Franc v. Dickinson

Barnard, P. J. The evidence shows no defense to the note which is the basis of this action. It is given to a Mr. Sterns under the following circumstances : “Mr. Stearns said it was desirable that the stock should be controlled by a few persons; asked me to take fifty thousand shares, to control the stock, and asked me to give him notes for the amount. He quoted the stock at fifteen and twenty cents a share, and said that by a few parties controlling it it would bring the price up in value. * * * He assured me that he would hold the notes,—keep the notes in his possession till such time as the stock was disposed of; * * * and when the stock was sold I should have it credited to me. If there was anything over and above this price it should be credited to my account, and these notes would be paid after the sale of the shares of stock, and, if the stock was not sold, the notes were not to be paid.” This transaction is a purchase of stock by the defendant'under hn agreement that the seller would hold the notes until the stock was sold, and then out of the sales the notes were to be paid, and not to be paid if the stock was not sold. Under this arrangement the note had a valid legal inception, and was delivered thereunder. Sterns sol'd the note to Wilde, and Wilde to plaintiff, before it matured. The case does not rest alone upon the transaction. Wilde, before he purchased the note, went to the defendant, and was told by him that, “so far as giving the note to Sterns was concerned, I supposed it was all right; but that it was distinctly understood that the note was not to be negotiated. ” Wilde purchased on the faith of this statement. There was no denial of the note itself, or its consideration, or of its delivery. It was not to be negotiated by the person to whom it was given. This agreement made no defense to the note if it was violated, and if there was a deeper meaning in it the defendant should have stated it when he was asked about the note in such a way as to indicate a design to purchase it if it was a good note. The plaintiff was an innocent purchaser of negotiable paper for value, and was entitled to recover. Stalker v. McDonald, 6 Hill, 93; Bank v. Neass, 5 Denio, 329; Comstock v. Hier, 73 N. Y. 269. The judgment should therefore be affirmed, with costs. Dykman, J., concurs. Pratt, J., dissents.