Court Opinion

ID: 8504575
Source: CourtListenerOpinion
Date Created: 2022-11-23 01:25:51.029165+00
Date Added: 2024-06-11T16:50:49.780129
License: Public Domain

Woods, J.
The note which forms the basis of this action being a contract entered into in the state of Vermont, and between citizens of that state, and being, by its terms, to be executed there; and the transactions relied upon in discharge thereof, and in defence of this action, as well as in support of it, having transpired within that state, the rights of the parties to this controversy in those particulars must be governed and determined by the laws in force in Vermont at the time when those transactions occurred. Harrison vs. Edwards, 12 Verm. R. 648; Peck vs. Mayo, 14 Ditto 33.
The defence set up is not technically an off-set, but is in the nature of an off-set, or is rather a notice of an off-set hy way of defence; and it is contended, by the counsel for the defendant, that the transactions set out in the brief statement, in connection with all the facts found by the case, constitute an answer in the form chosen to the plaintiff’s action, and entitle the defendant to hold his verdict.
Waiving all enquiries as to the manner of the defence, which, by a well settled rule of law, must be in conformity with the laws of the place where the remedy is sought, and assuming, for the purposes of this decision, that no legal objection exists to the form adopted, the particular question to which we shall turn our attention is, whether the instructions of the court to the jury, relative to the $60 note, were correct ; for, that being settled, upon the view entertained by us in regard to it, is decisive of the case before us, and renders the decision of any farther questions arising upon the case wholly imma*131terial. The instructions wore, that the defendant might offer the $60 note as an answer in part to the plaintiff’s suit, provided he held it, and notified the plaintiff thereof, before the commencement of the action, even if he did not hold it at the time of the enquiries made by the plaintiff; and although the plaintiff purchased the $100 note relying upon the statement of the defendant that he had no off-set to the note, and was as willing to pay it to the plaintiff as to any other person ; and that this did not estop the defendant from after-wards purchasing the $60 note, and availing himself of it in this suit.
The charge, then, involves the question, among others, whether the defendant can, by the laws of Vermont, set off an indorsed note, signed by the payee of the note in suit, against the indorsee of the note sued, of the purchase and indorsement of which note, attempted to be set off, the payee of the note sued had no notice prior to, or at the time of the indorsement of the note to the plaintiff, which is now in suit, or at the time of the action brought by the indorsee.
The statute of Vermont, passed in October, 1798, enabling indorsees to maintain actions in their own names, in the first section gives to the indorsees of promissory notes, payable to order, or bearer, the right to maintain a,n action thereon in their own names. The second section enables the defendant in all such actions to avail himself of any equitable defence which he might have if the action was brought by the original payee ; and also to plead an off-set of any demands proper to be pleaded in off-set, which the defendant may have against the original payee or payees, before notice, of such indorsement. And it is provided, also, that the defendant shall not off-set an indorsed note, unless he notify the plaintiff of such indorsement before the plaintiff commences his suit.
The supreme court of Vermont, in Parker vs. Kendall, 3 Verm. R. 540, have given a construction to these several provisions of the statutes of Vermont. In that case, the *132note sued was indorsed to the plaintiff on May 1, 1829, and the notes against Morgan, the payee of the note sued, were previously and regularly indorsed to the defendant in March or April, 1829 ; and when the plaintiff notified the defendant of the transfer of the note sued, to him, the defendant informed the plaintiff of the assignment of the notes to him, which were proposed to be set off to the note sued.
Williams, J., in delivering the opinion of the court says, “ From these statutes it appears that no action can be defeated by a plea in offset founded on a note indorsed, unless the plaintiff was notified of such indorsement previous to the commencement of the action; and that the indorsee of a promissory note cannot be affected by any claim which the maker holds against the payee, except those which were proper to be pleaded in offset before he gave notice to the maker that such note was indorsed to him. The court are of opinion, that the demands proper to be pleaded in offset must be such as the defendant could have so pleaded if the action had been brought by the original payee of the note. In applying these principles to the case before us, it will be seen that Morgan, at the time he. sold and delivered the note to the plaintiff, which is sued, had not been notified of any claim against himself in favor of the defendant; and if he had commenced a suit thereon, he could not have been defeated by the plea of the defendant, as he had not been notified that the defendant held the notes which he gave to Flint & Co.; that the plaintiff purchased the notes of Morgan and gave notice thereof to the defendant, before the defendant had perfected any claim against Morgan, which he could have pleaded in offset against him ; and the defendant cannot be in a better situation, in a suit brought by the holder of a note, than he would have been if the suit had been commenced by the payee. “ The defendant insists that the notice he gave to the plaintiff of his holding the notes given by Morgan to Flint & Co. was all that was requisite according to the statute. We think differently. The claim must have *133been perfected, and complete against Morgan. The plaintiff was not the agent of Morgan, and therefore was not the person to whom notice was to be given.”
The intention of the legislature was undoubtedly to protect the makers of notes against losses by reason of the sale and transfer of notes, other than would be suffered if suits were brought by the payees themselves to enforce the payment thereof. And it went no farther. No reason can be imagined why the legislature should place the makers of notes in a better situation, as against the indorsees, than that in which they stand in relation to the payees themselves ; and most clearly, in the present case, if the defendant were holden to have the right to avail himself of the offset against the plaintiff, his condition would be improved by the indorsement of the note to the plaintiff; for it is manifest, upon the decided case, and the fair and very obvious construction of the provisions of the Vermont statutes, aside from decisions, that the offset could not avail as against the payee, if he had brought this suit himself. For it does not appear that Parker was ever notified of the indorsement of the $60 note to the defendant, and so no right of set-off was established as against him upon that ground. And the fact of the notice to the plaintiff, inasmuch as he was not the payee of the note in suit, was immaterial. It was so holden in the case referred to of Parker vs. Kendall. The note attempted to be set off, being against the payee of the note and not against the plaintiff, the right of offset was required to be established, as against him, in order that the same should avail as against the plaintiff. The plaintiff was neither the payee nor the agent of the payee, and of course a notice to him could not be regarded as a notice to the payee, which alone could, as we have seen, give the right of offset claimed in this case. And the fact that the defendant held the note offered in defence previously to the indorsement of the note to the plaintiff, is of no avail to *134the defendant, under the circumstances of this case, and furnishes no ground of defence.
The jury were instructed, however, that if the defendant held the $60 note prior to the purchase of the note in suit by the plaintiff, and notified the plaintiff of that fact before the commencement of this suit, he was entitled to offer the same in answer to the plaintiff’s action. Inasmuch, then, as it appears that both those facts were wholly immaterial, as affecting the rights of the parties in this suit, and the instructions involve the opinion that the offset of the $60 note by way of defence might avail the defendant upon the finding of these two facts, notwithstanding no notice had been given to Parker, the payee, before the indorsement of the note sued, or even at any time before the commencement of this action, of the fact of the indorsement of the note offered in set-off, the same must be regarded as erroneous, and the verdict must be set aside and a

Neio trial granted.