Case ID: ny-super-ct_9/html/0509-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court. Hoffman, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Watson v. Bailey.
    (Before Oakley, Ch. J., Emmet and Hoffman, J.J.)
    November 21;
    December 10.
    A person who transiera a promissory note by delivery, without endorsement, is not an assignor within the meaning of the Code, so that when he has been examined as a witness for the plaintiff, the defendant may offer himself as a witness to the same matter in his own behalf (Code, § 399.)
    Whether an endorser is an assignor within the meaning of the Code, duiitatwr. The defence of usury cannot he admitted under a general allegation in the answer, not stating the terms of the usurious agreement,
    The refusal of the judge upon the trial to permit the answer to be amended, so as to let in the defence, is not a ground of exception, nor ought such m amend» ment to be allowed.
    Appeal from a judgment at special term, in favor of the plaintiff for $261.08. The appeal was founded upon exceptions taken by the defendant’s counsel upon the trial.
    
      The action was brought by the plaintiff, as endorsee, against the defendant, as first endorser of a promissory note. The defences set up in the answer were, want of notice of the dishonor of the note, and usury.
    The cause was tried before Mr. Justice Paine and a jury, in April, 1853.
    * It is not necessary to state the proceedings on the trial, except so far as they relate to the two following exceptions, which are all that were taken to the ruling of the judge. One Gaige, who, without endorsing the note, had transferred it for value to the plaintiff, was examined as a witness on his behalf. The defendant, on the ground that Gaige was an assignor, offered himself as a witness on his own behalf to the same matter. He was objected to as incompetent; the judge rejected his testimony, and the counsel for the defendant excepted.
    The answer, in setting forth the defence of usury, alleged, that $fthe contract between Gaige, the first holder, and Batt, the maker of the note, was usurious and void, by reason of the fact that the said Gaige took and exacted from the said Batt an illegal usurious interest for the loan or forbearance of the moneys to the said Batt, on the said note, when he received the note, iu violation of the statute in such case made and provided ; and that the said Gaige received from the said Batt, on the acception of said note for a loan on the same, a greater interest than at the rate of seven dollars for one hundred dollars.” Upon the trial, the defendant offered to prove by Batt, that he had allowed an usurious rate of interest to Gaige when he gave the note. The counsel for the plaintiff objected to the evidence, upon the ground, that no usurious agreement was set forth in the answer. The judge was of that opinion and excluded the evidence, and the defendant’s counsel excepted. The counsel then asked leave to amend the answer by making the charge of usury more definite, and the judge refused to allow the amendment. The jury found a verdict for the plaintiff for the amount of the note, with interest.
    —Porter
    
    moved to reverse the judgment, and for anew trial, insisting that,—
    
      I. The judge erred in rejecting the defendant as a witness. 1. The witness Gaige was an " assignor of a thing in action or contract,” within the meaning of section 399 of the Code. The note was a “ thing in action or contract.” (Kent. Com. 2 vol. 351; Chitty on Bills, 5, 245.) The witness Gaige was an " assignor.” Webster’s Dictionary words, “ assign,” "assignment,” “ assignor.” (Code, sec. 112, and note to page 405, 2d ed.)
    II. The defence of usury is set forth in the answer; if defectively set forth, the defendant should have been allowed to amend, (Utica Ins. Co. v. Scott, 6 Cowen 606.)
    III. The defendant ought now to be allowed to amend.
    
      T. Romeyn, for plaintiff,
    contended that—
    I. There was no error in the court’s overruling the application to receive the testimony of Bailey. Gaige, the witness for the plaintiff, was not the assignor of a thing in action within the meaning of § 399 of the Code. A negotiable note is not a chose in action, within the meaning of this section. At least, as between a blank endorsement and the holder (as was the case here) the latter takes as bearer. This has been repeatedly held in questions of jurisdiction in the U. S. courts. (2d Peter 326; 1 Mason 243.)
    H, The evidence as to usury was properly rejected, the answer not having sufficiently set forth an usurious agreement. (10th Barb. 321; 12th Barb. 603.)
    HI. The application to amend was addressed to the discretion of the court, and its refusal is rio ground of error.
   By the Court. Hoffman, J.

Two questions only are raised.

I. Charles W, Pratt made his promissory note in favor of Samuel Bailey, the defendant. The latter endorsed it in blank, and transferred and delivered it to Preserved Gaige, and Gaige, in the language of the complaint, “ transferred and delivered the same to the plaintiff, who is now the lawful bearer and owner of the same.” It is sufficiently shown by the evidence that Gaige delivered this note without endorsing it. Gaige was examined as a witness on the trial on behalf of the plaintiff, and after his examination, the defendant offered himself as a witness to the same points as those to which G-aige had been examined, Upon an objection made, the witness was rejected, and this rejection presents the first exception taken,

The ground to sustain the admissibility of the defendant is, that Gaige was an assignor of a thing in action through which the plaintiff derived title, and that the adverse party may, in such case, offer himself as a witness to the same matter, under the 399th section of the Code.

Whether this section applies to the case of endorsers of negotiable paper at all, is a question we do not feel called upon to discuss. We are clearly of opinion, that the ease of an endorser delivering a note without his own endorsement, is not within the provision,

It deserves notice that the holder of a note or bill may strike out all intervening endorsements; may omit to state them in his declaration after the first endorsement in blank; and may aver that such first endorser endorsed immediately to himself (Byles on Bills, 87); and if a bill be once endorsed in blank, although afterwards endorsed in foil, it will still, as against the drawer, payee, and acceptor, be payable to bearer; though as against the special endorser, title must be made through his endorsee, (Smith v. Clark, Peake 225.)

The effect of this rule of law is, that a holder, however remote, may overlook the derivation of his title through a series of endorsers, and treat the payee of the note as the original source of his right. We cannot conceive that the Legislature meant, in the section before us, to adopt a rule which would conflict in principle with so settled a doctrine of mercantile law.

H, The next question arises upon the refusal of the judge to admit testimony to establish the defence of usury in the note, on the ground that the answer did not set forth sufficiently the facts constituting the usury, or usurious agreement.

The answer avers merely, “that the said Gaige took and exacted from the said Pratt an illegal usurious interest for the loan and forbearance of the moneys to the said Pratt on the said note, when he received the same in violation of the statute; and that he received a greater interest than at the rate of seven dollars for $100.”'

It is needless to dwell upon this point. The answer is wholly insufficient to warrant the production of any testimony, and the application to amend it at the trial was also rightly denied. Both these positions rest upon authorities so numerous and consistent as to establish truisms in the law.

The appeal must be dismissed, and the judgment affirmed, with costs.