Schepp v. Carpenter

By the Court, Leonard, P. J. The judge charged the jury that if they believed the note was received in payment for a debt, or as security for the payment of it, they should find for the plaintiff. The defendant's counsel requested the court to charge the jury so as to exclude the right to recover on the note if it was taken by the plaintiff as security for a debt. Also that if they believed that the note, if paid, was to be credited on account of the indebtedness of the payee to the plaintiff, and if not paid, it was to be returned to him, then the plaintiff was not entitled to recover, and he was not a holder for value. The note was loaned by the defendant to the payee, for his accommodation, without any restriction as to the manner in which it might be used. Where such a note has been transferred to pay or secure a precedent debt, the holder may recover, because the note has answered the purpose for which it was created, and the maker is to be considered as consenting to any use which operates to the benefit of the borrower. The rule is otherwise where the note has been obtained by fraud, or was given,- for a specific purpose, or is void in the hands of the payee on grounds of public policy or otherwise. In such a case a precedent debt is not a consideration for a transfer of the note, which will entitle the holder to recover. (Corbitt v. Miller, 43 Barb. 309, and the cases there cited.) [547] [New York General Term, June 3, 1867. The jury found for the plaintiff, and thereby found that the note was received by the plaintiff in payment or as secur rity for the debt due to him from the payee of the note. They could not have credited the defendant’s witness, who testified that the note was to be returned by the plaintiff to the payee, if not paid. This evidence was given by the payee of the note, and was inconsistent with his indorsement, and ought to have been disregarded, on that ground. The requests of the defendant’s counsel were substantially a negative or denial of the proposition contained in the charge of the judge. The charge was correct, and the requests wrong. I think there was no error,- and that the judgment.should be affirmed, with costs. Leonard, Clerke and Welles, Justices.]