Bank of Salina v. Babcock

By the Court, Nelson, Ch. J. There is no question in the-case, but that the plaintiffs received and discounted the note in good faith, and the only pretence of objection to the recovery was, that no value had been given, and hence the defendant Babcock should be at liberty to set up the diversion of the paper. This seems to have- been the view of the learned judge at -the circuit, though the charge is somewhat obscure. The answer to the objection, however, js, [501] that the proceeds of the note were placed to the credit of Trowbridge &• Grant, for whom it was discounted; and were drawn out—not, I admit, by checking for the money, „ but by the cancellation of securities held by the plaintiffs, which was the same tiling, in legal effect. The court ought not to speculate' about the probability of reviving these cancelled securities, in case the paper upon the strength of which they were cancelled should turn out to be unavailable; much less ought we to go into a calculation of the chances of revival as the ground of defeating the substituted security. It is enough that the plaintiffs, in good faith, charged over and cancelled them according to usage, and held them merely to be sent home. This is parting with value in the strictest sense of the term. The plaintiffs had a right to give up the old securities upon the faith of the new paper, and they have done an act that is equivalent, and so intended. What if the old debt might still remain which seems to have been the idea of the judge at the circuit? The securities which were held beyond the responsibility of the debtor himself were destroyed. Regarding the usage of the bank in keeping its accounts with its customers, as detailed by the cashier, we may safely say, that any alteration of the state of them to the, prejudice of the institution, by reason of the discount of new paper should be deemed a parting with value therefor, within the meaning of the rule of law. It was urged on the argument, that there was no evidence that these securities were cancelled in consequence of the receipt of the note in question ; but this is most obvious, .as well from the course of dealing as the testimony of the cashier. New trial granted.