Court Opinion

ID: 6278094
Source: CourtListenerOpinion
Date Created: 2022-02-18 16:07:13.770308+00
Date Added: 2024-06-11T09:00:07.532531
License: Public Domain

Opinion by
Henderson, J.,
The evidence taken by the appellant in support of the rule to open the judgment does not impeach the bona fides of the appellee as the holder of the promissory note given by the defendant to the legal plaintiff. The evidence is clear and direct that the note was indorsed for a valuable consideration before maturity without notice of any defense. It is clear, therefore, that in an action brought on that note by the indorsee the defendant could not set up the transactions relied on by way *563of defense. It is equally clear that the note on which the judgment was entered was given as collateral security for the payment of the promissory note. The case is, therefore, within the principle stated in Welton v. Littlejohn, 163 Pa. 205. There the 'collateral security was a mortgage on which a judgment had been obtained which judgment one of the mortgagors sought to have opened to permit him to show that the consideration for the notes for which the mortgage was security had failed in part. It was held, however, that as the mortgage was security for a negotiable obligation against which the defense could not be interposed because the promissory notes had passed into the hands of third parties before maturity for a valuable consideration without notice of the defense proposed it was not permissible in a proceeding on the mortgage to introduce evidence which would not be competent in an action by the holder of the notes. If the security is to be available to the payee or indorsee or bearer of a negotiable instrument it should carry with it the same exemption from defense which attaches to the obligation for which it is security. On this ground alone the action of the court below was justifiable and the same result might have been reached on a consideration of the merits of the defense set up. There is not such an exhibition of an equitable right in the defendant as would authorize us to hold that the court is chargeable with an abuse of discretion in discharging the rule. It follows that there was not reversible error in the action of the court in refusing the petition of the defendant for a decree setting aside the order of January 31, 1913, and discharging the rule to show cause why the judgment should not be opened.
The decree is affirmed.