Beltzhoover v. Blackstock

The opinion of the Court was delivered by Sergeant, J. The defence set up on the trial would be clearly admissible in a suit by Hind; but this being a suit of another holder, to whom Hind passed the notes, something more must be shown by the defendants before they can affect the plaintiffs by the want of consideration between the original parties: and the question is, whether sufficient was shown to justify the admission of the evidence offered. The defendants have undertaken to place the plaintiffs in the situation of Hind, by proof of a knowledge on their part of the objections to these notes, and also of the circumstances casting a suspicion on the plaintiffs’ title. And I concur in the position, that if an indorsee takes a note heedlessly, and under circumstances which ought to have excited the suspicions of a prudent and careful man, the maker or indorser may be let into his defence. Gill v. Cubitt, 3 Barn, & Cress. 466; 3 Kent’s Comm. 53. Much more if there is ground to suspect a secret understanding that the indorsee should appear in the light of an innocent holder, whilst really acting as an agent or trustee for the original party. But what are the circumstances in evidence here, that lead to this conclusion 1 I perceive nothing in the contract of plaintiffs and Hind, in relation to the banks in which the notes were placed, or their removal from one and deposit in another, that is out of the usual course of business. Before a note is due, the holder may withdraw it from the bank in which he has deposited it for collection, and transfer it to a person who may deposit it in another bank, in which he transacts business, without inducing a suspicion of impropriety. The publication in the gazette, with the evidence of one of the [26] plaintiffs being a subscriber, that his paper was duly sent, and no complaint made of omission, is relied on as visiting the plaintiffs with notice of the defence which the defendants intended to make. But such a publication cannot be considered as affecting the plaintiffs with direct notice of the contents of the advertisement, nor even as a circumstance for the jury to infer it. It would-be of dangerous consequence to hold an advertisement in the gazette to be such an actual notice as to visit a party with all the consequences of full and express notice. A general warning or notice in the gazette, not to trust a wife, is not a sufficient prohibition to excuse the husband from liability for necessaries, though an actual notice would be. 1 Bac. Ab. 488. Notice in the newspaper of dissolution of partnership, is not sufficient as to persons who had previously dealt with the firm. 4 Bac. Ab. 608. In the present instance the newspaper may not have been delivered to the party: if left at his abode, he may not have read it, or not till subsequently to the transaction it related to. It would be hard to subject a man to the consequences of mala fides, when perhaps he never had knowledge of the matter alleged. In the case of a common carrier, a notice limiting his responsibility was held not sufficiently given though constantly published in a weekly newspaper which the party had taken for three years. ---v. Horne, 3 Bing. 12, cited 3 Kent’s Comm. 39. It would not be intended, say the court, that a party read all the contents of any newspaper he might choose to take. I therefore think the publication in the newspaper did not kmount to notice to the plaintiffs of the objections to the potes, so as to place them in the situation of Hind and subject them to the equities he was liable to. But it is contended that, independent of all proof on the subject, the defendants had a right to give evidence of mistake and fraud in the procurement of these notes by Hind, and that the plaintiffs were then bound to show the circumstances under which they got the notes, before they could be deemed bona fide holders for a valuable consideration, exempt from the defence set up. And the rule undoubtedly is, that when negotiable paper has been stolen or lost, or obtained by duresse, or procured or put in circulation by fraud, proof of these circumstances may be given against any plaintiff, and on such proof being given, it is incumbent on the plaintiff to show himself to be a holder bona fide and for a valuable consideration: otherwise he is considered as standing in no better situation than the former holder, in whose hands the instrument received the taint. This I take to be the rule as settled here and in England. In Holme v. Karsper, 5 Binn. 469, the suit was by the indorsee against the makers; and the late chief justice Tilghman says, “in the first instance it is presumed every man acts fairly. It lies on the defendant, therefore, to show some probable ground of suspicion, before the plaintiff is expected to do any thing more than produce the note on which he founds his action. The defendant offered to prove that the note indorsed by him had been put in circulation by the drawer by fraud [27] and falsehood. If he had proved this, enough would have been done to throw on the plaintiff the proof of the manner in which he came to the possession of the note, and what he paid for it.” In Heath v. Sansom, 2 Barnw. & Ald. 291, 22 Eng. Com. Law Rep. 80, it is said that it may be laid down as a general rule, that if the note or acceptance were taken under such circumstances, the indorser himself could not recover: the indorsee must prove that he became so for a good consideration. This general rule appears not to be inconsistent with justice and sound policy. It is calculated to check secret transfers, by covin and collusion, to a mala fide holder, for the purpose of throwing on a party to a note or bill a responsibility which is uniust, and which, if the truth appeared, he could not be subjected to. Nor does it seem to impose any undue hardship on the plaintiff, to oblige him to show that consideration which is the foundation of the privilege he enjoys beyond the person from whom he derives title. (a) Without meaning to lay down any general rule, it is sufficient to say, that to throw on the plaintiffs the necessity of showing the consideration they gave for the note, justice requires that express notice should be previously given that- they would be called upon,- at the trial, to do so, otherwise they may be taken by surprise, and inferences drawn against them from their inability to give proof which would have been in their power, if apprised beforehand. Being a negotiable instrument, the first presumption is, that the holder took it fairly and in the regular course of business: and when that presumption is to be overthrown, and he is to supply it by actual proof, he ought to have opportunity to prepare for doing so. On this point the practice of the English courts seems to differ: the common pleas holding notice indispensable; the king’s bench not requiring it. Mana v. Lent, 1 Moody & Malk. 240; 22 Eng. Com. Law Rep. 302; Chit. Bills 400. I know of no decision in our own courts; but I believe the practice has been to give notice. It was done in Holme v. Karsper, 5 Binn. 471, and it would seem right that the practice should be continued. In the present case, the defendant gave a notice to the plaintiffs, that no valuable consideration passed from Hind to the.makeras to a part of these notes, but did not notify them of his intention to call on them at the trial to show their title from Hind. The defendants, therefore, not having availed themselves of this ground by previous notice, it was too late to do it on the trial. The evidence of fraud or mistake, as between the original parties, was nugatory and inadmissible in this suit. As to the other point, the refusal to compel Mr M’Donald to answer the questions proposed to him by the defendant, it seems that he possessed no knowledge on the subject except what he obtained from his professional intercourse with the parties. This it is the [28] privilege of the client he should not' be permitted to divulge. Without such a privilege the confidence between client and advocate, so essential to the administration of justice, would be at an end. It is not necessary there should be a cause depending in court; it is sufficient if the witness were consulted professionally,.and acted or advised as counsel. No knowledge appears to have been acquired by him from being called as a witness to any transaction, or acting collaterally in a distinct concern; nor was he asked for information derived aliunde. The facts alleged by the defendant ought therefore to have been established by other testimony. There was no error in overruling this evidence. Judgment affirmed. Footnotes [(a)] But, see Bassit v. Dodgin, 10 Bing, 40.