Logan v. Cassell

Mr. Justice Mercur delivered the opinion of the court, January 27th 1879. This action was by the endorsee against the maker of two promissory notes.. They were duly executed and delivered by the defendant to the payee for a valuable consideration. No subsequent failure of consideration is alleged. They were endorsed and delivered by the payee to the plaintiff, in consideration of money received from the latter at the time of the transfer and delivery. It is conceded that they were unpaid at that time, and that the defendant then had no defence against them. One contention on the trial was whether the plaintiff purchased the notes of the payee, or whether they were transferred to him as collateral security only, for the payment of money he then advanced. In either case the plaintiff acquired the possession of them in good faith, and for a valuable consideration paid at the time. Evidence was given tending to show that after the notes matured m the hands of the plaintiff, the defendant, with knowledge that the plaintiff held, and claimed to own them, settled with the payee and took his receipt in payment thereof. In the hurry of trial, the learned judge appears to have overlooked the effect of this alleged payment by the maker, and failed to submit the question to the jury. It is true the court charged that if the plaintiff purchased the notes he could recover their full amount; but if he held them as collateral he could recover only the amount due him on the original debt. So far as this goes it was correct under the authority of Appleton v. Donaldson, 3 Barr 381. But those two questions both found against the plaintiff were insufficient to defeat a recovery against the defendant. The plaintiff having obtained the notes in good faith he might maintain an action on them in his own name, although the right of property therein had again passed to the payee. Whether the plaintiff sued for himself, or as trustee for the payee, constituted no defence for the maker, unless he was thereby deprived 'of some equitable defence which he may have had as against the payee: 2 Pars. on Notes and Bills 437; Whiteford v. Burckmyer, 1 Gill. 127; Mauran v. Lamb, 7 Cowen 174; Dean v. Hewit, 5 Wend. 257; Brown v. Clark, 2 Harris 469; Pearce v. Austin, 4 Whart. 489; Holmes v. Paul, 6 Am. Law Reg. 482; Ballentine v. McGeagh, 4 Brewst. 95; Way v. Richardson, 3 Gray 412. Hence, although the notes were taken by the plaintiff as col [291] lateral, and lie had been fully paid the debt for which they were pledged, so that he had no right of property therein as against the payee; yet, still the plaintiff was entitled to recover unless the defendant had fully paid them to the payee. It therefore follows the learned judge erred in instructing the jury, that if the notes were held as collateral, the plaintiff could recover only the amount he showed to be due on the original debt, without adding that they must also find the defendant had paid the excess, due from him on the notes, to the payee. Judgment reversed, and a venire facias de novo awarded.