either of a want of consideration, or of a fraud in obtaining it, to which the plaintiff himself was not a party. The court are therefore of opinion, that the plaintiff is entitled to judgment.'

Judgment for the plaintiff.