Bank of Burlington v. Beach

Royce, J. In this case, it is objected by the defendant, that no consideration ever passed from the plaintiffs, which could give effect to the note declared on, and that the note was never delivered to, or accepted by, the plaintiffs, according to their estab- . lished course of doing business; for both which reasons, it is con- . tended, that this action is not supported. On the other hand, it is insisted, that, as the amount of the note has been advanced upon it, in good faith, though not by the plaintiffs, they had a right to accept a delivery of the note, for the benefit of the persons equitably entitled to the amount, and to prosecute the present suit, for the benefit of those persons. It must be admitted, that, were it not for other transactions than those which have taken place immediately between the plaintiffs and the makers of the note, this suit could not succeed, for the reasons urged by the defendant. ■ The question then is, whether, as a Court of law, we can look beyond the parties to the note and to this suit, trace the note through the hands of other persons, and give it validity, upon a consideration moving from those who are apparently strangers to the instrument ? It is material, to observe, that this note was executed by the defendant, with Beeman and Clark, and placed in their hands, for the purpose of enabling them to raise money upon it; which money, when advanced, was to become the consideration of the note. It was drawn without any consideration, past or .present, but was to depend upon one which was future and contingent. In this respect, negotiable paper, and other mercantile securities for money, often differ from other contracts. For, that such securities [64] may be created to raise money, and become effectual in the hands of those who shall honestly purchase, or advance money upon them, is not to be disputed. It is generally understood, that the person for whose use they are created, may sell them to any one who will advance the money, and the parties to the instrument are precluded from objecting to the want of consideration. Nothing short of fraud in the purchase, is supposed to impeach his right to the benefit of the security. In this case, Wood &l Co. honestly advanced the amount of this note to Bee-man and Clark, the holders of it, and for whose accommodation and benefit it was made. It is true, they were induced to do this, by a misrepresentation of Beeman and Clark, to which the defendant was not privy. But he, having enabled Beeman and Clark to practice this fraud, by the possession of the note, ought rather to suffer the consequences of it, than Wood & Co. who were bona fide purchasers. It is said, however, that this note was not intended for circulation, being payable only to the bank ; and therefore, that nothing short of an acceptance of it by them, according to their usual practice, and the payment of their own money upon it, would perfect the contract, so as to uphold this suit upon the note itself. The concurrence of two things are undoubtedly necessary to the legal operation of this note; the acceptance or assent of the plaintiffs, and the advance of the amount. But the order of time in which these things happen, is not considered material. Nor is it considered material, whether Beeman and Clark received the benefit intended in the making of the note, from the hand of the plaintiffs, or from that of Wood & Co. When the value was once advanced to Beeman and Clark, from whatever source, the beneficial consideration of the contract, as to them and the defendant with them, was complete, and a second advance of the same sum by the plaintiffs, ought not to be required by the makers of the note, since they could derive no benefit from it. By this, it is not intended that Wood & Co. by the advance of their money upon the note, could make themselv.es parties to an instrument upon which their names do not appear; nor could they have compelled the plaintiffs to assent to the transaction, or authorize the present suit. But the plaintiffs, by receiving the note, and keeping it in the bank, and by commencing and prosecuting an action upon it, must be taken to have adopted the payment made by Wood & Co.; so that, for the purposes of this suit, the acceptance of the note, and the payment of the contents, are to be considered as the acts of the plaintiffs. Had not the advance of the money, and the receipt of the note into the bank, taken place in a reasonable time from the making of the note, and previous to any countermand or notice from the defendant to the bank, other considerations would doubtless have been presented, with which, at present, we have nothing to do. Wm. A. Griswold and J. C. Thompson, for the plaintiffs. John M. Eldridge and Chs. Adams, for the defendant. Judgment for the plaintiffs, on the verdict.