Noxon v. De Wolf

Dewey, J. 1. The plaintiff sues as indorsee of a negotiable promissory note, payable at fourteen months after date, and proves the execution of the note by the maker, and an indorsement duly made by the payee, without any written date. The defence set up by the maker as to a part of the note is, that it ought not to be enforced, because the consideration was the receipt from the payee of a policy, of insurance which was subsequently cancelled in part by agreement of the parties, thereby reducing the sum that ought to be paid thereon ; and as to the residue, that before the note became due, an indebtedness to a greater amount from the payee to the maker had arisen by reason of a loss on another policy on a different vessel. The plaintiff denies the right of the maker to interpose this defence as against an indorsee, holding the note duly indorsed in the manner this was ; and contends that before such defence can be made available, the defendant must show that the note was overdue when it was indorsed; and such was the ruling of the court before which the case was tried. No doubt, in a suit between the original parties to a promissory note, when the defence is want of consideration, the burden of proof is on the plaintiff. But the words “ value received ” make a prima facie case, sufficient to sustain that burden until it is overcome by other evidence put into the case. The cases of Burnham v. Allen, 1 Gray, 496, and Delano v. Bartlett, 6 Cush. 364, cited by the defendants, were between the original parties. But the party who executes a negotiable promissory note, payable at a future day, assumes towards an indorsee a very different relation from that which he bears to the payee himself while holding the note. Such defence of a failure in part of consideration, and an indebtedness to the maker by the payee, accruing before the maturity of the note, is only open to the maker upon the fact appearing that the note was negotiated after it was due, or in other words, was a dishonored note. Otherwise, the indorsee may well rely upon showing a nego [347] tiable note duly indorsed by the payee without date. If nothing more is shown, the plaintiff may enforce it as a note indorsed antecedently to its becoming due. Thus it was held in Hendricks v. Judah, 1 Johns. 319, in an action by an indorsee of a promissory note against the maker, the latter will not be allowed to prove a set-off against the original payee, unless he - previously shows that the note was transferred after it became due, or for the purpose of defrauding the maker. Such was the ruling of Spencer, J. at the trial, which was confirmed by the full court. In Webster v. Lee, 5 Mass. 334, where, in an action by an indorsee against the maker of a promissory note, the defendant set up in defence a submission of all demands, including this note, to referees, a report and judgment thereon, it was held by the court that it was not the duty of the plaintiff, an indorsee by a blank indorsement, to show that he purchased the same before the articles of submission were made. Parsons, C. J. says, in that case, “ if the maker of the note would set up the defence of payment, it is necessary for him to prove that the payment was made before the indorsement, or his defence will fail him.” In Stevens v. Bruce, 21 Pick. 193, which was an action by indorsee against maker, and the defence set up was payment to the payee, Morton, J. on the trial ruled that the defendant must first prove that the note was overdue before it was indorsed. In the consideration of the case by the full court, this ruling was assumed to be correct, and the only point of controversy was whether the defendant had introduced sufficient evidence to warrant the jury in finding that fact. In the case of Ranger v. Cary, 1 Met. 369, the point seems to have been directly before this court, and the rule stated to be that “ a negotiable note being offered in evidence, duly indorsed, the legal presumption is that such indorsement was made at the date of the note, or at least antecedently to its becoming due; and if the defendant would avail himself of any defence that would be open to him only in case the note were negotiated after it was dishonored, it is incumbent on him to show that the indorsement was in fact made after the note was overdue.” [348] . The earlier case of Wilbour v. Turner, 5 Pick. 526, and the later one of Hilton v. Smith, 5 Gray, 400, seem to have recognized the same principle. In Parkin v. Moon, 7 Car. & P. 408, it was held by Baron Alderson, that the burden of proving that the note was indorsed after it was overdue was upon the defendant, where he sought to defend by showing such facts as would constitute a good defence to a dishonored note; and this ruling, being submitted to the other judges, was confirmed by them. It may be that under the more precisely accurate use of the term “ burden of proof,” as now held by the court, it would have been more correct to say that upon the production by the holder of a negotiable promissory note, indorsed in blank, the legal presumption is that it was indorsed at its date, and it is incumbent on the defendants to overcome that presumption by evidence. This must have been so understood in the present case, as the plaintiff had already produced a note thus indorsed, and the question was upon the effect of the testimony offered to show the fact that it was indorsed after overdue. Upon such a state of'the case, it was the duty of the defendants to offer sufficient evidence to control the legal presumption arising from the indorsement of the note. In this sense the burden was on the defendants. 2. The exclusion of the testimony of the bookkeeper was correct. Without considering .the broader question of the competency of evidence to show that, upon an examination of the books of a corporation, the witness did, or did not, find certain facts to be indicated by the books, it is sufficient to say that it does not appear that the entries testified of were made while the party making them had possession of the note now in controversy. Declarations of one who has been the bolder of a bill of exchange or promissory note cannot properly be received in evidence, unless made while the party has possession of the bill or note. Pocock v. Billing, 2 Bing. 269, and 9 Moore, 499. Bond v. Fitzpatrick, 4 Gray, 91, and 8 Gray, 538. It is also to be remarked that the witness says he cannot state that this note was among those entered upon the books [349] of the corporation as lodged with the bank for collection. The proposed evidence fails to establish any declaration of the company on their books that they had left this note with the bank or collection.. Exceptions overruled.