#### Stevens vs. Campbell and others.

The right to make a ease or exceptions under section 20, chap. 132, R. S. 1858, is not cut off until the expiration of ten days after actual notice in writing that a judgment has been entered; and such notice should not be considered as waived by obtaining a stipulation extending the time for making a case, when the attorney was afterwards induced to let that time expire without serving such case, by suggestions from the opposite party that a settlement could be effected so as to prevent the necessity of appealing.

A purchaser of negotiable paper before due, who takes it, without notice of any equitable defense, in absolute payment of a pre-existing debt, and surrenders a prior note held by him for such debt, is within the rule protecting a *bona fide*purchaser of negotiable paper for value.

The payee of two notes, one for $500 and the other for $1000, which were secured by a mortgage, being indebted to the plaintiff in the sum of $500, assigned to him the mortgage, and delivered the notes into the hands of a mutual agent, under an agreement that the plaintiff was to own an interest in them, equal to his debt, which was paid by such transfer, and that such payee was to «continue to own the remaining interest in said notes. *Held,*that such notes were owned jointly by the parties, and that both owners were necessary parties to a suit to foreclose.

*376APPEAL from the Circuit Court for *Dane*County.

The case is sufficiently stated in the opinion of the court.

*Stevens & Lewis,*for appellant,

to the point that the plaintiff is within the rule protecting a *bona fide*purchaser of negotiable paper, cited *Low vs. Taylor,*4 Cush. (Miss.), 567; *Fryattvs. Sullivan Go.,*5 Hill, 116; Am. Lead. Cases, 344; *Stalker vs. McDonald,*6 Hill, 93; 20 How. (U. S), 343.

*J. G. Hopkins,*for respondents,

cited on that point *Godding-ton vs. Bay,*20 Johns., 637; *Stalker vs. McDonald,*6 Hill, 93; *Dickerson vs. Tillinghast,*4 Paige, 215; and argued also that there was a defect of parties plaintiff. •

*Stevens 8? Lewis,*in reply,

contended that the plaintiff became entitled, by the assignment, to the $500 first falling due, and that the holder of the remaining, interest in the notes stood in the position of a second mortgagee, and was not therefore a necessary, although a proper party, citing 3 Johns. Ch. R, 459, and 4 id., 605.

March 12.

*gy (jour^*

Paine, J.

The first question presented in this case is, whether the bill of exceptions is to be considered a part of the record. The respondents claim that it cannot, for the reason that it was not settled in time. The statute (chap. 182, section 20), provides that exceptions may be filed to the finding, and that a case or exceptions may be made, within ten days after notice of judgment. It is conceded here that no express notice of the judgment was served before the bill of exceptions was settled. But it appears that on the day when the decision of the judge was made, the attorneys for the defendants obtained an order staying proceedings for sixty days, and that then the time to serve a case or exceptions was further extended, by stipulation of the defendants’ attorney, forty days. Both of these terms expired before the exceptions were settled, and after that, judgment was entered and notice of the taxation of costs given by the defendants’ attorney to the plaintiff’s attorney. The defendants claim that obtaining the stipulation for the extension of the time in which to serve the case, was a waiver of the notice of judgment, and that if not, the notice of the taxation of costs, which stated that the amount would be entered in *377the judgment for the defendants, was sufficient, no exceptions having been filed within ten days after that. But appears from an affidavit filed in connection with the stipulation upon the subject, that the plaintiff’s counsel were induced to delay by suggestions from the principal defendant that a settlement could be made so as to prevent the necessity of an appeal. Whatever effect, therefore, might be given to the obtaining of the stipulation for an extension of the time, if that appeared alone, we still think that upon the facts presented to the circuit judge, he was right in deciding that the plaintiff had not waived his rights. Nor do we think the notice of taxation of costs was sufficient to cut off the right. That notice was not that judgment had been entered, but simply that at a future time the costs would be taxed and entered in the judgment. The judgment was not in fact entered then; and notwithstanding this notice, it might never have been. Where the statute provides that the party may appeal or make his case or exceptions, until his right is cut off by a notice of the judgment, if the other party desires to defeat the right, he must give the notice, unless it is waived expressly, or by acts of the most unequivocal nature. *Staring vs.*Jones, 13 How. Pr. R., 423; *Fry vs.*Bennett, 16 id., 402; 4 Abbott’s Pr. R., 309.

Having come to the conclusion that we may look into the bill of exceptions, we think the judgment of the circuit court must be reversed. The action was brought to foreclose a mortgage given to secure two negotiable notes, one for $500, the other for $1,000. The plaintiff sued as assignee and owner of the notes. The defense set up was, that they were given to secure part of the payments on a purchase of certain property by the mortgagor from the mortgagee, and that the title to an amount of the personal property exceeding the amount of these notes, failed by reason of a previous chattel mortgage under which it was seized.. It was also averred that the plaintiff was not the owner of the notes, and that he purchased them, not in good faith, but with notice. The court below sustained the defense, and found that the plaintiff held the notes “ as collateral security, and was not a *Iona**378holder for value.” It is impossible for us to see bow finding can be sustained upon tbe evidence.

The 0I1]y testimony upon tbe subject is that of "William Stevens, the mortgagee and payee of tbe notes, who states unqualifiedly that be was indebted to tbe plaintiff for $500 borrowed money, and that tbis mortgage was assigned to tbe plaintiff upon an agreement that be was to have an interest equal to bis debt in these notes, and that be was to take tbe mortgage in payment, and that be did so, and surrendered tbe note which be previously held. He says also that “ be did not turn out said mortgage to tbe plaintiff as collateral security for what be owed him, but in payment,” &c. There is no evidence tending to show that tbe plaintiff bad any notice of tbe equities set up as a defense. We think, therefore, that tbe evidence entirely fails to sustain tbe finding in tbis particular, and on tbe contrary, sustains tbe opposite conclusion. And tbe plaintiff having taken tbis transfer in absolute payment of a pre-existing debt, and surrendered bis previous security, is a *bona fide*purchaser for value, within tbe rule entitling such to protection against defenses growing out of equities between tbe original parties. There has been some conflict in tbe authorities upon tbe point, whether one taking negotiable paper merely as collateral security for a pre-existing debt, is a *bona fide*purchaser for value within that rule. Tbis conflict is referred to in *Cook et al. vs. Van*dercook, 5 Wis., 110; and it is there said that such a bolder is not protected against, such defenses. Rut we all think that where tbe bolder took tbe paper without notice, in absolute payment of a pre-existing debt, and surrendered a prior note or other security held for such debt, as appears to have been done in tbis case, that is a good purchase for value, and entitles him to protection. Tbis is fairly implied from tbe opinion of Chancellor Walwokth, in *Stalker vs.*McDonald, 6 Hill, 93; and is expressly decided by several authorities referred to in that opinion, and in tbe opinion in *Swift vs. Tyson,*16 Peters, 15.

But it appears from tbe testimony of William Stevens, that tbe plaintiff owns only an interest in these notes to tbe extent of *$500. The*mortgage was assigned absolutely to him, *379but tbe notes were never delivered to bim, so as to transfer to bim tbe entire title. On tbe contrary it appears that were sent to Ebenezer Stevens, to take up tbe paper beldby tbe plaintiff, and to arrange witb bim for tbe balance. Tbe arrangement made, as tbe deponent was informed by Ebene: zer, was that tbe old note was delivered up, and these notes and tbe mortgage left in Ebenezer’s bands to be collected, and tbe plaintiff and William Stevens eacb to be paid bis share. He says in answer to tbe 5th interrogatory, that be delivered tbe notes and mortgage to Ebenezer Stevens, to bold for tbe plaintiff and himself, as stated in bis answer to tbe 4th interrogatory; that is under “ an arrangement” by which, as we understand tbe testimony, eacb one was to be entitled to bis interest in tbe notes. We do not think this shows a transfer of tbe entire title to tbe notes, either in trust or otherwise, to tbe plaintiff; and consequently tbe owner of tbe remaining interest ought to be made a party.

Tbe counsel for tbe defendants states that it was admitted by tbe counsel for tbe plaintiff, on tbe trial, that tbe plaintiff held tbe notes only as collateral security, and that tbe trial proceeded on this assumption. But this does not appear in tbe pleadings ®r tbe bill of exceptions; and by these we are bound. While we think, therefore, that tbe circuit court was wrong in finding as a fact that tbe plaintiff held tbe notes as collateral security, and that if tbe proper parties were before tbe court, be would be entitled to a judgment of foreclosure and sale to make tbe amount of bis interest, and for this reason must reverse tbe judgment, yet we must remand tbe cause witb directions either .to nonsuit tbe plaintiff for want of proper parties, or allow bim to amend in that respect upon such terms as may be just, and have a new trial.

Tbe judgment is reversed, witb costs, and tbe cause remanded to tbe circuit court for further proceedings in accordance witb this opinion.