Court Opinion

ID: 6143529
Source: CourtListenerOpinion
Date Created: 2022-02-05 14:47:18.120174+00
Date Added: 2024-06-11T08:54:45.366739
License: Public Domain

Daly, J. —
Nothing had been established on the part of defendants to render it necessary for the plaintiffs to show that they were holders for value. The defendants accepted the draft in pursuance of an agreement between them and the drawer, by which they received certain bonds to the par value of $23,000, on condition that they would accept drafts for the railroad company, of which the drawer was the president, to an amount not exceeding $22,000. They 'accepted drafts to the amount of $21,675.43, the last acceptance being three of $1,000 each, One of which was the draft in suit. By the terms of this agree ment the drawer was to place them in funds to meet their acceptances at least three days before they became due, or the defend*343ants were to be at liberty to sell, hypothecate, or transfer the bonds, to reimburse themselves. There was, therefore, no want of consideration, but, presumptively, a full and adequate consideration for their accepting the draft in suit; and before they could impeach or inquire into the title of the plaintiffs it was necessary for them to show a want of consideration at the time the draft was accepted, or a subsequent failure of consideration. The par value of the bonds'when they were placed in the hands of the defendants was equal to the amount to which the defendants accepted, including the draft in suit; or if they were not of that actual value, or afterwards fell in value, and proved insufficient to secure the defendants to the amount of their acceptances', it rested with them to show it, which they did not. The court vflllji, therefore, justified in concluding that they had received a full consideration for accepting the draft; and if they had, then it was wholly immaterial whether the plaintiffs had given value for the draft or not; as the holders, they were entitled to recover it.
It is urged that the acceptance of the defendants was for a special purpose; that the amount for which they agreed to accept was to be used on the Janesville end of the road, and that the draft in suit was used by the drawer for a different purpose — having ■ been given by him, to the plaintiff, for an antecedent debt. But if they received a full consideration for accepting it, if is wholly immaterial what use was made by him of the draft. Where a party, without consideration, accepts a draft with a condition and understanding that it is to be used for a special purpose, in its application to which purpose he has some interest, and it is converted to a different purpose, he is not liable upon it, except to an innocent holder, who has taken it before maturity, and given a good consideration for it. But the defendants.are not in this position. They offered to show that when they made the agreement above referred to, they were creditors of the railroad company, asmortgage bondholders, to the amount of $100,000, and that the Janesville end of the road was not completed; with a view, it is to be presumed, of showing that they w.ere interested in the *344amount of tbe draft being applied to tbe purpose for wbicb it was drawn. But tbis evidence, if it bad been admitted, would not bave changed tbeir position, and brought them within tbe rule referred to. Tbe inducement to the acceptance of tbis draft, and of tbe other drafts included in tbe agreement, was not that tbe defendants were creditors of tbe company, but it was a distinct consideration, tbe placing of securities in tbeir bands sufficiently ample to cover them to tbe extent of tbeir acceptances. It was, therefore, 'a transaction entirely distinct and separate. Even if it bad been shown that tbe sale or hypothecation of these securities bad tbe effect to lessen tbe value of tbe other bonds of tbe company mortgaged to tbe defendants, it would not r<jjjjf.ve. them from tbeir liability upon these acceptances to tbe holders of tbe drafts, whether the holders bad given value for them or not. But whether it would or not, nothing of tbis kind was attempted to be shown. As tbe case stood before tbe court, they bad received a full consideration for tbe acceptance of tbis draft; they were bound to pay it, and bad no right to call upon tbe plaintiffs to show that they bad taken it for value.
But, if I deemed tbe point essential to tbe determination of tbis case, I could not agree with tbe other members of tbe court, that tbe plaintiffs are holders for value, so as to give them a right to recover upon a draft accepted without consideration, and diverted from the purpose for wbicb it was accepted. In tbe courts of tbe United States, and in several of tbe states, tbe circumstances under wbicb tbis draft was taken by tbe plaintiffs would be sufficient to make them holders for value. In tbis state, however, I understand the law, as settled, to be otherwise; but my reasons for so thinking would require an extended and careful examination of tbe course of our judicial decisions, which it is unnecessary that I should go into, as we all agree that the judge was right in telling tbe jury that, upon tbe evidence, tbe plaintiffs were entitled to recover.