Norton v. Waite

The opinion of the Court was by Shepley J. It is contended, that Hernán Norton was not a competent witness for the plaintiff. The bill was drawn, accepted, indorsed, and delivered to him on a consideration, which has fathed. He parted with it before its maturity; and it does not appear, that he indorsed it. If his testimony should enable the plaintiff to recover, he would be liable to' refund [177] the amount to the acceptors. Should he be regarded as liable to pay the amount to the plaintiff, if he should fail to recover, his interest would be a balanced one. A person, who sells a note or bill without indorsing it, is a competent witness for the holder, after the execution of the bill or note has been proved or admitted. Williams v. Mathews, 3 Cow. 252. The principal question is, whether the plaintiff can be considered as an innocent purchaser of the bill before maturity and for a valuable consideration. The witness states that he transferred it before maturity in consideration of money lent to aid him in the support of his family during five or six years; and that it was received by the plaintiff in payment of money borrowed of him. The plaintiff and the witness both resided in New York, and the transfer was made there. It is contended therefore, that the plaintiff must establish his title to the bill by the law of that State; and that by that law he is not entitled to recover, because he received it for a pre-existing debt. His property in the bill must no doubt be established in conformity to the law of the State where the sale and transfer were made. But whether the indorsee is subject to the equities existing between the original parties does not depend upon his legal title to the bill. That title may be good, as between him and the person from whom he received it, and he be still liable to those equities. Whether the holder be liable to be affected by those equities was, as reported in the daily papers, regarded by the Supreme Court of the United States, during its session of 1842, in the case of Swift v. Tyson, as a question to be decided by the general mercantthe law, and not by the law of the State where the transfer was made. And the decision is said to have been that a pre-existing debt was such a consideration for the regular transfer of a negotiable instrument as enables a bona fide holder to enforce it free from the exceptions, to which it might be liable between the original parties. But if the law of the State of New York were to decide the question,, it does not appear, that the plaintiff would not be entitled to recover. The difference between the law of that State and this on the point was noticed in the case of Homes [178] v. Smyth, 16 Maine R. 177, where it was attempted to be shown, that the reason why the holder, of negotiable paper received before maturity for a pre-existing debt, was subjected to the equities existing between the original parties, was that such paper was not regarded there as received in payment of such debt; and that when there was proof, that it had been received in payment of the pre-existing debt it was not considered as subject to those equities. Nothing has occurred to change the opinion then expressed. In this case, although received for a pre-existing debt, the testimony authorized the jury to find, that it was received in payment of the money borrowed. And in such' case the plaintiff must be considered as a bona fide holder for value before maturity and entitled to recover. Judgment on the verdict.