Case ID: ny-super-ct_15/html/0248-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court. Woodruff, J.—", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Robbins, et al.. Plaintiffs and Respondents, v. Richardson, et al., Defendants and Appellants.
    When a note is made, without consideration, and for the accommodation of the payee, and is delivered to him by the maker, without any restriction as to its use, and is endorsed and delivered by the payee to the holder, as security for an antecedent debt, the latter can recover of the maker; at least, to the amount of the debt it was transferred to secure. It is no answer to an action, on such note, that the debt it was transferred to secure has not become due. If such debt has been paid, the burden of proving that fact rests on the maker of the note.
    A surrender of other securities, by the endorsee of such a note, as a consideration of the endorsement and transfer of it by the payee, makes the endorsee a holder for value.
    When the endorsee of a note, prior to his taking the note, inquires of the maker, whether it is a business note, and such maker answers that it is, and the endorsee receives the note, and gives value, or parts with securities, in reliance upon such representation, he is entitled to treat it, for all purposes, to the extent of his interest therein, as a business note, and hold the maker to the truth of his representations.
    Whether, if he so receive the note, as collateral security for the debt of the payee, the maker would be permitted to deny the truth of such representations, even to reduce the recovery to the amount of the debt for which it is held as security ? Quaere.
    
    When such endorsee, prior to his taking the note, sends it by a messenger to the maker, with instructions to inquire, if it is a business note, and the inquiry is made, and he answers, that it is; after proof of such facts, the endorsee may prove, that the messenger, on returning, reported to the endorsee what the maker said, by any person who heard him make such report. Proof of the latter fact is material to show, that the representation made, or answer given, was communicated to the endorsee before he took the note, and such proof may be made by any person who knows the fact.
    When, in an action on such a note, the answer, by not denying, admits the allegations of the complaint, that the defendant made and delivered the note to the payee, who endorsed and delivered it to the plaintiff; the defendant should not be permitted, at the trial, to amend his answer, by inserting an averment, that the payee of the note, at the time it was so made and endorsed, was a married woman. The refusal of a Judge to permit such an amendment, if he has power to allow it, is a matter resting in his discretion, and cannot be reviewed, on an exception to his decision.
    To allow it, in such a case, even if the power to grant it is unquestionable, would permit a technical matter to be alleged, to admit proof of a defence not meritorious.
    (Before Duer, Ch. J., and Woodruff, J.)
    Heard, October 14;
    decided, December 5th, 1857.
    
      This action is brought by the plaintiffs, as endorsees of a promissory note, for $1000, dated Nov. 5, 1855, at 6 months. The complaint avers the mating of the note by the defendants, payable to the order of one R. C. Jones; the delivery thereof, by the defendants, to the said R. C. Jones: that the said R. 0. Jones duly endorsed the said note in blank, and transferred and delivered the same to the plaintiffs.
    The complaint then adds, that the note is due, and payable; that it has not been paid, and that the plaintiffs are now the lawful holders and owners thereof.
    The answer, by not denying, admits the making and delivery of the note, by the defendants, to the payee, and the due endorsement, transfer and delivery thereof, by such payee, to the plaintiffs. But the answer says, “ that they (the defendants) have no knowledge or information, sufficient to form a belief, whether, at the time of the commencement of this action, the plaintiffs were, or whether they now are, the lawful owners or holders of the said note.”
    For a second defence, the defendants aver that the note was made and delivered to R. 0. Jones without consideration, and solely for her accommodation, and that it was, at that time, agreed that the note should not be put into the street to be negotiated, or sold to brokers, and that the payee promised to return the note to the defendants, at maturity. But, that the note was, contrary to such agreement, passed away to Wall street brokers, the plaintiffs in this action, and that the plaintiffs received it for an antecedent debt, and advanced no money, and parted with no value therefor.
    For a third defence, the defendants aver that it was made and delivered for the accommodation of R. C. Jones, and without consideration received by the defendants, and that it was delivered to the plaintiffs, by the payee, upon, and in consideration of, an agreement to forbear, and give time of payment of a sum of §1000, then due, or to become due, to them, for which the payee at the time of the delivery of such note, paid to the plaintiffs more than legal interest, to wit, a rate at least two per cent, a month, and that the agreement upon which such note was delivered, was usurious, and void.
    The case came on for trial before Mr. Justice Slosson and a jury, at the' November trial term, 1856. On the trial, the plaintiffs read the note in evidence, proved the co-partnership of the plaintiffs, and rested.
    ■ The defendants gave evidence, tending to show that the payee, when she obtained the note, promised to return it within two weeks, but they, also, read in evidence, a written receipt, procured from her, after the two weeks had expired, acknowledging that the note was received for her accommodation, and promising to pay the same at, or before, the maturity thereof. This receipt was given before the note was transferred to the plaintiffs.
    But the defendants gave no evidence showing, or tending to show, that the defendants imposed any restriction upon the payee, in respect to the use she should make of the note, nor that there was any agreement, or understanding, in regard to the purpose to which it was to be applied. Nor was there any evidence, proving, or tending to prove, the usury alleged in the answer.
    One of the plaintiffs was examined in behalf of the defendants, and he testified to various loans made to R. C. Jones prior to January 1st, 1856, and that the balance due thereupon, on that day, was $735.36, for which the plaintiffs held, as security, certain Texas scrip, and a promissory note, made by one Walter Mead, then past due. And that the plaintiffs, on the day last mentioned, and upon condition of receiving the note, now in suit, as collateral security, and in consideration thereof, took her note, or agreement, (which he then produced and read in evidence,) acknowledging that she had borrowed and received the $735.56, and promising to pay the same on demand, with interest; gave up to her the said scrip, and the note of Mead, and, also, received the note in suit, instead thereof. And it was further proved, on the part of the plaintiffs, that before giving up the collateral securities, they sent the note, now in suit, to the store of the defendants, by a messenger, and inquired of them whether it was a business note, and one of the defendants, in the presence of the other, declared that it was.
    On the examination of one of the plaintiffs, he was asked, what was the report brought to him by the messenger ? The question was objected to, and the objection overruled. The defendants excepted, and the witness said, “ The report was, that it was a business note.”
    
      It appeared, on the examination of the plaintiff by the defendant, that he, the plaintiff, “had known Mrs. Jones and her husband ten years previouslythat he had not known any thing about him for three years past, but he said, “ I have no doubt that he is now the husband of Mrs. Jones. So far as I know, he was her husband ten years ago.” Other evidence showed, that E. C. Jones, the payee of the note, was a married woman, and that her husband was still living.
    'The defendants thereupon moved for leave to amend their answer, so as to aver that the payee of the note was a married woman, so that her endorsement and transfer conveyed no title to the note.
    The Court denied the motion, and the defendants’ counsel excepted.
    The testimony being closed, the defendants’ counsel moved to dismiss the complaint on the following grounds:—
    1. That the note being an accommodation note, and transferred as collateral security for an antecedent debt, the plaintiffs could not recover.
    2. That there was no evidence that the original debt had ever been demanded, or claimed, by the plaintiff, or that it had not been paid.
    3. That the endorsement and transfer, by a married woman, conveyed no title, and gave the plaintiffs no right of action.
    4. That upon the pleadings and the evidence, the complaint should be dismissed.
    The motion was denied, and the defendants excepted.
    The defendants’ counsel requested the Court to charge the jury, that if they believed,'from the testimony, that the note was between the defendants and the payee, without consideration, and that it was given by the payee solely to secure an antecedent debt, the plaintiffs could not recover. .
    The Court charged, that the evidence clearly showed that the note was an accommodation note; but that the transfer of an accommodation note as security for an antecedent debt, gives title, in the absence of fraud, and if made before maturity;—to which the defendants excepted.
    The Court further charged, that “ there is no evidence in this case that the note was diverted from its original purpose. There is no evidence that it was given under any restriction as to its use. That if they believed Robbins, (the plaintiff,) he did give value for the note, as he surrendered collaterals on receiving it.”
    To each and every part of which charge, separately, the defendants’ counsel excepted.
    The jury rendered their verdict for the plaintiffs for $780.30, being the amount of the note given by Mrs. Jones to the plaintiffs, with interest.
    From the judgment upon this verdict the defendants appealed.
    
      Edwards Pierrepont, for the appellants.
    
      C. F, Sanford, for the respondents.
   By the Court. Woodruff, J.—

The defendants wholly failed to prove, that there was any special agreement between the defendants and the payee, restricting the use of the note to any particular purpose, or restraining her in any wise as to the manner in which, or the persons to whom, it should be negotiated. And having given no evidence, that there was any usurious agreement, under which it was negotiated, no part of the second or third defences was proved, saVe, only, that the note was made, without consideration received by the defendants,, for the accommodation of the payee, and that it was transferred to the plaintiffs, as collateral security, for moneys previously loaned by the plaintiffs to such payee. In the endeavor to prove, that it was transferred, as such collateral security, the defendants also proved, that, although given as such security, the plaintiffs, in consideration thereof surrendered to the payee other securities theretofore held for the same indebtedness. This was clearly a parting with value, upon the faith of the note in suit; and if giving value was necessary, to entitle the plaintiffs to retain the note, as such security, and recover thereon, it was sufficient. The surrender of securities is giving a valuable consideration, as truly, as the giving of money on the faith of the note.

In this respect, we say, unhesitatingly, that the charge of the . Judge to the jury was correct, and had the ease been submitted to the jury, upon this point alone, the second and third defences must have failed; for the evidence, to the effect stated, was wholly uncontradicted, and we. see nothing in the case to warrant the jury in disregarding, or even doubting it.

Besides this, the proof was, in like manner, clear and uncontradicted, that the plaintiffs took the note, in reliance upon the representation of the defendants, that the note was a business note. The plaintiffs had a right to rely upon that representation, and to deal with the note, in all respects, as if such representation was true; and if the title, which was either admitted in the pleadings, or proved on the trial, was such as would have entitled the plaintiffs to recover, had the note been given for value received, the plaintiffs were clearly entitled to recover here. And we think the Judge would have ruled correctly, if,, upon proof, that the note was received and collateral securities surrendered, in reliance on the truth of such a representation, the evidence, that the note was. an accommodation note, should, so far as the right of recovery was concerned, be wholly disregarded. If the defendants had a right to give such evidence at all, in the face of their representation, it was only to restrict the recovery to the sum for which the plaintiffs held it as security; and even that may be doubtful (Gram v. Hendricks, 7 Wend. 569.)

Under such circumstances, we think it was not necessary, for the purposes of this case, to consider the question; whether the transfer, by the payee, of an accommodation note, as security for an antecedent debt, without fraud, and before the maturity of the note, gives title. We are, nevertheless; equally clear,, that the charge was correct, on this point also.

We regard it as fully settled, that, where, a note is made for the accommodation of a payee, and delivered without any restriction or limitation of his authority to use it, he may appropriate it to such uses, (being themselves legal,) as his convenience- or pleasure may dictate; and the holder is not bound to prove, that' he parted with value, as the consideration of the transfer to himself.. He may recover thereon, although he received it in payment of a preexisting debt, or received it as collateral security for such an indebtedness. Indeed, mere proof, that a note is an accommodation note, is not sufficient to cast upon an endorsee the burden of showing, upon what consideration he did receive the note. He may rest upon, the consideration which the endorsement to himself legally imports. Although some misapprehension has formerly existed, upon this point, it is now, we think, too firmly settled to be open to discussion. (Lathrop v. Morris, 5 Sandf. S. C. R. 7; Grandin, et al., v. Le Roy, 2 Paige, 509 ; Bank of Rutland v. Buck, 5 Wend. 66; Grant v. Ellicott, 7 Wend. 227; Young v. Lee, 2 Kern. 552; Ross v. Bedell, 5 Duer, 467, and cases cited.)

There was, therefore, no error in the charge to the jury, and the Judge properly refused to charge as requested by the defendants.

We are no less clear, that it was unnecessary for the plaintiffs to prove a demand of payment from Mrs. Jones, the payee. Indeed, this seems to follow, from what has already been said. They were (so far as relates to this point) the lawful holders of the note, for a sufficient consideration, not defeated by the proof, that the note was an accommodation note. Establishing their title to the note, established their right to recover thereon, according to its tenor.

But in no aspect of the case was such a demand necessary. The transfer to them was not dependent upon any condition precedent, viz., to become available, in case the note of Mrs. Jones was not paid, on demand, or provided, on demand, payment should be refused. In reference to this question, their title was precisely the same, as if the note had, in fact, been given to the defendants for full value. They had- a right, and, in the last case supposed, it might, perhaps, have been their duty, to require the defendants to pay the note, when it became due. True, if the note of Mrs. Jones had been paid, she would have been entitled to a return of this note; but the burden of showing, that the plaintiffs’ title had been defeated, was upon the defendants.

In relation to the admission of the evidence, that the plaintiffs’ messenger reported to the plaintiffs what the defendants said, in 'answer to the inquiry,- whether this note was a business note; there was no error. The objection is, that the evidence was hear-say, only.

It was competent, and it was deemed material, to prove, that the defendants, by representing, that the note was business paper, had induced the plaintiffs to deal with it as such, and surrender other securities. For this purpose, it was necessary to prove two things: First, that the representation was made; and second,

that the plaintiffs had acted upon that representation. The plaintiffs proved, by the messenger, that the defendants made the representation ; but, had they stopped there, this ground of claim would not have been established. They must prove, that the representation was communicated to them by their messenger; otherwise, it could not have been acted upon. Whether this was proved by the messenger, or by any other witness, was wholly immaterial. This seems, to us, too plain to require further discussion. It was not attempting to prove the defendants’ representation by what a third person (the messenger) said; but it was giving direct and positive proof, that what the defendants said (which bad already been proved) was communicated to the plain-, tiffs.

The remaining questions are: First, whether, under the pleadings, the plaintiffs’ title could be defeated by proof, that the payee of the note was a married woman? and second, whether the Judge should have permitted the defendants to amend their answer, so as to set up that specific defence?

The answer of the defendants, by not denying, admitted, (Code, § 168,) that they made the note in suit, and delivered it to the payee, and that “ the said payee, the said R. C. Jones, thereupon duly endorsed the said note, in blank, and transferred and delivered the same to the said plaintiffs.”

The fact of endorsement, that it was duly made, and that the note was actually and, of course, legally transferred to the plaintiffs, here stand admitted. Whether the plaintiffs continued to be the holders and owners, at the time of the commencement of the suit, may, perhaps, be deemed put in issue, by what follows in the answer; but the regularity and validity of the transfer of the note to them is not put in issue. Certain facts are afterwards alleged, as second and third defences, which have already been noticed ; but there is no intimation of a want of legal capacity in the payee to endorse or transfer the note.

We say, unhesitatingly, that, under such an answer, the defendants were not at liberty to prove, that no transfer had been made to the plaintiffs; nor to do indirectly, by showing, that the payee had no capacity to transfer, what they would not be at liberty to do directly. In truth, the fact of due endorsement and transfer to the plaintiffs was not in issue.

It is settled by the Court of Appeals, that a defence which is not set up in the answer, will not avail a defendant, although it is proved on the trial. (Field v. The Mayor, 2 Seld. 179; Brazill v. Isham, 2 Kern. 1.)

It is eminently just, that this rule should be adhered to. A plaintiff comes to trial prepared to meet the defences upon which the answer assures him the defendant will rely, and presumptively prepared to meet none other. It is true, that he may object to proof of any other defence; but it is also true, that in the course of the trial facts' may, and frequently they do appear, in some form or process of examination, or cross-examination, which are so connected with the res gestœ, or, proper as a means of testing the memory or credit of the witness, that they could not be altogether excluded, and which suggest, that, had they been set up by answer, might defeat the action. But the plaintiff was not bound to bring witnesses to contradict them. In this way, even payment might be testified to by some witness; or, in an action for assault and battery, in which the answer contained nothing but a denial, a witness called by the defendant to mitigate damages, might state facts, as a part of the res gestœ, which, if true, would amount to a complete justification.

Second. Ought the Judge to have permitted an amendment ? Whether the propriety of granting the amendment did not rest so fully in the discretion of the Judge presiding at the trial, that the refusal to allow it cannot be reviewed on appeal, has been already twice considered in this Court, in General Term, and it is held, that such a refusal furnishes no ground of exception, and will not be reviewed. (Brown v. McCune; 5 Sandf. 229 ; Hunt V. Hudson River Fire Ins. Co., 2 Duer, 489; and see Roth v. Schloss, 6 Barb. 308.)

In the present case, the considerations above suggested, in regard to the right of the defendant to prove a defence not set up in the answer, bear also upon the propriety of allowing the amendment. The motion was not made, to prevent a- variance; it was sought to introduce an entirely new defence—a defence that was contrary to the admissions in the answer—a defence not in itself meritorious, but resting, so- far as concerns this case, upon purely technical grounds; for if, in fact, the note in question was without consideration, the husband had no beneficial interest in it—it could never be collected for his benefit—he was in no wise prejudiced by suffering the plaintiff to recover, or by requiring the defendants to pay according to the very terms of their promise, i. e., to the party whom the payee should appoint.

The cases of Egert v. Wicker, (10 How. Pr. R. 193,) and Catlin v. Hansen, (1 Duer 309,) show that an. amendment introducing a defence, new and substantial, ought not to be allowed at the trial.

We do not, therefore, deem it necessary to inquire whether, under the circumstances disclosed on the trial, the defence would have availed to defeat a recovery. The general doctrine, that a promissory note, made during the coverture, payable to a married woman, and having no connection with her separate property, is, in legal effect, payable to her husband, we do not question; nor, that she cannot transfer such a note, by endorsement, without her husband’s authority. But there are circumstances in which the title of an endorsee of a note, payable to her, and transferred by her endorsement, will be sustained. (Miller v. Delamater, 12 Wend. 433.)

The judgment should be affirmed.

Judgment affirmed. 
      
      
        ■ Benedict t. Qaffee (5 Duer, 23V); Burrall v. Be Groot (Id. 383).