Atkins v. Knight

B. F. SAFFOLD, J. The defendant, Atkins, was at liberty to buy a set-off against his note to Dr. Herbert, but the purchase should have been absolute, not conditional. As he was to pay Veldell only in case he made the claims against Herbert available, he had no such property in them as would entitle him to use them as a set-off. — McDade v. Mead, 18 Ala. 214. His fraud consisted in concealing the conditional character of the purchase, and in ante-dating the agreement, for the purpose of precluding Herbert’s right to transfer or sue on his demand. Assuming that Atkins’ note was given with the understanding expressed in Yeldell’s receipt, and that the consideration has not been realized, the latter could not recover on it. If the plaintiff, obtaining the note after its maturity, occupies a better position than the payee, it must be on account of some fraud from which he is likely to suffer, and against which he was not warned either actually or constructively. The consideration of a promissory note may be inquired into, for the purpose of a defense to an action brought thereon, between any of the immediate or original parties to the contract. The rule applies to all cases where the party takes the note, even for value, after it is over due; for then he takes it subject to all the equities which properly attach to the particular note between the antecedent [548] parties. The test of such an equity is, could the payee, at the time he transferred the note, have maintained a suit upon it against the maker, if it had then been mature. Story on Prom. Notes, §§ 178, 190. A note in circulation after it is due, carries suspicion upon its face. It suggests inquiry, and places the purchaser in privity with his indorser, and subject to any defense available against him. Sylvester v. Crapo, 15 Pick. 92 ; Burroughs v. Moss, 10 Barn, & Cresw. 563. It is better to require one who would purchase a negotiable note after its maturity to ascertain whether it is a subsisting demand, than to subject the antecedent parties to the necessity of tracing to him a knowledge that it is not. ■ The question in this case is not whether the defendant’s intended fraud shall shield him from liability, but whether, notwithstanding it, he shall be protected. Contracts in fraud of the rights and interests of third persons are void against them, but not necessarily always so between the parties or their privies, especially when not in pari delicto, For instance, if Atkins had purchased the claims upon Herbert absolutely, after the commencement of the suit against him by Dunklin, and ante-dated the contract of purchase in order to make them available as an offset, he could not defeat the suit of an innocent purchaser, though after maturity, on the note given for them, on the ground of the attendant fraud. In such a case there would be neither want nor failure of consideration, and the fraud would be such as the perpetrator would not be allowed to take advantage of. — Abner v. Kingsland & Co., 10 Ala. 355 ; Trough-ton v. Johnston, 2 Hay, (N. C.) 328. Our conclusion is that the charge given by the court was erroneous; the first, second and fourth charges asked by the defendant were properly refused; and that the third, fifth and sixth charges refused ought to have been given. The plea to which the demurrer was sustained, was in substance merely the suggestion of another claimant of the money sought to be recovered, without a request for an interpleader. Besides, it was not pleaded puis darrein continuance, the matter alleged having occurred after the [549] commencement of the suit. The demurrer was well sustained. — Agee v. Medlock, 25 Ala. 281. The judgment is reversed and the cause remanded.