Bacon v. . Burnham

There appears to be a misconception on the part of the plaintiff's counsel of the true import of the few facts disclosed upon the trial. He seems to assume, that, nothing being shown upon the trial as to the time when the plaintiff became the owner of the note, it may be taken for granted that he obtained it before maturity, or, if not, that, having received it from Kingsley, who did become the owner before maturity, the title of the plaintiff can no more be impeached than could that of Kingsley. Now, while it is true that it is not shown at what particular date the plaintiff obtained title to the note, it is very clear *Page 616 that it was after maturity; for it was not transferred to him until after a suit had been brought upon the note by Kingsley; and, at that time, Sweezey's name appeared upon it in no other character than as a guarantor for its collection. And if it be true that the title of plaintiff could no more be impeached than could that of Kingsley, this would not determine the question in controversy between these parties, for the inquiry would still remain, whether, under the facts which are here disclosed, Kingsley could himself maintain any suit against the defendant as second indorser on this note. In considering this case, we are to remember that we are only concerned now with the cause of action set forth in the first count, and the proof made under it, since no attempt was made to prove any of the facts set up as the special cause of action in the second count. The note is made payable to Sweezey, or his order, and, being indorsed by the defendant, the legal presumption from this simple fact (nothing appearing to show that he intended to assume any other character), is, that his responsibility was that of second indorser, with all the rights, and subject only to the liabilities, of that position. It must be supposed, in the absence of any proof to the contrary, that, perceiving the name of the payee in the note, he indorsed it on the presumption that the name of such payee, to whose order it was made payable, would also, at some time, appear upon the note; for only thus would it become negotiable. When the defendant placed his name upon the note, he did so as a second indorser, with all the rights and responsibilities which attached and belonged to him in that character, and that assumed that he had, or would have, a responsible party before him. The locality of the names was immaterial; and, whether the name of Sweezey should appear above or below his own, or before or after his in point of time, would not change, in any respect, his position as second indorser. As the case stood upon the trial, it is entirely clear that Sweezey could have maintained no suit on the note against the defendant; and the case is thus brought directly within the authority of Herrick v. Carman (12 Johns. 159). That case was this: R., for value received, delivered *Page 617 his note to C., made by R., and payable to C. or order, and indorsed by H. in blank. C. afterward sold the note to B., indorsing it also himself. In an action, brought by B., as indorsee of the note, against H., it was held, that, as C., the original payee, could not maintain an action against H., as indorser, neither could B. recover against him; affirming the principle, that, where a prior indorser cannot maintain an action against a subsequent indorser, no person, deriving title under the prior indorser, with knowledge of the facts, can recover against such subsequent indorser. This case has been uniformly followed and approved in the courts of this State. (Seabury v.Hungerford, 2 Hill, 80; Ellis v. Brown, 6 Barb. 282;Morse v. Cross, 19 N.Y. 229.) The case at bar is stronger than the one cited, from the fact that there the name of C., the payee of the note, appeared as indorser before the transfer; while here, when Kingsley took the note, the name of Sweezey was not upon the note, except in a special character, under which alone he could be made liable, and not as indorser, and thus a liability was sought to be charged upon the defendant which he had not assumed, and which could not be created by the transaction of placing the name of Sweezey upon the note long after it had matured. The rights of the defendant must, on the clearest principles, be what they were when the note fell due; and, as Kingsley took the note with only a guaranty, he was chargeable with notice of the legal rule that this was not an indorsement, and was incapable of enforcement as such. The plaintiff, taking the note after maturity, is not a bona fide holder, within the commercial rule, which might otherwise protect him, but is subject to all the equities that existed in favor of the defendant at the time the note passed into his possession. In the opinion of the court below, it is said, that, under the state of facts set out in the complaint, there is no doubt, if sustained by proof, the plaintiff could recover, as, indeed, Sweezey could, under the authority of Morse v. Cross (supra). But the difficulty is, that there was no proof offered to sustain this branch of the case; and, until there was, the action stood simply upon the paper itself, and the rights of the parties *Page 618 were to be determined upon only the facts thus made to appear. Upon another trial, a very different question may possibly arise, which need not, and, indeed, cannot, now be determined. As the case now stands, I do not see how the plaintiff was entitled to recover, and am of opinion that the judgment should be reversed and a new trial ordered, with costs, to abide the event.