#### William C. Ilsley *et al.,*Respondents, *against*Thomas M. Smedes, Appellant.

(Decided February 3d, 1890.)

A provision in a promissory note that, upon the payment of two subsequent notes of the same series, certain stock, which was delivered to the payee as collateral security for all the notes, should be returned, does not prevent its transfer in the usual manner as an independent obligation for the payment of money regardless of such stock; and, therefore, evidence of an alleged conversion of the stock by the payee is inadmissible in an action on the note by a *bona fide*purchaser before maturity.

Appeal from a judgment of the General Term of the City Court of New York affirming a judgment of that court entered upon the verdict of a jury and an order denying a motion for a new trial.

The action was brought on a promissory note by an indor. see against the maker. The facts are stated in the opinion.

*L. H. Andrews,*for appellant.

*Robert L. Harrison,*for respondents.

Larremore, Ch. J.

The argument of the learned counsel for the appellant is principally directed to the proposition, that an indorsee of negotiable paper may not recover more than the sum actually advanced by him, on the credit of a note, when there are equities which would serve as defenses between maker and payee. It appears that at least part of the consideration moving from plaintiffs for the note here in suit was the payment of an antecedent debt, owed by the payee to plaintiffs, which plaintiffs accordingly cancelled. But, conceding the abstract principle of law which appellant has fortified by the citation of many authorities, two questions remain for determination: First, is there any evidence *489in the case tending to establish an equitable defense, as between the original parties to this particular note for five hundred dollars? Second, if no such evidence appears in the record, was defendant debarred from offering the same, through any incorrect rulings on the part of the court?

The first of these questions must without hesitation be answered in the negative. The written agreement, under which this note was given, attaches no conditions to the enforcement thereof, although it does prescribe that upon the payment of two subsequent notes of the same series, certain stock, which was delivered to the payee as collateral security for all the notes, should be returned. There is nothing in such agreement to prevent the transfer of this first note for five hundred dollars in the usual manner, as an independent obligation for the payment of money, regardless of said stock.

The second inquiry must also be answered in respondents’ favor. All the exclusions of evidence complained of, including that of the judgment roll in the action in Mississippi, related to attempted proofs of the alleged conversion of the collateral. Under our construction of the agreement, the transfer of such stock would not have been any defense to the payment of the first note. By the express terms of the agreement this note was collectible irrespective of any return of collateral, and by the time the second note fell due the payee might have re-possessed himself of such collateral and been in a position to perform the contract. All considerations of such alleged conversion were therefore immaterial in an action upon the first note, and the evidence was properly excluded.

The judgment should be affirmed, with costs.

Bookstaver and Bischoff, JJ., concurred.

Judgment affirmed, with costs.