Court Opinion

ID: 8503271
Source: CourtListenerOpinion
Date Created: 2022-11-23 01:24:45.682892+00
Date Added: 2024-06-11T16:50:46.653449
License: Public Domain

Richardson, C. J.,
delivered the opinion of the court.
As some of the facts, upon which the defence in this case rests, were proved by the testimony of Baldwin, it is necessary in the first place to determine whether he was a competent witness. It is objected,that as the note was negotiable and endorsed by Baldwin, he was an incompetent witness to prove that at the time he endorsed it, the note had been paid. We have decided, that a party in a negotiable security is not a competent witness to prove such security to have *214been originally void.(l) In the ease of Churchill vs. Sitter,(2) the reasons, history, and limitations of this rule of law are stated and explained by Ch. Jus. Parsons, with great precision and perspicuity. And in Phillips' Ev. 34, the decisions in this country are collected together in a note. After a careful examination of all the adjudged cases, we are clearly of opinion, that the rule must be limited to cases where the party to a negotiable instrument is called to testify facts which render the note void, even in the hands of a bona fide endorsee for a valuable consideration without notice. The necessity of thus restricting the rale in its application becomes very visible, when we advert to the reasons upon which the rule rests. The rule has its foundation in the. impropriety and impolicy of admitting a person whof has put hfs name to a negotiable note, and thus held it out and given it currency as evidence of a valid contract to testify facts, rendering such note absolutely void in whose-soever hands it may be, and clearly shewing that he must have been guilty of a fraud in giving it the sanction of his name. This being the reason of the rule, it is very apparent that it is inapplicable to the case of notes, which, though void as between parties and privies, are valid in the hands, of innocent purchasers. Because, if he who purchases notes of this description is not conscious of their defects, he cannot be affected by them, and whatever names may be upon such notes, they held out no false colors, by which an innocent purchaser can be defrauded.
(1) 1 H. H. Rep. 60, Houghton vs. Page.
g) 4 Mass, ep. 156.
(3) 1 Jshn. Ca. 169, Prior vs. Jaeocks.
In tbis case the defence is, that Baldwin bad received payment of this note, before it was transfered to the plaintiff, and that the plaintiff was apprised that it had been paid when he took it. But in an action by a bona fide endorsee against the maker of a note, payment to the endorser, is no defence, unless the endorsee at the time he received the note had knowledge of the payment, or the note was discredited when he took it by being overdue.(l) Baldwin then was not called to allege his own turpitude by proving the note to which he had given the sanction of his name, utterly void even in the hands of an honest purchaser, but to prove facts which *215could not constitute a defence against such a purchaser. He was therefore most clearly a competent witness to prove any fact upon which the defence in this case was founded. The case of While vs. Kibling, 11 John. 128, is directly in point.
The facts stated in this case constitute a good defence against the action. The note had been paid and taken up •by the mother,and was afterwards purchased by the plaintiff of one of the makers. The plaintiff must of course have had knowledge, when he bought it, that it had been paid. It is very clear, that when a note has once been paid and taken up, it ceases tobe negotiable. Chitty on bills, 235, note by the editor.—3 Mass. Rep. 556, Blake vs. Sewall.—8 ditto 465, Boylston vs. Green.
Verdict set aside, and judgment for the defendant,