Case ID: abb-pr-ns_11/html/0127-01.html
Source: Caselaw Access Project
Author: {"author": "J. F. Barnard, P. J.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MASON against HICKOX.
    
      Supreme Court, Second District, Second Department;
    
    
      General Term, December, 1870.
    Promissory Note.—Boma Fide Holder.
    Where a collector of rents fraudulently transferred to the landlord a ■promissory note for a sum slightly exceeding the amount of rent which had been collected, and was payable immediately by him, he being allowed to retain the excess out of a subsequent collection,—Held, that the circumstances were not such as to put the landlord upon his guard, and that it was error, to hold, as matter of law, that he was not a bona fide holder for value.
    Appeal from a judgment.
    This action was upon a note dated September 17, 1868, payable in four months, for two hundred and ninety-three dollars and eighty cents, made by defendant, J. M. Keep, indorsed by the defendants T. N. Hickox, N. I). Redhead and D. C. Brown, to the defendant James D. Vail, and by him transferred to the plaintiffs Mason and Von Au.
    Keep paid the money into court, and the defendants Hickox, Redhead and Brown (constituting the firm of T. N. Hickox & Co.) set up that they were the owners of the note. Vail did not answer.
    The note was received by plaintiffs of Vail, in settlement of rents which he had collected for plaintiffs, and then, according to plaintiff’s testimony, had in his possession, and a balance of fifteen dollars, which he was thereupon authorized to retain out of the rent to be collected the following month.
    It was testified by defendant Hickox, that he had placed the note in Vail’s hands to get discounted, which he said he could get done in New York or Poughkeepsie. This he failed to do, but, upon demand by Hickox, represented that the note was at the bank in Poughkeepsie. The first notice that T. N. Hickox & Co. had of the whereabout of the note was that it was held at the Metropolitan Bank, for collection.
    On the trial, the court charged the jury that Mason and Yon Au were not bona fide holders, on the ground that, as it was not customary for persons who employed persons to collect rents to receive notes in payment, the circumstances were such as to put them on their guard. Plaintiff excepted. The jury brought in a verdict for defendant, and plaintiff appealed.
    
      Dana & Wust, for plaintiffs, appellants.
    
      Chambers & Pomeroy, for defendants, respondents.
   J. F. Barnard, P. J.

The court at the trial, fell into an error, in holding as matter of law, that the plaintiffs were not bona fide holders for the value of the note in question. YaU, from whom the plaintiff obtained the note, was indebted to the plaintiffs for rents collected, in the sum of two hundred and eighty-nine dollars, immediately payable. The note amounted to fifteen dollars more than the debt. The note was taken in settlement of the debt so due, and by allowing Yail to retain fifteen dollars out of the next month’s collection of rent, to be made by Yail for plaintiffs, which sum was so collected and retained before the maturity of the note. This transaction, if done in good faith and without notice of the fraudulent diversion of the note by Yail, constituted the plaintiffs bona fide holders for value within the cases. The plaintiffs settled the claim against Vail, extended the time of payment, and advanced a new consideration.

There was nothing in the fact that Vail was in arrears thirty dollars for the rents due the preceding months, which, as a matter of law, made it the duty of plaintiffs to inquire as to the note. It does not appear that the thirty dollars had been collected during the month preceding the transfer of the note. Mason testified he was only indebted one floor for the month of October, which he had not collected.

The judgment must be reversed, and a new trial granted, costs to abide the event. 
      
      
         Present, Barnard, P. J., and Tappan and Pratt, JJ.