Case ID: ny-super-ct_49/html/0338-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Ingraham, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE NORTHAMPTON NATIONAL BANK v. AMOS M. KIDDER, et al.
    
      Negotiable instruments—action to recover stolen railroad bonds—burden of ■proof.
    
    The ordinary bonds of a railroad company, secured by mortgage upon its. property, are negotiable instruments, having all. the attributes of such obligations, and the possession and production of them is prima facie evidence of title.
    
      Where in an action to recover possession of such bonds, it appears that plaintiff was robbed of them prior to their negotiation to defendant, the burden of proof is shifted, and to overcome plaintiff’s title defendant must show that he purchased such bonds in good faith, before maturity, and paid for them a valuable consideration.
    To do this defendant must show under what circumstances and for what value he became the holder, and it is not enough that he testify generally that he bought and paid for the bonds at a certain time.
    Where a verdict is ordered subject to the opinion of the court at general term, the whole case is before the general term on its merits and no new trial can be ordered.
    Before O’Gorman and Ingraham, JJ.
    
      Decided November 16, 1883.
    Application for judgment on a verdict of jury, under direction of the court, subject to the opinion of the court at general term.
    The facts appear in the opinion.
    
      Peckham & Tyler, for plaintiff.
    —The burden of proof is all on defendant after we prove loss by robbery, and the case can rest on this alone (Nat. Bk. of Courtlandt v. Green, 48 N. Y. 298; Kuhns v. Gettysburg Nat. Bk., 68 Pa. 445; Bk. of North Am. v. Kirby, 108 Mass. 497). Waiver of the defaults on our part is not proven, and cannot be presumed (Ragan v. Day, 46 Iowa, 239; Penn. Hosp. v. Gibson, (2 Mills, 326). The verdict is to be upheld on any theory sustainable on the facts (21 N. Y. 490). It is axiomatic that over-due paper is non-negoliable (Vermilye v. Adams Exp., 21 Wall. 138; People v. Superior Ct., 19 Wend. 109). This condition broken, the paper is is over-due (Daniels Neg. Ins. § 1506). The other taints on the paper entitle us to recover also (Nat. Bk. v. County Coms., 14 Minn. 78). Defendant’s claim as to the burden of proof shows that it was not by surprise that he neglected to prove values, etc. Failure of proof and defect of proof are questions of law.
    
      W. M. Safford, for defendants.
    —It is clear that the objection that defendants did not pay value for these bonds was not raised on the trial, but that the claim of plaintiff was based on the ground that the bonds were over due. There is some evidence tending to show that value was paid by defendants. From the whole case, it is evident that the objection was not even raised, much less relied on at the trial.
    Where a material fact is unproved, but objection is not taken at the trial, and some evidence in support of it is given, and the whole proceedings tend to show that it was understood at the trial that no such objection was relied on, the court at general term will disregard the objection (Porter v. Lobach, 2 Bosw. 188).
    In the case of Wilson v. Rocke, it was held that both court and counsel having assumed that plaintiff was a bona fide purchaser, upon this assumption, plaintiff’s title was paramount, and he was entitled to recover. “That the correctness of this assumption could not be diputed upon appeal, as no question in reference thereto was raised upon the trial, and no request made to submit it to the jury ” (Wilson v. Rocke, 58 N. Y. 642).
    The burden of proof in the case of negotiable instruments before maturity, does not shift on proof of theft. On the contrary, it has been repeatedly declared by the courts of this country, that the possession of such paper was presumptive evidence of title in the holder, and that the burden of proof was upon the person assailing the title of the holder, to show that he was not a bona fide holder for value (Goodman v. Simonds, 20 How. U. S. 343, 365; Murray v. Lardner, 2 Wall. 110, 121; Seybel v. Nat. Cur. Bank, 54 N. Y. 288, 301 and 302).
    The default of the coupons did not make the principal due (Cromwell v. Co. of Sac, 96 U. S. 51; Railway Co. v. Sprague, 103 U. S. 756). Receipt of interest on later coupons was a waiver of default (Sire v. Wrightman, 25 N. Y. 103; Conkling v. King, 10 N. Y. 440).
   By the Court.—Ingraham, J.

—This action was brought to recover for the conversion of two consolidated second mortgage bonds of the Ohio and Missouri Railway Company.

It appears that prior to the ninth of January, 1876, the bonds in question were the property and in the possession of the plaintiffs, a national bank, doing business at Northampton in the state of Massachusetts, and that on the ninth of January, 1876, plaintiffs was robbed of a large amount of property, including the bonds in question; that at the time of the robbery the said bonds were not in default but interest had been regularly paid thereon ; that the coupons that became due October 1, 1877, were not paid, and had not been paid up to the time of the trial; that on April 28, 1881, defendant purchased the said bonds in the regular course of business at the New York Stock Exchange, from Lucian H. Niles, a member of the Exchange in good standing, and paid therefor. It does nor appear, however, what consideration was paid or whether or not any money was actually paid by defendants for the bonds. At the close of the testimony plaintiff requested the court to direct a verdict in favor of the plaintiff. The defendant also requested the court to direct a verdict for the defendant. Neither party requested the court to submit any questions to the jury, and the case must be treated as a question of law, on the facts proven.

That the bonds in question were negotiable instruments and possessed all the qualities and attributes of such obligations is well settled (Gillespie v. City of Dubuque, 1 Wall. 206; Murray v. Lardney, 2 lb. 113). litis also well settled that the possession and production of a negotiable instrument is prima facie evidence of title (Mechanics’ and Traders’ Bank v. Crow, 60 N. Y. 85; Murry v. Lardney, supra).

Plaintiff to rebut such presumptions, proved on the trial that the bonds were stolen from the bank in January, 1876. The burden of proof was then changed, and the defendants to sustain their title to the bonds were then required to show under what circumstances and for what value they became the holder (1 Dan. Neg. Instr. § 166); in other words, in order to overcome plaintiff’s title, it was necessary for defendants to prove that they purchased the bonds before maturity, and paid for them a valuable consideration. As a leading English case on this question says, “Where a note is proved to have been obtained by fraud, that affords a presumption that the person who is guilty will dispose of it, and would place it in the hands of another person to sue upon it.” Such presumption operates against the holder and it devolves upon him to show that he gave value for it (Bimby v. Bidwell, 13 Mees. & Wel. 73, cited and approved in First National Bank v. Green, 43 N. Y. 298; Porter v. Knapp, 6 Lansing, 125). If defendants failed to prove that they paid a valuable consideration for the bonds, plaintiff was entitled to a verdict.

After a careful examination of the evidence, I have been unable to discover any proof that defendants paid a valuable consideration for the bonds. The only evidence in relation to the purchase of the bonds by the defendants is that given by the defendant Morse. He was first called as a witness for the plaintiff, and on his redirect examination, he first speaks of the purchase of the bonds in question : “ That it was in 1881 that we (defendants) paid for the bonds ;” and then, “ We bought these bonds on April 28, 1881.” After plaintiffs rested, Morse was recalled. He again stated that he bought the bonds April 28, 1881. On cross-examination he said he could not swear that he in person bought the bonds, but he knew that the firm purchased them, and finally said, ‘ ‘ I would swear that we bought these bonds, paid such a price for them and received them on a given day.” In my opinion this was not evidence that the defendants paid a valuable consideration for the bonds. It would be true if the defendants had taken the bonds for an antecedent debt, they would then have “purchased” the bonds and paid for them. Yet it is well settled that such a payment of consideration would not overcome plaintiff’s title, and make defendants holders for1 value (Phœnix Ins. Co. v. Church, 81 N. Y. 218).

The court of appeals in the case of First National Bank v. Green (43 N. Y. 300) held that, “a plaintiff suing upon a t negotiable note or bill purchased before maturity is presumed | in the first instance to be a bona fide holder. But where the maker has shown that the note was obtained from, him under •duress or that be was defrauded of it, the plaintiff will then be required to show under what circumstances and for what value he became the holder.” In Ocean National Bank v. Carll (55 N. Y. 440), the point was, whether plaintiff had failed to prove he was a bona fide holder for value, of the note, upon which the action was brought, and the court of appeals reversed a judgment for plaintiff, on the ground that the witnesses who had testified that the note in suit was discounted and that a check produced was given for the avails, made the statement from books and papers and not from their personal knowledge. In this case the evidence was uncontradicted that the note was in possession of the' plaintiff before maturity, but the court held this was not sufficient. The consideration must' be shown. In Wylie v. Spencer (62 How. 110)., Judge Van Vorst, in an action to recover some coupons on bonds stolen from the vaults of the plaintiff, says, “ The plaintiff’s title is made out by showing the fact of original ownership and that the property had been stolen. If they reached the hands of bona fide purchasers before maturity through whom the defendants claim, they must show it.” We think upon principle and authority, this to be the true rule. In the case at bar, defendants did not show that they paid any valuable consideration for the bonds, and not having brought themselves within the rule, can not hold the bonds as against the plaintiffs. Many cases could be cited to sustain this proposition, but we think the foregoing are sufficient. Defendants claimed on the argument and cited many cases to sustain their contention that the production of the bonds threw the burden of proving that defendants did not pay a valuable consideration, on the plaintiff. We have examined the cases cited but do not think they are .authorities for the defendants. Defendants also insisted that the court should assume that plaintiff did not, on the trial, raise the point that defendants had not paid a valuable consideration for the bonds. It nowhere appears that "both court and counsel assumed that defendants were bona fide purchasers for value. But from all that appears, it may be assumed that defendants resisted their claim, at the trial, as they did on the argument on appeal, on the proposition that the possession of the bonds was presumptive evidence of title in the holder, and the burden of proof was upon the person asserting such title, to show he was not such a bona fide holder. This position, as before stated, we do not consider to be well taken. But in no case cited did the appellate court assume a fact to exist for the purpose of reversing a judgment; and in order to set aside a verdict and direct a verdict for the defendants, it would be necessary for the court to assume in this case, that plaintiff paid a valuable consideration for the bonds in question, of which as before stated there was no proof.

If defendants purchased the bonds in good faith, and paid value for them, there could have been no difficulty in their proving such payment, and having failed to give any evidence which would sustain a verdict in their favor, we think the court below was right in directing a verdict for the plaintiff.

When a verdict is ordered, subject to the opinion of the court at general term, the whole case is before the general term on its merits, and no new trial can be ordered (Durant v. Abendroth, 69 N. Y. 148).

It follows therefore that defendant have failed in their defense, and judgment must be ordered in favor of the plaintiff, on the verdict, with costs.

O’Gorman, J., concurred.