Case Name: Frederick Seybel, Appellant, v. The National Currency Bank, Respondent
Court: New York Commission of Appeals
Jurisdiction: New York
Decision Date: 1873-06
Citations: 54 N.Y. 288
Docket Number: 
Parties: Frederick Seybel, Appellant, v. The National Currency Bank, Respondent.
Judges: 
Reporter: New York Reports
Volume: 54
Pages: 288–314

Head Matter:
Frederick Seybel, Appellant, v. The National Currency Bank, Respondent.
One who purchases negotiable paper before due for a valuable consideration, in good faith and without actual knowledge or notice of any defect of title, holds it by a title valid as against every other person.
Suspicion of a defect of title; knowledge of circumstances which would excite such suspicion in the mind of a prudent man; disregard of means of information, an examination'of which would disclose such defect; in fine, gross negligence at the time of the purchase, will not alone defeat, his title. It is evidence, but not conclusive, of bad'faith, and that must he established by one seeking to impeach such title.
A dealer in United States bonds,, payable to hearer,, is not bound to make inquiry of one offering, to sell as to. his right or title thereto, or to take any special precautionary measures to ascertain or protect the interests of others ; and in case of the purchase by him of such bonds which have been stolen, the fact of an oinission on Ms part to examine and regard notices of the theft left at his, place of business, will not, of itself, without actual knowledge or notice, deprive him of the character of a Iona jicle purchaser. (Reynolds and Gray, 00., dissenting.)
Defendant purchased, in the ordinary course of its business; two United States bonds, payable to bearer, paying thereforfull market value. The bonds had been stolen from the plaintiff the evening previous, and printed notices of the theft, describing these bonds,.with others, had been left at defendant’s office, upon its cashier’s desk, on the morning of the purchase. In an action to recover the value of the bonds, plaintiff testified that at the time he made demand of the bonds of defendant’s cashier, he notified him of the sending of the notice, and that the cashier replied that they did not care for notice; defendant thereupon called the cashier and after he had testified that he did not see the notice, to his knowledge, offered to prove by him, in substance,that bonds of the kind stolen were received and paid out by defendant and by hankers and brokers generally as money; that the amount of them and the amount stolen was so great, and the notices of theft and loss so frequent, that it was impossible for defendant, without stopping its business, to regard the notices and compare the securities offered for sale therewith. This evidence was objected to by plaintiff and rejected. Held (Reynolds and Gray, 00., dissenting), error; that disregard of and omission to examine the notice alone would not defeat defendant’s title or deprive it of the protection extended to a Iona fide purchaser, hut that the tendency of plaintiff’s evidence was to impress the jury that defendant was not such a purchaser; and the purport of the proof offered was to remove such impression and to repel any imputation of had faith, and so the evidence was proper.
(Argued January 17, 1873;
decided June term, 1873.)
The authorities hearing upon the rights of bona fide purchasers, collated and discussed. Pringle v. Philips (5 Sand., 157), limited.
Appeal from order of the General Term of the Court of Common Pleas for the city and county of New York, reversing a judgment in favor of plaintiff entered' on a verdict, and granting a new trial.
This action was brought to recover the value of two United States bonds, for $1,000 each, payable in 1881, which had been stolen from the plaintiff and purchased by the defendant. They were stolen on the evening of September 12, 1865, and bought by the defendant, in the regular course of its business, on the next day.
The facts, so far as they are material, are sufficiently stated in the opinions.
Walter S. Poor for the appellant.
The motion to dismiss the complaint at the end of plaintiff’s case was properly denied. - (Goodman v. Simonds, 20 How. [U. S.], 345 ; Bernhardt v. R. and S. R. R. Co., 23 How., 166 ; Byrd v. Hall, 2 Keyes, 646; Johnson v. Monell, id., 655; May v. Chap-man, 16 M. & W., 355; Ernst v. H. R. R. R. Co., 35 N. Y., 39,40; Topping v. lynch, 2 Rob., 484.) Plaintiff having shown that a fraud had been committed upon him, of which defendant had notice, this was enough to compel it to show how it obtained the securities. (Case v. Mechanics Bk'g Ass'n, 4 N. Y., 168; Cardwel v. Hicks, 37 Barb., 458 ; Catlin, v. Hansen, 1 Duer, .309 ; Ross v. Bedell, 5 id., 462 ; Monroe v. Cooper, 5 Pick., 412; White v. Springfield Bk., 1 Barb., 225 ; Vallett v. Parker, 6 Wend., 615 ; Smith v. Braine, 3 E. L. & E., 379 ; Bailey v. Bidmell, 13 M. & W., 73.) If defendant had notice of the theft, plaintiff is entitled to a verdict. (Mayer v. Badger, 34 N.Y., 249; Belmont B. Bk. v. Hoge, 35 id., 65 ; Welch v. Sage, 47 id., 143 ; Down v. Hailing, 4 Carr. & P., 330.) If an exception is taken to a charge embracing two separate propositions, one of which is good, the whole exception fells. (Haggart v. Morgan, 5 N. Y., 422; Jones v. Osgood, 6 id., 233 ; Hart v. R. and S. R. R. Co., 8 id., 37; Hodges v. Cooper, 45 id., 216.) If, with reasonable care, and attention, defendant might have had notice of the loss, plaintiff was entitled to recover. (Bernhardt v. R. and S. R. R. Co., 23 How., 166; Keller v. N. Y. C. R. R. Co., 26 id., 177; Ireland v. Oswego R. R. Co., 3 Kern., 533 ; Brown v. Lyne, 31 Penn. St., 512; Cayzer v. Taylor, 10 Gray, 280 ; McGraw v. Stone, 13 Penn., 442; 2 Kept’s Com., 560.) Where a purchaser receives notice of circumstances that would excite suspicion, a want of caution and diligence, such as an honest man would exercise, is want of good faith. (Newell v. Doty, 33 N. Y., 83; Baker v. Bliss, 39 id., 70; 2 Kent’s Com., 560; Hall v. Hinds, 2 M. & G., 847.) If the notice reached defendant and it chose to disregard it, it is not a purchaser in good faith. (Whitbread v. Jordan, 1 You. & Col., 303; May v. Chapman, 16 Mee. & W., 355; Goodman v. Simonds, 20 How. [U. S.], . 343 ; Williamson v. Brown, 15, N. Y., 354; Devlin v. Brady, 36 id., 531; Newell v. Doty, 33 id., 83 ; Jackson v. Post, 9 Cow., 120; Wiggin v. Bush, 32 J. R., 306; Comstock v. Hoag, 5 Wend., 600; Small v. Smith, 1 Den., 583 ; Johnson v. Bloodgood, Caine’s Cas., 302; Clark Nat. Bk. v. Bk. of Albion, 52 Barb., 592; Newell v. Gregg, 51 id., 263; Owen v. Homan, 4 H. L., 997, 1035; Jones v. Williams, 24 Beav., 47.) Where there is any evidence, the finding, the verdict of a jury or the decision of a single judge, as to matter of fact, is conclusive. (McGrath v. H. R. R. R. Co., 19 How., 211; Burnham v. Butler, 81 N. Y., 480; Moak v. Foland, 3 How., 84; Mendell v. French, 2 Hilt., 178.)
Amasa J. Parker for the respondent.
Even gross negligence will not defeat the title of a bona fide purchaser. (Magee v. Badger, 34 N. Y., 247; Belmont v. Hoge, 35 id., 67; Bird-sail v. Bussell, 29 id,, 249; Goodman v. Simons, 20 How. [H. S.], 365; Lardner v. Murray, 3 Wall., 121; Hale v. Wilson, .16 Barb., 548; Welch v. Sage, 47 N. Y., 143; Back-house v. Harrison, 3 B. & A., 1098; Steinhart v. Baker, 34 N. Y., 347.)

Opinion:
Lott, Ch. C.
A new trial was properly granted in this case, on the ground of the improper exclusion of evidence offered on the part of the defendant. It is stated in the respondent's points that the bonds in question were payable to bearer. I do not find that fact proven, but it appears to have been assumed on the trial that they were such, or at least transferable by delivery. They must, therefore, be deemed to have been of that description. The plaintiff proved a demand of them from the defendant on or about the 23d day of September, 1865, being eleven days after they were stolen, and its refusal to deliver them. The demand was made of the cashier, and he answered, according to the plaintiff's statement, "You can't have them." To which the plaintiff replied (as he states) as follows: " Then I said, why ? I sent you a printed notice of the robbery the next morning," adding, " He said they did not care for the notice. We don't care for notice. That was the answer. He said, if you wait a little while you can see Mr. Thompson, and I waited." The plaintiff then, without any previous explanation given by the defendant of - the circumstances under which he obtained possession of them, and before any proof whatever was given by it—introduced evidence tending to show that two printed notices of the robbery, containing the numbers of the bonds in question, and of fifteen more were left before nine o'clock in the morning after it occurred, in the banking-house of the defendant—one on a desk marked " cashier's desk," and the other on the desk opposite—while persons were sweeping the office, in such a position as to be noticed by the occupants of the desks when they came in and took their places. The bonds in question were designated therein-as follows: bond 37,864, $1,000, 1881; bond 37,865, $1,000, 1881; after a statement that seventeen Hnited States bonds had been stolen, numbered and described as mentioned in the notice. After this testimony had been introduced, the plaintiff rested, and the defendant's cashier was examined on its behalf, and after giving a description of the locality of hiá desk, and stating facts tending to prove that the desk, described by one of the plaintiff's witnesses as his, was not so in fact; stated that he did not see the notice referred to, to his knowledge, and gave other testimony tending to show the purchase of and payment for the bonds by the defendant (which was dealing daily in government securities of all kinds, and' in all kinds of bonds), in its usual course of business, and the price paid for them, which was subsequently shown to be their full market value. He also testified that there were three kinds of bonds of 1881, and that there were two sets of bonds payable in 1881 of the numbers of those in controversy, and that he had been in the banking business a number of years.
The defendant's counsel then offered to prove, by this witness, the following facts : ,
" 1st. That these government securities are payable to bearer. That the amount in circulation is so great, and the amount stolen and lost is so great, and the notices of such thefts and losses so frequent that it is utterly impossible, without stopping their business, for the defendant to take notice of and keep track of those lost and stolen.
" 2d. That the defendant dealt largely in government bonds similar to these, and that they are received and paid out as money by defendant, and by bankers and brokers generally; that very large amounts, amounting to several millions, had been stolen and advertised; that notices are being thrown in constantly in their bank of such thefts, with lists, numbers and descriptions, and that it would be impracticable to deal in government securities if they are bound to take notice of such notices.
" 3d. That U. S. securities like those in suit pass from hand to hand by delivery, are received and paid out by banks, bankers and brokers as money, are bought and sold daily in the market, in parcels varying from $1,000 to $500,000, and that they are always paid for in cash on delivery.
"4th. As a separate proposition, in connection with the last above proposition, that printed notices of loss of such and other securities, by theft and otherwise, are daily, and frequently each day, thrown or brought into the offices of dealers in such securities, and that it is impracticable, in the ordinary course of such business, to make a comparison between such notices and the securities purchased and delivered.
" 5th. The defendant's counsel then made the same offers numbered herein 3d and 4th, confining the same to defendant's bank, and not to dealers, banks and-bankers generally."
Each proposition was offered separately in the order above set forth, and was excluded on a general objection to each of them, without specifying any ground therefor, and a separate exception to each ruling was taken by the defendant's counsel.
The cashier then stated, in reference to the interview between the plaintiff and himself, spoken of by the plaintiff, that what he told him was that it would be impossible for - them to pay attention to all notices, and on being asked by the defendant's counsel whether he said that he could not pay any attention to notices, he answered that he " did say something like that; " and in answer to a question by the plaintiff's counsel, whether that statement was in fact true, he made the following answer: "It was true; we buy and sell bonds without any regard to these notices left in the office; we look at notices from time to time, but we keep no record of them; no instructions are given by me to the clerks or officers to bring the notices to me personally." He stated further that he was in the office at nine o'clock of the morning of the thirteenth of September, but could not tell whether any one else was.
It is apparent, from the preceding statement of what had been proved by the plaintiff when the testimony offered on behalf of the defendant was excluded, that his object and its tenor was to show that the defendant's cashier, by saying "We don't care for notice," willfully disregarded all notices, that were left at its office or place of business, of thefts or rob beries of such bonds as were stolen from him. Its tendency and its probable effect was to impress the jury with the belief that the defendant was not a purchaser in good faith, but was, on the contrary, chargeable with bad motives and actual fraud. It afforded sufficient ground for the plaintiff's counsel to argue to them, as he has urged in his points on the argument before us, that "if from this the jury could not infer fraud, it would be difficult to infer it in any case. As well might the defendants put up a sign, ' stolen goods received here, and no questions asked.' " Such an appeal made by eloquent counsel, having the opportunity of closing the summing up, on such facts could not well fail to secure from the jury a verdict against the defendant, proved to be " a regular national bank," in favor of the plaintiff, who had informed them that he carried on "a fancy store" at 111 Eighth avenue, and resided "in the upper part," and that he had lived there fourteen years.
The general purport of the proof offered and rejected was t<5 repel and remove all and every ground for the imputation of bad faith to the defendant, by showing that it was impracticable, and indeed impossible for it, in the prosecution of its business, to regard notices left at its banking-house or office, as those in question were stated to have been. Its exclusion-appears to have been placed on the ground that the mere omission of the cashier to read, or become informed of, the contents of such notices, if he saw them, or might have seen them, but for the defendant's disregard of them, as testified to by him, charged it with such want of due and reasonable care, caution and prudence, and such gross negligence in making its purchase, as to deprive it of the protection extended to a bona fide purchaser. This is inferable from the general scope and tenor of the judge's charge to the jury, although he did not assign that reason at the time he excluded the evidence. His ruling was in accordance with the .rule of law, as declared by the King's Bench, in Gill v. Cubitt (3 Barnewall & Cresswell, 466, decided in 1824), and subsequently modified by the decision in Crook v. Jadis (5 Barnewall & Adol phus, 909, made in 1834). See also Backhouse v. Harrison (ib., 1098). The rule was, however, repudiated in Goodman v. Harvey (4 Adolphus & Ellis, 870, decided in 1836). That was an action against the drawers of a bill by an indorsee for value, whose title was disputed on the ground that his indorser, who had paid no value for it, obtained its discount in fraud of the right owner. It appeared that the drawees refused acceptance of the bill, and that the notarial marks of non-acceptance were noted thereon. It was objected, as one ground of defence, that the plaintiff, in taking the bill with such marks on it, had been guilty of gross negligence, and therefore took it with all its vices, and could have no better right to recover thereon than his indorser. Lord Chief Justice Denman is stated, in the report of the case, to have been of this opinion, and to have observed " that the plaintiff had received the bill with a death wound apparent on it, and he proposed to the plaintiff's counsel either a nonsuit or that the cause should go to the jury on the question whether or not the plaintiff had been guilty of gross negligence. The jury, in answer to the question from the lord chief justice, said that, in their opinion, the notary's marks on the bill were sufficient notice to *an indorsee of non-acceptance." A non-suit was then taken, and at the next term of the court a motion for a new trial was made on the ground that the above ruling against the plaintiff was incorrect; that the bill had been lawfully sent into the market by the payee, while not yet due, and that the plaintiff', who had taken it before maturity and given value for it, had a right to recover the amount, notwithstanding the defect in the title of an intermediate party. A rule nisi was granted; and subsequently, on hearing counsel on the part of the defendant against it, the plaintiff's counsel, after some discussion in support of it, and after stating that the only question was whether the plaintiff acted bona fide in discounting the bill, was stopped by the court, and Lord Denman, C. J., said: " The question I offered to submit to the jury was, whether the plaintiff had been guilty of gross negligence or not. I believe we are all of opinion that gross negligence only would not be a sufficient answer, where the party has given consideration for the bill. Gross negligence may be evidence of mala fidesfnü, is not the same thing. We have shaken off the last remnant of a contrary doctrine. Where the bill has passed to the plaintiff, without proof of bad faith in him, there is no objection to his title. The evidence in this case, as to the notarial marks,- could only weigh, as rendering it less likely that the bill should have been taken in perfect good faith." Littledale, Patterson and Coleridge, JJ.j concurred, and the rule was thereupon made absolute.
The doctrine there laid down was reaffirmed by the same court, in Uther v. Rich (10 Adol. & Ell., 784, decided in 1839); Arbouin v. Anderson (1 Q. B., 498-504, decided in 1841), and is now understood to be undisputed in England. See Byles on Bills of Exchange (119); he says: " It is now definitively settled that if a man takes, honestly, an instrument made or become payable to bearer, he has a good title to it, with whatever degree of negligence he may have acted, unless his gross negligence induce the jury to find fraud? And he also ,says - that "Exchequer bills, which are payable to bearer before the blank is filled up, bonds of foreign princes and States, payable to bearer and East India bonds resemble money and bills of exchange payable to bearer, in the necessary union of possession and property. Honest acquisition confers title."
Chancellor Kent, in his Commentaries (vol. 3, p. 82), seems to have considered the rule to be, that in any case in which the indorsee takes paper under circumstances which might reasonably put the holder upon inquiry and create suspicions that it was not good, he takes at his peril; and he refers to the case of Gill v. Gubitt (supra) as establishing that principle, and as Overruling the doctrine of Lord Kenyon, in Lawson v. Weston and ors. (4 Esp. N. P., 56), in which he, in answer to a claim on behalf of the defendants that "a banker or any other person should not discount a bill for one unknown, without using due diligence to inquire into the cir cumstances," replied that " if there was any fraud in the transaction or if a bona fide consideration had not been paid by the plaintiffs to be sure they could not recover; but to adopt the principle of the defence to the full extent stated, would be to paralyze the circulation of all the paper in the country, and with it all its commerce," but added, " that the circumstance of the bill having been lost, might have been material if they could bring knowledge of that fact home to the plaintiffs. The plaintiffs might or might not have seen the advertisement, and it would be going a great length to say that a banker was bound to make inquiry concerning every bill brought to him to discount."
The doctrine as laid down in Goodman v. Harvey (supra) was considered by the Supreme Court of this State, in Hall v. Wilson (16 Barb., 548), and it was said by W. F. Allen, J., giving the opinion of the court, in-July, 1853, that it had been adopted and approved by the courts of some of the States of the TJnion, and that he had met with no case in our own courts in conflict with it, and added, " So that, in the absence of evidence of bad faith in the holder, if he is, in other respects, within the rule established for the benefit of commercial paper, his title will be upheld."
It appears to have been disapproved by the Superior Court of the city of New York in Pringle v. Phillips (5 Sand. R., 157, decided in June 1851), but as that was an action of replevin in the detinet, for the recovery of merchandise which had come into'the possession of the defendant from a fraudulent vendee of the plaintiff, as security for advances made, but, as alleged by the plaintiff, with notice of the fraud, the question now under consideration was not involved therein.
The subject came before the" Supreme Court of the United States in 1857, on a writ of error from the Circuit Court for the District of Missouri, in Goodman v. Simonds (20 How. U. S. Rep., 343). That was an action against an acceptor of a bill of exchange placed in the hands of the plaintiff by the drawer as collateral security for his own debt, and in which the circuit judge instructed the jury that if such facts and circum stances were known to the plaintiff as caused him to suspect, or .that would have caused one of ordinary prudencfe to suspect, that - the drawer had no interest in the hill and no authority to use the same for his own benefit, and by ordinary diligence he could have ascertained the facts, then they would find in favor of the defendant. That instruction was held to be erroneous. Justice Clifeokd, in giving the opinion of the court said, there was no doubt that the Circuit Court, in giving that instruction, intended to apply the doctrine to the case that the title of the holder of a negotiable bill of exchange, acquired before maturity, is not protected against prior equities of the antecedent parties to the bill, where it was taken without inquiry and under circumstances which ought to have excited the suspicions'of a prudent and reasonable man; and after stating that a well-defined and correct exposition of the rights of a bona fide holder of a negotiable instrument was given by that court in Swift v. Tyson (16 Pet., 1), in 1842; and that such exposition was adopted by it relative to the point then under consideration " as one accurately defining the nature and character of the title to those instruments, which such holder acquires when they are transferred to him for a valuable consideration," added, " This court then said and we now repeat, that a bona fide holder of, a negotiable instrument for a valuable consideration, without notice of facts which impeach its validity between the antecedent parties, if he takes it under an indorsement made before the same becomes due, holds the title unaffected by. these facts, and may recover thereon, although, as between the antecedent parties, the transaction may be without any legal validity." He then proceeded to consider the question on principle and as affected by authority; and after a very able discussion of the question and an elaborate and discriminating1 examination of the decisions bearing on it, he" approves of the rule laid down in Goodman v. Harvey (supra), which, he said had since that decision, undoubtedly-been the settled law in all the English courts. .He then added that, according to that rule, applied to the case then under review, "proof that the plaintiff had been guilty of gross negligence in acquiring the bill, ought not to defeat his right to recover, and if not, it serves to exemplify the magnitude of the error assumed in the instruction, that any facts and circumstances which would excite the suspicion of a careful and prudent man were sufficient to destroy the title." "Gross negligence is defined to consist of the omission of that care which even inattentive and thoughtless men never fail to take of their own property; and if such neglect would not defeat the right to recover—and clearly it would not, unless attended by bad faith—it cannot require any further reasoning to demonstrate that the instruction was erroneous." He then said that, "the law has been uniform since the decision in Goodman v. Harvey, which was decided in 1836; 'and we think it will appear upon an examination, that it has always been the same—at least from a very early period in the history of English jurisprudence down to the present time, except for an interval of about twelve years, while the doctrine prevailed which is now invoked in support of the instruction in this case; that doctrine had its origin in Gill v. Cubitt (3 Barn. & Cress, 466)." He then remarked that, "A brief reference to some of the earlier cases will be sufficient to show that the decision in Gill v. Cubitt was a departure from the well known and long established rule upon the subject under consideration;" and after citing Hinton's Case (reported in 2 Show., 247); Anonymous (1 Selk., 126); Miller v. Race (1 Burr, 462); Grant v. Vaughan (3 Burr, 1516) ; Peacock v. Rhodes (2 Doug., 633), and lastly Lawson v. Weston & ors. (4 Esp. B., 56), before referred to, he concluded with the remark that, " The cases cited, commencing in 1694 and ending in 1801, are sufficient to show what the state of the law was in 1824, when Gill v. Cubitt was decided—especially as the judges of the King's Bench, in giving their opinions on that occasion, did not pretend that there were any later decisions in which it had been modified."
•The rule or doctrine adopted in Smith v. Tyson and Goodman v. Simonds (supra), was recognized, approved and reaf firmed in the case of The Bank of Pittsburgh v. Neal & ors. (22 How., at p. 108), and was subsequently applied (in 1864) in Murray v. Lardner (2 Wallace U. S. Rep., 110), to a purchase of coupon bonds of the Camden and Amboy Railroad Company, payable to bearer. They were stolen from Lardner, who resided near to and transacted business in Philadelphia, on the night of Wednesday the 23d of February, 1859, but, the theft was not discovered till Saturday, the 26th. Notices of the robbery appeared in the Philadelphia Ledger (the newspaper in Philadelphia having the largest circulation there) and in leading New York papers, on Monday, the 28th. In the meantime, and on the morning after the theft, they were negotiated to Murray, a broker of character, engaged in the negotiation of such bonds, at his office in Wall street, in the city of New York for full value. They' were taken by him on hypothecation for a loan to a man calling himself Dr. A. D. Bates, of Milford, Sussex county, New Jersey, from whom a stock note for its payment was given. The borrower was a stranger to Murray, and was introduced to him by a Mr. Parker, another broker of good character, to whom he applied for the loan. After such introduction, Murray asked him of whom he got the bonds and also made some inquiries of him as to his acquaintance with persons in the city of New York; he replied that he obtained the bonds of Mr. Lardner of Philadelphia, and named some persons with whom he said he was acquainted, and also stated for what purpose the money was wanted, and thereupon the loan was made. Parker testified that the borrower was a stranger to him and that he so told Murray; but Murray stated, on his examination, that he had no remembrance that Parker made such statement, and he thought if it had been, his suspicion would have been awakened. He also said that it was always his custom to know from whom securities come before dealing, and that it was the custom of brokers generally, but he added that he did not think it necessary to inquire about Bates, he being introduced by Parker. The action was one of detinue, brought in the Circuit Court for the southern district of New York; and, on the facts above disclosed, the court was asked by the defendant's counsel to charge the jury "that there were no such suspicious circumstances attending the transaction between Bates and Murray as to put Murray on inquiry; and that Murray was not chargeable with bad faith by any omission on his part to inform himself in regard to the bonds and Bates' title to them, further than he did." The court refused so to charge, but did charge them that it was for them to say " whether the defendant had made out that he received the paper in good faith, without any notice of the defect of the title; in other words, of the theft from the plaintiff; or whether there were such circumstances as would warrant the inference that there was ground of suspicion, and that he should have made further inquiry as to the character of the paper." This instruction was excepted to; and the jury having found a verdict for the plaintiff, its correctness was the question brought before the Supreme Court on a writ of error to the Circuit Court. It was very fully discussed and considered by Justice Swayne; and he, in delivering the opinion of the court, after referring to the decision of Goodman v. Harvey, and saying that it had been followed by that court in Swift v. Tyson, Goodman v. Simonds, and again in the Bank of Pittsburgh v. Neal, above referred to, said: " In Goodman v. Simonds the subject was elaborately and exhaustively examined, both upon principle and authority. That case affirms the following propositions: The possession of such paper carries the title with it to the holder; " the possession and title are one and inseparable; the party who takes it before due for a valuable consideration, without knowledge of any defect of title and in good faith, holds it by a title valid against all the world. Suspicion of defect of title, or the knowledge of circumstances which would excite such suspicion in the mind of a prudent man, or gross negligence on the part of the taker at the time of the transfer, will not defeat his title. That result can be produced only by bad faith on his part. The burden of proof lies on the person who assails the right claimed by the party in possession. Snch is the settled law of this court, and we feel no disposition to depart from it."
The opinion, after an expression or declaration that the court were well .aware of the importance of the principle involved in the'inquiry to the commercial world and to the community at large, concludes with this statement: " The instruction under consideration in the case before us is in conflict with the settled adjudications of this court." (See also Galveston Railroad v. Cowdrey, 11 Wall. [U. S.], 478.)
The decisions of the courts in this State are in harmony with the adjudications of the Supreme Court of'the United States. (See Steinhart v. Boker, 34 Barb., 436; Magee v. Badger, 34 N. Y., 247; Belmont Branch Bank v. Hoge, 35 id., 65; Welch v. Sage, 47 id., 143.)
In the last case it is said by Peckham, J., in giving the opinion of the court, that " unless the evidence makes out a case upon which a jury would be authorized to find fraud or bad faith in the purchaser, it is the duty of the court to direct a verdict."
It is clear from the preceding exposition of the law as declared by the decisions of the Supreme Court of the United States, to which I have referred, and which must be deemed to be the settled law, that the defendant was under no obligar tion to make any inquiry of the person who offered the bonds in question for sale as to his right or title thereto, or to take any special precautionary measures in the purchase of securities by which the interest of other parties should be protected; and if it could be deemed chargeable with want of caution ' or even negligence in the omission of its cashier or any of its officers to take up and read the notices of the theft that were left on its desks, it was not by reason of such omission alone deprived of the protection of a loona fide purchaser. It was necessary for the plaintiff to establish lad faith;. and if the disregard by the defendant, as stated by its cashier, of notices tended to prove that fact, it was clearly, proper to repel the imputation or inference, not only by an explanation of what was stated, but by proving that such disregard was entirely consistent with fair and honest dealing; and was necessary» or at all events, not improper, from the impracticability of paying attention to them. The object of the proof offered was to show, and the facts stated in the offers tended to prove, that no bad faith or fraud could be properly imputable to the defendant from the omission of its cashier or officers to read the contents of notices left with it. Indeed, the fact that the notice of the theft of the bonds in question contained a statement that fifteen more had been stolen, with a description of them, would seem to justify the conclusion that the numbers and description of them all could not have been borne in mind and remembered; and that to have made any attention to it, useful or available, it would have involved the necessity of having a record kept to which a reference would be necessary whenever a security was offered to it for sale, without any limitation of time. A rule that would require a purchaser to keep such a record and make such examination would, in its practical operation, throw the risk of purchasing bonds or securities that were stolen or lost, or to which the party offering them had no title, on the buyer, in all cases where a notice of the fact had been left at his place of business at any previous time, whether it actually reached him or not. Any proof that it had been so left would cast the burden on him of satisfying a jury that it had not reached him. The general object of the evidence excluded and rejected in this case was to establish that it was impossible for the defendant, without stopping its business, to regard such notices. If the facts offered to be shown by the first, second and fifth offers, or either of them, had been proved and established to the satisfaction of the jury, all grounds for the imputation to the defendant of bad faith and fraud would have been removed; and as full value appears to have been paid for the bonds, and no actual knowledge of or notice to it, of the theft was shown, or could be properly inferred, there would have been no right to a recovery by the plaintiff.
The proof was clearly proper for the consideration of the jury, and its exclusion was erroneous. The order for a.new trial was therefore properly granted, and it must be affirmed. Judgment absolute must also be rendered against the plaintiff under his stipulation, with costs.