Court Opinion

ID: 5460406
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:34:20.334703+00
Date Added: 2024-06-11T08:32:51.292407
License: Public Domain

Ingraham, P. J.
(dissenting.) The question in this case is whether a person who takes a note that has been diverted from the use for which it was made, and pays for it partly in cash and partly by giving up the note of the person who surrendered it, is a bona fide holder for value.
In Youngs v. Lee, (2 Kernan, 551,) the court of appeals hold that a party who receives accommodation paper and surrenders the note of the party from whom it is received, before such note is due, is a bona fide holder for value. And in Stettheimer v. Meyer, (33 Barb. 215,) the Monroe general term hold that where a note is so received, and the holder gives up the note of the party from whom he receives the note, although over due when it was surrendered, he is a bona fide holder for value. Johnson, J. says : “ We think the rule is now settled that whenever a negotiable note' is taken in good faith, before it becomes due, in payment of a preexisting indebtedness, and the evidence of such indebtedness is surrendered or destroyed, the person taking such note becomes a holder for a valuable consideration.”
As we follow the decisions of other general terms in the other districts, where there is no special reason for dissenting therefrom, I think this case should be followed.
*466[New York General Term,
May 5, 1862.
The case of Farrington v. The Frankfort Bank, (24 Barb. 554, and 31 id. 183,) has been urged as sustaining a contrary rule. But in that case the original notes were not given up at the time of receiving the notes -sued on, but only a short time before commencing the action. Allen, J. says, the transaction between the parties was complete when Osborn delivered to the plaintiffs the drafts. No other act was necessary to vest the title, and they were then the holders of both sets of securities. That case does not conflict with the views herein expressed.
I am also informed of manuscript decisions in the general term in this district holding a contrary doctrine. Although the question might-be considered settled by the court of appeals in Youngs v. Lee, and that there is no reason for any distinction whether the note given up was past due or not yet payable, still it may be that these cases are so explicit on this point that my brethren who have taken part in these decisions may feel bound by them.
My own opinion is that the present verdict should be sustained, and judgment rendered thereon.
New trial granted.
Ingraham, Leonard and Olerke, Justices,]