Howlett v. Fitzgibbon

McAdam, C. J. The defendants’ acceptance having been diverted from the purpose for which it was given, they are not liable on it unless the transaction between Rogers, on the one hand, and Steves & Hasbrook, on the other, made the latter bona fide holders of it for value, so as to shut out the equities between the original parties. The exchange of Steves & Hasbrook’s note of $451.85 for Rogers’ post-dated check of the same amount, on the credit, faith, and security of the defendants’ acceptance, made Steves & Hasbrook bona fide holders of the check and acceptance, to the amount of $451.85, aforesaid. Dome v. Schutt, 2 Denio, 621; Wooster v. Jenkins, 3 Denio, 187; Newman v. Frost, 52 N. Y. 422; Burhans v. Carter, 13 Hun, 153; Frazier v. Printing Co., 24 Hun, 281. The fact that Steves & Hasbrook have not paid their note does not detract from their rights as bona fide holders. Their obligation is outstanding. They have not been discharged from their liability thereon, which continues until they extinguish it by payment. As Steves & Hasbrook were bona fide holders of the acceptance sued upon, to the extent of $451.85, the plaintiff succeeded to their rights, and is entitled to judgment for this amount, with $40.66, interest; aggregating $492.51.