Case Name: Carlson v. Winterson
Court: New York Court of Common Pleas
Jurisdiction: New York
Decision Date: 1893-03
Citations: 3 Misc. 63
Docket Number: 
Parties: Carlson v. Winterson.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 3
Pages: 63–66

Head Matter:
Carlson v. Winterson.
(New York Common Pleas
General Term,
March, 1893.)
A transferee of negotiable paper, taking it merely as conditional payment of a precedent debt, without releasing the original obligation or incurring any new liability, is not a Iona fide holder for value, to the effect of excluding the equities between the primary parties in defense of an action by such transferee.
In an action against the maker by the indorsee of a note taken simply for a precedent debt, the court refused to charge “that the plaintiff, by taking the note for an antecedent debt, is not a bona fide holder.” Reid,, that the request meant a bona fide holder for value, and was so understood by the court, and that it was error to refuse the request as so intended and understood.
Appeal from judgment of the General Term of the City ■Court, affirming judgment on a verdict. The opinion states the case.
E. H. Bulla/rd, for defendant (appellant).
Hector M. Hutchins, for plaintiff (respondent).

Opinion:
Pryor, J.
Action by indorsee against maker of a note; -defense, first, that the note is a forgery; and, secondly, that being ineffectual in the hands of the payee against the maker, ' it is not enforcible by the plaintiff, who received it in payment of an antecedent debt.
The issue as to the execution of the paper by the defendant was submitted to the jury upon conflicting evidence, ample to authorize a finding either way, and we have no jurisdiction to review their determination. The verdict is conclusive of the authenticity of the note.
The other issue as to the availability of the note in the hands of the plaintiff, though tendered by the answer and contested on the trial, appears not to have been referred to the jury for decision, at least not so distinctly and directly as to admonish them that the solution of it was indispensable to a verdict. The court charged in terms that " the defense is simply upon the point that the note was never signed by the defendant. This is substantially the only dispute in the case for your consideration." Manifestly, upon tins instruction the jury may well have concluded, that when they found the issue as to the genuineness of the note in favor of the plaintiff, she was entitled to the verdict, although, in their opinion, the evidence demonstrated the other defense. True, no exception to this instruction was taken by the defendant, but, in effect, she presented her other defense for determination by the jury by request for a charge, " that the plaintiff by taking the note for an antecedent debt, is not a bona fide holder," and " that the defendant has the same defense against the plaintiff that she had against the payee." In the denial of the latter request the defendant acquiesced, but to the refusal of the former she duly excepted.
Still, in effect, the jury were told that although the plaintiff took the note for an antecedent debt, she was a bona fide holder and entitled to recover, irrespective of any equity between the defendant and the payee.
Such is not the law of this state. In United States N. Bank v. Ewing, 131 N. Y. 506, 507, the note sued upon was transferred " as added security " for a precedent debt, and the court held the plaintiff not a bona fide holder for value, say ing: " The holder parted with nothing upon receiving it, surrendered no right and no security, and made no new agreement in reliance upon it." In Leslie v. Bassett, 129 N. Y. 523, the court declare it to be " the settled law of this state as established in Coddington v. Bay " (1822), that the transferee of negotiable paper " taken for or in nominal payment " of an antecedent debt, holds it subject to all defenses available between the original parties. In Phœnix Ins. Co. v. Church, 81 N. Y. 218, 221, the court ruled that prior equities of antecedent parties "will prevail against an indorsee who has received it merely in nominal payment of a precedent debt, there being no evidence of an intention to receive the paper in absolute discharge and satisfaction, beyond what may be inferred from the ordinary transaction of accepting or receipting it in payment, or crediting it on account. The law regards the payment under such circumstances as conditional only, and the right of the creditors to proceed upon the original indebtedness after the maturity of the paper, is unimpaired."
In the instant case the evidence does not warrant the inference that the plaintiff accepted the note in satisfaction or extinguishment of her claim against the transferrer, or in. relinquishment of his liability on the original obligation. Testifying to the very language he used when he passed the note, to the plaintiff, the payee says : " I told her that I got this; $500 note for work I did; and that I owed her the money;, and that she should go down the following day to the maker and present the note as it was due. I also said: 'Don't, deliver it without payment.' Hothing else was said in regard to the note; I told her the note was good for what I owed her. I took no receipt from her at the time, and have not taken a receipt from her since." As to the receipt of the-note the plaintiff says : " It was given to me for a loan of money I made him. He said that he gave it to me-, for the money I owed him." The language of the learned, trial judge in his charge to the jury, is conclusive that he did not understand the plaintiff to have accepted the note in discharge of her claim; for he cautioned the jury against the- testimony of the transferrer on the ground that, " he has an interest in obtaining the verdict; which could not be unless he were still liable to the plaintiff for the loan in the event of her failure to recover on the note.
It occurred to us on the argument that the defendant's request to charge was not phrased with critical accuracy, in submitting the proposition that an antecedent debt is insufficient to constitute a " bona fide holder," instead of a " holder for value • " but as the case discloses no evidence affecting the good faith of the plaintiff, the court must have understood the request in the sense obviously intended by the counsel. Allowing, however, technical informalities on the part of appellant in challenging the correctness of the charge, we are of opinion that it was so misleading in substance as to produce the result which, on the evidence before us, we cannot regard as consistent with justice.
Judgment reversed and new trial ordered, costs to abide the event.
Bischoef, J., concurs.
Judgment reversed and new trial ordered.