Case Name: Charles A. Hall, Respondent, v. Caroline W. Whiton, Appellant
Court: New York City Court
Jurisdiction: New York
Decision Date: 1902-04
Citations: 37 Misc. 756
Docket Number: 
Parties: Charles A. Hall, Respondent, v. Caroline W. Whiton, Appellant.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 37
Pages: 756–759

Head Matter:
Charles A. Hall, Respondent, v. Caroline W. Whiton, Appellant.
(City Court of New York, General Term,
April, 1902.)
Bills and notes —• When the holder of a note must prove himself a bona fide holder for value.
Where it appeared, in an action by the holder of a promissory- note against the maker, that the note was transferred by the payee and first indorser to the second indorser for him to hold it simply as collateral security to him for an antecedent debt and for a guaranty of a mortgage and that both indorsers, more than two months after maturity of the note, entered into- a memorandum ■as to .the disposition of its proceeds, the court considered that the holder, who alleged that be bought the note of the second indorser for seventy per cent of its face before maturity and by a draft — which he failed to prove was ever paid — must show affirmatively . that he was á tona fide holder for value; and 'that, consequently, the direction of a verdict for the plaintiff was erroneous as it improperly withdrew from the consideration of the jury the circumstances attending the note and the credibility of the holder.'
Appeal from a judgment rendered at Trial Term upon the direction of a verdict had in favor of the plaintiff and from the order denying a new trial upon the minutes.
The note in suit was dated July 6, 1900, was for $1,750 and was payable in four months from date. It was indorsed, in blank,
successively by L. C. Whiton, Elmer E. Oooley and 0. A. Hall, the plaintiff. The memorandum as to the proceeds of the note, referred to in the opinion, was as follows: “ At the time the note for $1,750.00 made by Caroline W. Whiton to the order of Louis C. Whiton was delivered to Elmer E. Cooley, to wit, on or about the 6th day of July, 1900, it was understood between the said Cooley and the said Louis 0. Whiton, that if the said sum of $1,750.00 were paid before the debt secured by a mortgage made by Ira L. Willits to Agnes Patterson, and guaranteed by Louis O. Whiton was paid, then the sum of $850.90 should be held by Elmer E. Cooley, and any deficiency that might arise upon the sale of the said mortgaged premises should be paid out of the said sum of $850.90 and the surplus returned ti> the said L. C. Whiton or Caroline W. Whiton, and if the said mortgage was paid before the said note was paid, then the net amount realized upon the said mortgage less disbursements not taxable, was! to be deducted from the amount of the said note. The said note having been sold by Elmer E. Cooley, and it not having been paid, Elmer E. Cooley hereby agrees to carry into effect the foregoing understanding as soon as said mortgage and said note are paid.
“ Dated December 26, 1900.
“ L. C. Whiton,
“ Elmeb E. Cooley.”
John Freeman Baker, for appellant.
Francis B. Elgas, for respondent.

Opinion:
MoCabthy, J.
The action was brought upon a promissory note made by the defendant Caroline W. Whiton to the order of one L. C. Whiton and by him given to one Elmer E. Oooley as security for a pre-existing debt of $700, and to secure a guaranty of a mortgage for some $650, and which note thereafter it is claimed came into possession of plaintiff.
It appears by the evidence that the note was to be held as collateral1 ¡security and that Cooley was simply to hold the note for the indebtedness that then existed. A few days before the maturity of the note Cooley delivered the same to the plaintiff, an employee of the Lakewood Trust Company, who gave a draft for $1,200 on the Lakewood Trust Company to Cooley, for which plaintiff gave his.check,.although it did not appear that the draft was ever paid. Over two months after the maturity of the note and subsequent to its transfer to the plaintiff, both Cooley and Whiton signed a memorandum as to the proceeds of the note, which memorandum appears in evidence.
On motion the trial justice struck out all testimony of both Whiton and Mathews as to the limitations placed on the note, •.and also held that there was no question for the jury as to whether or not the plaintiff was a bona fide holder for value, and directed a verdict for the plaintiff for the full amount of the note in suit.
We think it was incumbent in this case upon the plaintiff to show that he was a bona fide holder for value and the burden of proof in that respect was upon him. American Exchange National Bank v. New York Belting Co., 148 N. Y. 698; Nickerson v. Ruger, 76 id. 282; Farmers' & Citizens' Bank v. Noxon, 45 id. 762.
Upon the testimony, as it appears in the record, we: are of opinion that the learned trial justice erred in refusing to submit the question to the jury as to whether or not the plaintiff held the note sued upon for value or became a bona fide holder thereof, as the circumstances attending the procurement of the note by the .plaintiff and all the transactions surrounding the same were all proper subjects to be inquired into and to be left to the jury for their determination. Vosburgh v. Diefendorf, 119 N. Y. 360.
And as was recently held in this department in the case of Cahen v. Everitt, 67 App. Div. 89, by Patterson, J., that it is neither possible nor necessary to lay down a general rule as to what constitutes bad faith, but here we are impressed by the evidence that the case should have gone to the jury on that subject, and from the testimony as to what plaintiff gave for the nóte and the circumstances under which he acquired it, and ás an interested party his credibility was for the jury. These remarks of Mr. Justice Patterson, in case supra, can well be applied to the casé at bar.
We are bound by the record in this case, and therein' we find an order duly entered denying the motion for a new trial made upon all the grounds stated in section 999 of the Code, and said order being also appealed from we have the undoubted right to review all the facts as well as the exceptions taken upon the trial. First National Bank v. Clark, 42 Hun, 90; Matthews v. Meyberg, 63 N. Y. 656.
Taking the evidence as given on the trial- in its most favorable light towards plaintiff, we think the defendant had the right, in view of the fact that said note was not to be sold or assigned until certain events happened as stated in the agreement in evidence, to have the question determined by the jury as to whether or not the plaintiff became a bona fide holder thereof for value, and that the direction of a verdict for the plaintiff in this respect was error.
For the reasons stated the judgment and order appealed from must be reversed and a new trial granted, with costs to appellant-to abide the event.
Delehanty, J., concurs, Hasoall, J., dissenting.
Judgment and order reversed and new trial granted, with costs to appellant to abide event.